Chris’ note: It’s a huge development for the crypto world…
Recently, China’s President Xi Jinping said that China should “seize the opportunity” in blockchain – the technology underpinning cryptocurrencies.
This is huge news… and it sent bitcoin – the world’s most popular cryptocurrency – into a frenzy.
Since the announcement on October 24, bitcoin’s rocketed 25% higher. At one point, it went as high as $10,021.
Today, I bring in my friend Marco Wutzer – blockchain expert and senior analyst of Disruptive Profits – to see what this news means going forward.
You probably haven’t heard this angle yet in the mainstream media, so pay close attention…
Chris Reilly, managing editor, Casey Daily Dispatch: Marco, we’ve seen a nice jump here in bitcoin over the past couple weeks. Many are attributing the big boost to Chinese President Xi Jinping’s recent comments.
What’s the significance of this?
Marco Wutzer, senior analyst, Disruptive Profits: Before we get to that, let’s backtrack for a moment to 2017, when China banned all cryptocurrency exchanges. If you remember, most of the volume of all crypto trading was happening in China at the time.
But in late 2017, the Central Bank of China banned all local crypto exchanges. So, most of the liquidity then moved to Japan, and Korea, and other exchanges. Cryptos in general were kind of frowned upon by the government over in China.
When a totalitarian regime like China gets confronted with a technology it cannot control, monitor, and manipulate, it’s hardly surprising that its first reaction is to simply outlaw it where it can. In this case, the crypto exchanges operating in China.
It seems the crucial importance blockchain technology will play in the near future has now dawned on the bureaucrats in Beijing.
That’s why President Xi Jinping now came out and gave a speech basically saying that blockchain technology is very important, and very important for the future of China, and that the country should work on making this a priority. This, of course, had a big effect on the crypto price, because China is obviously a huge market.
In fact, it was one of the biggest one-day moves in bitcoin ever, reminiscent of the early days when moves like that happened more frequently.
It was surprising for a lot of people. But the main takeaway should be that you don’t want to be too cute with timing the market. Big moves can happen seemingly out of nowhere. If you look at the history of bitcoin, most of the gains made in a year happen in just a few trading days. And if you’re not participating in these trading days, then you’re missing most of the gains and might even have negative returns. So if you believe in a positive future for high-quality crypto projects, you should already be invested right now. And don’t get tempted into trading in and out of your positions.
The core message I always repeat is that all of these moves, while they’re exciting, are just gossip for the day. In the big picture, it’s really irrelevant because absolutely nothing has changed.
Blockchain technology will have a huge impact in many areas of our lives. It’s truly a game-changer. Yet only a tiny percentage of people actually own any crypto tokens. You want to be positioned in the right decentralized protocols for the long term to catch the big waves when they happen. This is the safest strategy to reap big returns in this space.
Chris: That’s a great point. So people shouldn’t get too high or low on the daily moves…
Marco: Exactly. A lot of people are saying things like, “I’ll buy when bitcoin drops to $7,000… $5,000… $3,000.” It might happen, but it might not. You don’t want to take that chance by getting too cute with trying to time the market.
Of course, it’s exciting to have this news coming out of China. This is very bullish for bitcoin and for cryptocurrencies in general over the medium and long run. But for us, especially at Disruptive Profits, it really makes no difference to our strategy.
Chris: But do you think other countries will follow in China’s footsteps? I mean, I know it’s just an announcement at this point, and time will tell how China uses the blockchain. But do you think this will spur other countries to take a closer look at blockchain technology?
Marco: Absolutely. It’s one thing for a politician to say, “We’re going to do something,” and an entirely different matter if that thing will really happen. But in China, it’s different. It has a dictatorship over there, and it can actually do things just by one powerful person saying, “We’re going to do that.”
And certainly China, unlike democratic countries in the West, has a much longer-term outlook and can see long-term plans through.
Other countries, if they are smart enough to see what’s coming, will create crypto-friendly environments. Nobody can escape the rise of the Blockchain Ecosystem, and as it gains more power, countries either adapt or become irrelevant.
So, yes, I see other countries following China’s lead, but rest assured there will also be plenty of governments that don’t get it and will try to fight the crypto revolution.
But opening itself up for cryptos is a double-edged sword for China…
Chris: How so?
Marco: Because people in China are forced to hold their savings in Chinese yuan – at least as far as currencies go – because China has very strict capital controls. That’s why in China it’s so popular to invest in real estate to protect your savings. But properties are fixed assets and come with their own risks. That leaves bitcoin as the only way to protect your wealth by moving it abroad, out of reach of the Chinese government.
China’s certainly one of the largest economies in the world and one of the most developed countries. But it’s also a very dystopian society. Think about what’s going on in China with its surveillance machine, the social credit system, how it limits people’s freedom to travel, freedom to read and speak, and economically too, to a large degree.
In short, it has very tight control. People don’t really use cash over there anymore for most of their transactions (even when just going to the market and buying some fruit). It’s all happening with just two payment systems, which are WeChat and Alipay. Everything is all tracked in a huge database by the Chinese government. There is no privacy in China. Its citizens are completely transparent.
So, what it has in mind with cryptocurrencies is even more control, even more insight, and even more automatic enforcement of policies and also of penalties. This is the dark side of crypto as it comes to China.
It’s virtually guaranteed that China won’t embrace the decentralized aspects of blockchain technology, because that would bring more freedom and privacy to the average Chinese.
I think we’ll see government-sanctioned crypto projects that share their data with the Chinese government. And the Chinese central bank might launch a yuan crypto token soon.
I have no doubt we’ll see a more controlled dystopian version of cryptos there, but I also think we’ll see decentralized protocols create more freedom in China thanks to their unstoppable nature.
Chris: Thanks, Marco. Overall, it sounds like the big picture hasn’t changed. If anything, the news out of China is positive for the overall crypto space. What should someone do today if they want to take advantage?
Marco: That’s right, Chris. Now’s a great time to get involved. We’re still in the early days.
The best way to participate is by buying some bitcoin if you haven’t already. This will give you some initial exposure to the crypto market.
And then, if you want to explore the space further, and become more diversified, I would recommend reading my newsletter Disruptive Profits, where I focus on the world’s most explosive projects.
Chris: Great. Thanks for the time, Marco. We’ll be in touch soon.
Marco: Sounds good, Chris.
Chris’ note: As Marco just explained, there’s still time to make a fortune off cryptos and blockchain technology.
In fact, Marco recently found one blockchain project with huge upside potential…
It all has to do with a deadly flaw in America’s national security. A tiny, $10 million company is developing a solution to this problem… and it could disrupt a $2.9 trillion market. This would open the door for a potentially life-changing payday.
You can get all the details from Marco himself by watching this video right here.