The China Implosion No One Is Talking About
Teeka Tiwari | Oct 19, 2021 | Palm Beach Daily | 6 min
Yesterday, I showed you why the U.S. banning crypto would be the stupidest crackdown since the prohibition of alcohol…
And that the move would be a severe blow to the U.S. financial systems that are about to offer crypto access to millions of customers.
Much of the fear around a U.S. ban can be tied back to this past summer when China’s crypto ban was making the news…
The ban began in June, with a crackdown on bitcoin mining in the Sichuan province… and this was followed by a nationwide ban on all crypto mining, trading, and transactions.
In response, crypto prices plummeted, and the mainstream media once again told us “the sky was falling” for crypto… that one country’s ban would somehow mark the death of bitcoin and the greater crypto ecosystem worldwide.
Here’s what I said about a potential U.S. ban back in June when many crypto investors were rushing toward the exits…
U.S. regulatory agencies have allowed companies like Goldman Sachs… Morgan Stanley… JPMorgan… Citi Group and others to offer bitcoin to their clients.
They’ve seen companies like MassMutual – the oldest insurance firm in the United States – add bitcoin to its balance sheet.
These financial giants have every incentive to fight tooth-and-nail to keep bitcoin alive since they have skin in the game. So again, don’t bet against Wall Street.
Now, the months that followed the ban saw crypto prices fall as much as 62%, with bitcoin falling as low as $29,000… a 55% plunge from its all-time high of $64,863.
But over the last few weeks, crypto and bitcoin have been on a tear…
With bitcoin around $61,000, as I write, and a market cap of about $1.2 trillion. That’s bigger than the market caps of Facebook, Tesla, and Berkshire Hathaway.
Much of this growth can be attributed to institutional mass adoption… like the financial firms mentioned above.
But there’s another factor at play here. And it’s evidence that one country’s crypto ban is another country’s crypto gain…
The NEW No. 1 Destination for Bitcoin Miners
Twelve months ago, China was the global leader in bitcoin mining, as measured by the bitcoin hash rate – the term used to describe the collective computing power of bitcoin miners.
That’s why in the months after China’s crypto ban, we saw the global bitcoin hash rate fall 70% lower from pre-crackdown levels.
Today, the global hash rate is now 35% higher than when China initiated its ban. Think about that. The world’s largest producer of an asset bans it, and the asset still finds a way to not only come back but come back stronger.
Here is the nature of bitcoin: It doesn’t just “survive” attacks, it “learns” from them and gets stronger, bigger, and more widely adopted.
Try to name me any other asset that can do that.
Not gold, not stocks, not commodities. Only bitcoin can take repeated punches straight to the face and get right back up… bigger, tougher, and meaner than it ever was before. I want you to understand this asset cannot be killed.
If it cannot be killed – and only 200 million people own it – that means you must own some as well.
Thanks For The $10 Trillion, China
So, who’s been the beneficiary of China’s actions? America. The U.S. has filled the mining gap that China’s crackdown created.
China’s abandonment of its dominant bitcoin mining position will go down as the single-greatest destruction of a nation’s wealth outside of a war…
The strategic significance of being the hub for bitcoin mining cannot be overestimated.
Within five years I believe bitcoin will be at $500,000. That’s a $10 trillion market China just gave away to its biggest rival: The United States of America.
Last week, Cambridge University released data showing that as of July – when China’s bitcoin crackdown was unfolding – the U.S. accounted for 35.4% of the global bitcoin hash rate… a 428% increase from September 2020.
In that same timeframe, China fell from 67% of the hash rate all the way down to zero.
And as London-based fintech data analyst Boaz Sobrado told CNBC last week…
The whole narrative of China controls bitcoin is now completely destroyed.
Read that again: The China-bitcoin narrative that the mainstream media – including CNBC – was throwing at us this summer is now “completely destroyed.”
So, will this be the end of all the “death of bitcoin” narratives? I doubt it.
Until bitcoin and crypto become as accepted and commonplace in the mainstream as cash or blue-chip stocks… the media and so-called “experts” will jump at every opportunity to drag them down.
But if you’re a longtime reader who’s followed my research, you know that those false narratives and price drops are buying opportunities.
The long-term trajectory of bitcoin and crypto is looking stronger than ever thanks to exploding mass adoption.
China’s Loss Is America’s Gain
By kneecapping its miners and banning crypto, China left the field wide open for other countries to step in… and that’s exactly what happened.
U.S. bitcoin miners have become the biggest beneficiaries… they’ll be earning the bulk of bitcoin rewards… and they’ll be sitting on a war chest of bitcoin.
Because until recently, bitcoin miners haven’t been able to hold the bitcoin they mine. They’ve had no choice but to sell it to fund their operations.
But we’ve seen crypto adoption take off significantly over the past few years. And huge players like Morgan Stanley, Goldman Sachs, and MassMutual are taking notice.
One after another, these big institutions are now coming into crypto. And that means for the first time, miners can raise money through the capital markets by issuing shares (equity) or bonds (debt).
We’re now in a world where bitcoin miners no longer have to sell their bitcoin to fund their operations… and U.S. miners are dominating and hoarding the rewards.
What do you think will happen when bitcoin’s price continues to rally and eventually hits a new record high?
The value of their bitcoin will explode. And the more bitcoin’s price goes up, the more miners will hoard their bitcoin…
And that changes everything because it removes the new supply of bitcoin from the market just as demand for bitcoin is set to explode higher…
So ignore the mainstream media when it comes to bitcoin.
As the death of the China-bitcoin narrative shows, they rarely get it right, and they almost always miss the bigger picture…
China gifted virtually the entire bitcoin mining industry to the U.S. – just like I said it would back in July – and the media is just now catching on.
If you want broad exposure to this trend, consider the Bitwise Crypto Industry Innovators ETF (BITQ).
It has broad exposure to miners… but also includes companies in the broader blockchain ecosystem. So it’s not a pure-play on miners.
And remember, the mainstream media loves negative bitcoin narratives… now that China is out of the picture, I wouldn’t be surprised if we start seeing headlines about bitcoin bans in the U.S… but don’t fall for it.
They’ve been wrong about bitcoin and crypto for nearly a decade now, and I doubt that’ll change any time soon.
Let the Game Come to You!
https://www.palmbeachgroup.com/palm-beach-daily/the-china-implosion-no-one-is-talking-about/
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