More Bad News for the Digital Market
Cryptocurrency prices have been falling for weeks now, and the losses could continue to mount.
In the early months of 2021, it looked for all the world like cryptocurrencies were on the right path to gaining widespread acceptance in the mainstream.
Various investment firms had begun offering cryptocurrency ETFs, select companies had begun accepting crypto payments for their goods and services, and saw the IPO of the first publicly traded crypto exchange in Coinbase Global, Inc. (COIN).
Even the country of El Salvador has gotten in on the excitement, becoming the first country to pass a law adopting Bitcoin as legal currency.
But the good times have not been able to carry over into the summer months.
Amid a massive selloff in the crypto market since mid-April – during which Bitcoin lost as much as 52% of its value – the news just keeps getting worse and worse for the digital market.
And now, cryptocurrencies have run into perhaps their biggest roadblock to date.
Where’s the money?
News began to surface yesterday that the People’s Bank of China (PBOC) had reportedly told banks and payment companies to suspend cryptocurrency trading.
Concerns immediately arose among Chinese crypto traders that their accounts would be disabled.
In an announcement that all but confirmed the reports that the Chinese government is cracking down on crypto, the Agricultural Bank of China – the country’s third-largest lender – stated that it would follow the guidelines set forth by the PBOC). The bank cautioned that any client involved in crypto trading or mining would immediately have their account shut down and all relationships to the bank would be severed.
While China had already banned cryptocurrency exchanges from operating in the country, the latest move targets individuals and institutions that have continued to take part in digital markets through foreign exchanges.
The Chinese government has even gone so far as to cut power to Bitcoin mining farms last week, cutting Bitcoin’s hashrate – how quickly new coins can be mined – by 17%.
As a result of China’s renewed attacks on the crypto market, Bitcoin’s price fell by more than $3,200 since Sunday evening.
So, given the huge dip in the prices of many of the top coins, many are surely wondering if this is a good buying opportunity.
Here’s what I think…
How do I get some?
The Chinese are well on the way to banning all cryptos, and that is incredibly bad for Coinbase and all cryptocurrencies.
Remember that China is the world’s second-largest economy, so removing millions of crypto traders is potentially disastrous for the value of coins that are driven purely by supply and demand.
For now, I would stay away from actual cryptos like Bitcoin and Ether, as well as crypto-related stocks like Riot Blockchain, Inc. (RIOT), Marathon Digital Holdings, Inc. (MARA) and anything else in the crypto space because I think they all go lower in the near-term.
I would recommend sticking to the stock market instead of the digital market for now. There’s a massive potential for growth as economies around the world begin recovering from the pandemic.
And my colleague Shah Gilani, an absolute legend on Wall Street, has the inside track on the best profit opportunities in the market…
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In the Spotlight: The latest short squeeze beneficiary…
It seems like the entire market is searching for the next big squeeze that will be caused by retail investors targeting short positions.
And we just got yet another example of the huge profits that they can create.
Over the last week, shares of Torchlight Energy Resources, Inc. (TRCH) – a small oil company based out of Plano, TX – skyrocketed more than 130%.
That makes TRCH the second biggest gainer on the Nasdaq this year.
After announcing last month that it could potentially go out of business, the company’s short float has moved above 12%. The influx of new buyers, spurred on by various Reddit threads, has led to the massive surge.
While I think most of the fun for TRCH is likely over for now, I’ll be keeping an eye out for any more short squeeze trade ideas for you. Stay tuned.