For years Bitcoin and other digital currency enthusiasts have been crowing about the fact that no central government had effective jurisdiction over the future direction of money nor could stop the meteoric rise of the various cryptocurrencies. This past week, that long-standing and -held premise suffered a heavy direct blow as the government of China attacked the kingpin of the space Bitcoin directly.
Whether or not you have prepared your retirement portfolio for the monetary transition to cryptocurrencies yet, this directly impacts the value of your retirement portfolio. In recent years, Bitcoin especially has stolen some of gold’s thunder in attracting much of the new in-pouring safe haven investment dollars, yen, yuan, and euros. As China (and also potentially other countries) cut off access to it, this heavily favors gold and the other precious metals which they actually cannot stop. Now that you know why to invest in gold, now is the time to brush up on how to invest in gold in your IRA while the prices are still somewhat affordable.
China Makes Its War on Bitcoin Personal
China has launched an all-out assault on the various digital currencies, but in no way is this more pronounced than with their personal attacks on Bitcoin in the communist-run country. The Chinese media on Friday revealed that the national government has made plans to close down all of the local Bitcoin currency exchanges in China. BTC prices responded by plunging $100, around two percent. Both the Wall Street Journal and Bloomberg carried the story on Monday as well, only adding fuel to the fire and increasing the severity of the decline.
By Friday, Bitcoin prices had reached a weekly low of $4,241 per coin in Friday British trading. They continued still lower on Monday, touching the new low of $4,108 per price data shared by Coindesk. These numbers may not sound particularly devastating until you consider that only a week ago, the prices were trading at an all time high of $5,000 per coin, as this chart below clearly demonstrates. The world’s first and leading cryptocurrency’s prices are up by almost 350 percent since January 1st.
China Previously Banned Initial Coin Offerings in Its First Assault on Digital Currencies
Chinese regulators were still fresh off their ban on all ICO initial coin offerings from only about a week ago. The People’s Bank of China spearheaded this first attack against the method of raising funds through selling new digital tokens to investors. While the crackdown on the Initial Coin Offerings did not directly impact the digital currencies, Bitcoin took it personally. The digital currency giant plunged by $1,000 in only three days, representing an eye-watering 20 percent drop.
Authorities have already banned those new projects which pertain to the ICOs. Fully 60 major platforms for the ICOs were targeted by the collective local financial regulatory agencies to inspect and report back on soon. The Chinese are attacking cryptocurrencies under the argument that the fundraising tool is not authorized at best and can easily involve any number of financial scams or outright fraud at worst. While the industry in China only amounts to hundreds of millions in dollars and not billions, it was still a symbolic strike at the heart of the newly surging digital currencies like Bitcoin and Ether.
The joint statement announcing the ban on the ICO’s came from an impressive seven different administrations within the Chinese government, revealing the apparent unity in this new policy. It included a combination of the powers of the People’s Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission, and China Insurance Regulatory Commissions who provided a joint statement declaring the ICO’s as an illegal fund raising activity in China.
This statement went one further by “recommending” that all financial institutions and banks not engage in any business that pertains in any way to ICO trading. What is more, those individuals and organizations which have finalized fundraising using ICO’s are instructed to return the money so that investors’ best interests can be protected. It represented a sea -change in the country’s direction and regulation of the digital currency markets.
Real Concern Surrounds Potential Additional Regulations
Analysts have now begun considering the very real possibility that China is only the first of major nations to line up for stricter regulations and regulatory oversight on the burgeoning $150 billion digital currencies markets. CEO and Digital Currency Comparison Website Founder Charles Hayter of Crypto Compare warned:
“The Chinese market has been perhaps the most virulently exuberant in terms of its irrational excesses and across the world regulators are looking to gradually turn up the regulatory heat on this ICO phenomenon. With China nothing is ever certain and a lot is left to be desired in terms of translation and interpretation. Rumors are that the Chinese are looking to ban bitcoin again and ring fence their fiat yuan from the crypto world. The fears of capital outflows as well as money laundering are causing the Chinese state to ratchet the rhetoric. Examples will doubtless be made — the question is who and when. China isn’t that important as it only accounts for less than 20 percent of volumes. Uncertainty for the time being in China whilst for the rest of the world its business as usual.”
Some experts tried to see the silver lining in the first regulatory move against ICO’s as positive since they will at least restore law and order to this market by cracking down on scams and rampant fraud.
Why China Feels Personally Threatened by Bitcoin and the Digital Currencies
The reasons for why China takes these alternative currencies so personally has to do with the nature of how they trade and operate. Bitcoin, as with most of its smaller descendants in the space, functions via a peer to peer network. This permits the traders to send either payments or transactions without having to rely on a central authority. This is where the problems begin for the Chinese authorities, who are carefully running their economy and indeed entire nation as a dictatorial and all-controlling, all-powerful central authority.
Former Facebook employee Palihapitiya opined that this is anathema to the Chinese administration simply because they view Bitcoin as:
“the ultimate insurance policy against autocracy, currency curbs, and other forms of value destruction.”
The Chinese are more fearful of the digital currencies as mainstream adaptation to them increasingly appears to be a foregone conclusion. Even significant celebrities like Michelle Mone and Paris Hilton have jumped on the proverbial bandwagon. Only last month, Hilton declared that she would take part in the firm Lydian’s Initial Coin Offering. Meanwhile, Mone the entrepreneur opened a $330 million luxury-styled property development in the United Arab Emirates’ real estate center of Dubai. The claim is that this will be the very first property offering which is priced for Bitcoin.
Gold Is The Insurance You Need Against a Major Bitcoin Setback
If other important nations such as Japan, South Korea, the United States, or the United Kingdom follow the Chinese government example to align against especially Bitcoin (but in reality all of the digital currencies), this would be devastating to the underway currency revolution. In this case, it is gold that will welcome back these safe haven value seekers to its folds.
This is why you need to add gold to your IRA now. Alternatives to gold come and go, yet the only historically proven safe haven and retirement portfolio hedge is the yellow metal. It is all part of the reasons why you should own gold in times of financial crisis. Time to learn what gold goes in an IRA.