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Bitcoin, Ethereum, and the Chinese Ploy

Posted on 14 September 2017 by Thraxxus

Bitcoin hit an all time USD price of about $5000USD on August 17, 2017. This explosion in price, in turn, affects the values of other digital crypto-currencies, such as Ethereum, which peaked the $400USD mark. One would think that holders of these currencies would rejoice, and some did, others, on the other hand, made the mistake of trying to get in a bit late – and not because getting in is a bad thing – in fact it is the right thing to do. Buy low, sell high and all that business – you get it.

There is a not so hidden factor at play here that has, frankly, been in play many times before with other currencies,and it is causing a serious amount of fear in the crypto-currency landscape – China. There is no secret that China has manipulated currencies in the past – their own to be the first example. Naturally China has now set her sites on Bitcoin – and even the announcement of that has had a catastrophic effect on the value of Bitcoin.

Is the fear justified? Temporarily, perhaps. What you must understand is that even though China did have some success in keeping her own currency locked at a level for a long, long time, eventually it had a dire effect on her economy. The middle class exploded, which was a good thing, but her coffers actually got too full (this was reported on in 2013) , if you can imagine that being a problem, and that came back to bite China in her booty. The short story? China created fear internally when the intent was to create it externally. Why was that a problem? The Chinese people started pulling their money, as fast as a they could, out of the motherland – the exact opposite of what China was hoping was going to happen, through the purchase of jewelry, and now bank cards.

What is going to happen, then? First you must look into why China is doing this – the answer, conceptually, is rather simple, and is actually in line with what the Big Banks and Governments of the west are also concerned about – control. Simply put, the Chinese government is all about absolute control, and trying to maintain that control as much as possible. With their coffers already bleeding due to the rich and ultra-rich jumping ship, having a currency that they don’t control, just sitting out there supplying yet another way for their citizens to escape with all that glorious cash, is outside their interests – and they hate that.

Granted, the official statement by the Chinese government is that they are banning only the trading of crypto-currencies on their vast exchanges. Again, why? Crypto-currencies have certainly been volatile in the past – nobody can really doubt that – a common problem and concern. Now say you are China, a lady that controls almost every facet of her existence with absolution, then the idea that your markets could be directly affected, in real time, by a vast collection of cryptos, that you cannot control in any fashion, keeps you up at night. So what do you do? You put a stop to that nightmare. Will it last? Perhaps. However, what traders must realize is that China isn’t shutting down cryptos completely, only the trading of them on her markets – at least until she can figure out a way to control them – which could happen fairly quickly as China is rather skilled at control. After all, she is over four thousand years old, and thus has had loads of practice.

Where is it going? It will go down, then, again, it will explode upwards. Why? Less and less people believe in Fiat Currencies, and as such, are liking currencies that are controlled by their owners more than the governments that printed Fiat currencies with reckless abandon, and ultimately failed. A compounding reason that these currencies will climb again is that there is a limited amount of coins in the currencies. Here is a Reddit post, GASP, that loves to talk all about this concept.

My suggestion – buy low, sell high – but we started this piece that way. Fundamentally speaking, it is the right way to make money. I would use Kraken or Coinbase, however, I don’t guarantee them, but I do use them, sometimes with an extreme amount of frustration. In the meanwhile – watch this guy – he is pretty good at explaining the fun.

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