China has shockingly (not really) issued yet another warning about the so-called perils that come along with investing in the cryptocurrency industry. This time, it’s in the form of a news report run by its state TV channel.
The Bubble Chant Continues
According to China Banking News, the report, titled ‘Blockchain Cryptocurrency Bubble Accumulates’, is an alleged investigative piece on how dangerous crypto speculation can be.
The seemingly in-depth report appears to focus on one Bitcoin investor who has been on a losing streak since even before China introduced their ICO ban. Yang Chao appears to have lost millions of yuan through Bitcoin betting. The report added:
In actuality, this isn’t the first time that Yang Chao has speculated on coins. Prior to the banning of ICO’s and cryptocurrency trading platforms, his losses already exceeded two million yuan. Yang Chao feels that the ICO ban launched by the central bank has not had any effect whatsoever on investors like himself.
This only shows that Yang has been making poor financial decisions for a while now. However, we must assume that he has been following that old crypto adage that you should only invest as much as you can afford to lose. I mean, he has been an “investor” for a while now, right? Which means that he is obviously following this advice, right?
Too Quick to Jump on the Bitcoin Bandwagon
The report went on:
In the less than ten years since their emergence, the price [of Bitcoins] has exceeded 120,000 yuan. Given such a mad increase, the allure of becoming rich overnight has attracted a large volume of investors.
Ah, therein lies the problem. Ill-informed investors, or those new to crypto trading, are putting all of their eggs into one crypto basket with the aim of becoming instant millionaires while not taking into account the volatility of the market.
Do Your Homework
In its infinite wisdom, the report continues:
Because countries lack effective regulation, capital can use the game of rising and falling prices to readily make off with the funds of small investors. These types of operations are easy to do on the current market where there is a large volume of new cryptocurrency issues. The lack of openness, the lack of transparency, the instability of prices, as well as the expectation amongst investors that they will become rich overnight, has magnified risk on the virtual currency market.
Firstly, decentralization is all about openness and transparency. Secondly, unpredictable prices are not a secret, platforms like CoinMarketCap are there to show the pricing highs and lows that these virtual currencies experience.
It seems that the issue is not cryptocurrencies at all. It is investors that look to Bitcoin and the like as get-rich-quick schemes instead of doing research, applying due diligence, and using common sense before parting with their hard-earned money.