The "Chinese Effect" - Why The Chinese Ban On Cryptocurrencies May Be Good For Your Long-term your crypto investment strategy

September 24, 2021 - China announced a blanket ban on all cryptocurrency trading and mining. The announcement resulted in significant drop in the price of bitcoin and other coins and has made some crypto investors a bit jittery about the future of cryptocurrencies.

Chinese Effect is Real

As the second largest economy in the world, whatever happens in China may have global repercussions. If there is any doubt about that fact, just a few days earlier, the possibility that Chinese conglomerate, Evergrande, may default on its huge loan interest repayment reverberated across markets all over the world, with stocks and crypto prices plummeting. While stocks and cryptos have fairly recovered, it is poignant reminder of the ever-growing power China and its economy have on the world economy.

Many crypto fans and investors are therefore justifiably worried about their investment. Should they sell now and hold on to their cash or re-invest in other areas? Many even fear that other governments may copy Chinese example and make crypto illegal.

Why the Chinese Ban May be Good for Crypto World

While these are legitimate concerns, and no one has a crystal ball to look into the future, many experts caution against reading too much into the so-called Chinese effect. For one, some believe that China’s complete hands-off approach regarding bitcoin and other cryptos is a great development. In fact, some analysts and fund managers believe that bitcoin and other cryptocurrencies may actually benefit from the Chinese ban. Ross Garber, the CEO of Gerber Kawasaki Wealth & Investment Management, was recently quoted as saying that, “This is great news for bitcoin, The last thing we want is China [to be] involved in a currency of the world.”

To understand the full import of that statement, recall that 1. Chinese companies and individuals have played an important role in the early emergence and adoption of cryptocurrencies alongside a growing suspicion of China among Western governments; and 2. Bitcoin and other cryptocurrencies emerged as an alternative to current monetary system, as an opportunity to give power and control over people’s money over to their own individual hands.

So, clearly, in the light of those two important facts, the growing association of bitcoin and other cryptocurrencies with China or with any government for that matter is not in the overall interest of the decentralized finance systems and applications in general, and bitcoin in particular. Viewed from this angle, one may even consider Chinese total ban on cryptocurrencies an important positive development for crypto in general.

However, that does not mean that there may not be challenges and hurdles in the immediate term as individuals, exchanges, and other agencies which have relied on Chinese market begin to pivot away. This would mean innovative thinking, more allocation of funds to develop or adapt DeFi systems to pivot away from certain markets or even to increase privacy. The blockchain ecosystem is nothing if not adaptive with a unique ability to thrive in the face of institutional blockage. Already, exchanges in China are beginning to implement changes to not only comply with the new rules but also to pivot away to other markets and grow. That will certainly come with growing pains.

Investment Implications

So, what does it all mean for you as a crypto investor in US, Europe, Africa, or any other part of the world? Simply put, without mincing words, it will get worse before it gets better. Some countries may emulate China, not by outright ban on crypto, but by tightening regulations and taxing crypto investment more. In the short time, as these events unfold, the prices of cryptocurrencies may fluctuate. In the enxt few weeks or months, we may not witness the rapid growth in crypto portfolios we have seen in the within the last year.

Significant Opportunity?

But we believe that such price fluctuations are only temporary. If you don’t have the ability to “stomach” such fluctuations, it may make economic sense to sell and play a wait and see game. But for those who have a higher level of risk tolerance, this dip might provide the best opportunity to even buy more cryptos at low prices and hold them for a long-term strategy. Because of the possibility of more government regulations and other challenges around crypto, you need to be careful about the exchanges or trading platforms you choose to be buying and selling crypto. We have reviewed all the exchanges and have identified just 8 exchanges that we think are the best, especially for people from united States of America. Because of the serious financial framework in US, we think that all these exchanges that have successfully met the conditions in US, are also safe platforms for those investors in Europe, Africa, Asia etc. Click here to see our list of the Best Crypto Exchanges for US Citizens.

So, which crypto coins should you invest in, with this kind of long-term strategy in mind? Again, you have to be careful. While there are many crypto coins and tokens out there, quite frankly, a lot of them are not worth your investment. Our analysts have received tons of cryptocurrencies out there and now recommends just a few. Click here now to see the list and why we think you should Invest In These TOP 10 Cryptocurrencies Right Now.