In today’s Money Morning…China and UK bank moves hurting BTC, but unsurprising if you can zoom out…USD selling off, is reserve currency status under threat?…cryptocurrency trading opportunities should spring up even faster…and more…
The dominoes are starting to fall faster — this time the People’s Bank of China (PBOC) told ‘the country’s major financial institutions to stop facilitating [crypto] transactions.’
This news came within 24 hours of UK bank TSB moving to halt transactions with crypto exchanges like Binance and Kraken, according to The Times.
The combined effect of the renewed attack managed to push the Bitcoin [BTC] price below the important support line of US$33,000:
Will the bottom fall out for BTC? Is the de-Chinafication of BTC an existential threat? What about Western banking institutions getting in on the act?
To answer these questions, let’s take a look at what went down.
China and UK bank moves hurting BTC, but unsurprising if you can zoom out
Yes, in the short run moves like these are bad for those looking to make a quick buck.
In the long run, though, I think this will play into the hands of crypto and BTC’s appeal.
Take the move by China, for example.
According to CoinDesk, the PBOC said:
‘Banks must not provide products or services such as trading, clearing and settlement for crypto transactions, the PBOC said in a statement.
‘They also have to make sure to identify virtual-currency exchanges’ and over-the-counter dealers’ capital accounts, and cut off the payment link for transaction funds in a timely manner.’
And here’s the rub (emphasis added):
‘The latest statement comes after consultation with the Industrial and Commercial Bank of China, Agricultural Bank of China, Construction Bank, Postal Savings Bank, Industrial Bank and Alipay (China) Network Technology on the issue.’
Ah yes, Alipay, the world’s largest mobile payments platform with 1.3 billion users, which is a subsidiary of Ant Financial, which in turn was about to launch the world’s largest IPO before being sent to corporate limbo (black site?), because founder Jack Ma was getting too big for his britches.
This is completely unsurprising.
The digital yuan and digital renminbi will, in my eyes, likely be forced down consumers’ throats in China via the Ant Financial system.
Ahem, I mean ‘welcomed with open arms’, if I am double-speaking correctly.
Point is, the de-Chinafication of crypto is coming thick and fast.
Remember when the criticism of bitcoin was ‘China runs it’?
Which brings me to the UK’s first major dabble in trying to turn off the leaky crypto faucet…
Here’s what The Times said:
‘More than five million British banking customers are to be barred from buying cryptocurrencies within days amid concerns that trading platforms are riddled with fraudsters.
‘The Times has learnt that TSB is preparing to block its customers from sending money to trading sites such as Binance and Kraken because it believes scammers are being allowed to set up e-wallets and steal people’s money because of weak security checks…
‘The bank is particularly concerned about Binance, one of the world’s biggest cryptocurrency exchanges, registered in the Cayman Islands.
‘It said 849 TSB savers reported losing money to scammers with Binance accounts between March 15 and April 15. The bank claimed that when it tried to raise concerns, it received no response from the company.’
Binance is a Chinese crypto exchange, and apparently ‘Binance is reportedly of particular concern to the bank because about two-thirds of all frauds involving crypto were tied to the Binance platform.’
First of all, don’t keep your crypto on an exchange — but let’s ignore that.
As of last year, Binance had a 26% market share.
So, it makes sense that Binance is the main scape goat here for crypto users that are naïve enough to keep crypto on the exchange.
I’d expect Binance to face pressure from the Chinese authorities at some point — such is the impetus to roll out the digital yuan.
But the move by TSB was curious — it’s possible that other Western banks follow suit.
Which is why you need to see the long-term picture.
USD selling off, is reserve currency status under threat?
As you can see, after a sharp rally the value of the USD is sliding again relative to the basket of currencies that the US Dollar Index [DXY] tracks:
It’s possible that it corrects back to say 91, 90.4, or even as low as 89.6.
Going forward, I’ll continue watching the DXY closely for big moves as they relate to crypto.
As in, if the DXY punches below that final third support line in a meaningful way, it could accelerate a move towards crypto.
It’s a tangential relationship between the types of currencies, but still important.
That’s because the USD is the world’s reserve currency — weakness there has massive implications for the global economy.
No one expects USD dominance to slip quietly into the night, as it’s still the backbone of many fragile economies around the world.
That being said, if we are about to enter a more multi-polar currency environment, with say, the digital yuan entering the frame — the dominoes in this new game may fall even quicker.
Meaning cryptocurrency trading opportunities should spring up even faster.
The race to innovate and remake the concept of money is well and truly on.
So, if you’ve ever wanted to trade crypto, or are looking for an edge — be sure to check out Ryan Dinse’s latest event called ‘New Game Trader’ right here.
Since his first bitcoin investment in 2013, Ryan’s become an expert on crypto trading, and I highly recommend his strategies.
For Money Morning
Lachlann is also the Editorial Analyst at Exponential Stock Investor, a stock tipping newsletter that hunts for promising small-cap stocks. For information on how to subscribe and see what Lachy’s telling subscribers right now, please click here.
Lachlann Tierney is an Analyst for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently he has been working with Ryan Dinse. Lachlann is involved in two publications: