Global investors are turning their eyes to Evergrande Group, China's second-largest property developer by sales, for fear of a possible credit contagion.
Cryptocurrency prices rebounded from a one-and-a-half month low on Tuesday despite heavy selling linked to loan default concerns by property developer China Evergrande.
Global markets started the week with concerns that Evergrande's problems could lead to repercussions on the Chinese and global economies, leading to a sell-off in riskier assets.
On Monday, many people woke up to the news of China's Evergrande Group losing a significant amount of its market capitalization as the company's shares plunged to an 11-year low. The Hang Seng Tech Index also plunged in value on Monday morning as the news roiled markets.
Evergrande's losses could cause a domino effect like the collapse of Lehman Brothers during the 2008 financial crisis.
"We can't take a very positive view just yet until we get through the next few days," said Matthew Dibb, chief operating officer at crypto index fund provider Singapore-based Stack Funds.
"This is purely sentiment-driven right now, and it's actually been off very low liquidity," he said, adding that it would be better to wait on the sidelines as crypto markets will continue to be affected by the contagion.
Bitcoin traded around $43,000, recovering from its low to $4,0192. It hit a four-month high of $52,000 on September 6, while the value of smaller rival Ether rose 1 percent to $3,055 after falling below $3,000 for the first time since early August.