Regulatory strikes again, what about the market outlook?

# Blockchain 2021-05-23 09:31 2 10,360 Source: Tao said the blockchain

Yesterday, an important news swept the screen: at the 51st meeting of the State Council’s Financial Stability and Development Committee chaired by Vice Premier of the State Council and Director of the Financial Committee Liu He, it was clearly stated that we must resolutely prevent and control financial risks and strengthen platform corporate finance. Activity supervision, crack down on Bitcoin mining and trading behavior, and resolutely prevent individual risks from being transmitted to the social field.

In my impression, this is the first time that the regulatory authorities have clearly proposed to crack down on Bitcoin mining, so it is worthy of our in-depth interpretation.

After reading the complete news report, I think this meeting contains two meanings and one key point:

1. It is obvious that the state is to prevent financial risks and prevent all signs of financial risks that may spill over to the entire society. In terms of supervision, Bitcoin mining and trading are also one of the key monitoring areas.

2. The news also implies that supervision believes that the current environment is facing great financial risks. In order to prevent such risks from detonating and disrupting my country’s financial order, the country must take precautionary measures in advance.

3. The key point of the whole message is to “prevent individual risks from being transmitted to the social field”.

Let’s look at the second point first, and follow this line of thinking. Where does this risk come from? I think the source of this risk is mainly overseas, especially in the United States. The U.S. government released a large amount of water, which led to an overflow of funds, which pushed up the prices of almost all investment products (including Bitcoin) and commodities, and began to export inflation to the world. Once this risk is detonated, it will harm the world. Therefore, the country is preparing in advance and strictly preventing individuals from being involved in this risk, so Bitcoin mining and trading are specifically mentioned.

In fact, this kind of risk should not only be considered at the national level, individuals as digital currency investors should also consider and take precautions in advance. That is what I have repeatedly mentioned: don’t play with leverage, don’t stud, don’t invest in debt, Don’t use funds that affect your life.

With this news, each of our investors reminds ourselves that this risk is also a good thing.

Let’s look at the first point again: Why did the country clearly propose to combat Bitcoin mining? I think in addition to financial risks, another possible reason is that the state believes that some Bitcoin mining uses thermal power, which is contrary to the country’s carbon-neutral development strategy.

Finally, we must pay particular attention to the keyword “resolutely prevent the transmission of individual risks to the social field” in the news-the state is worried that the irrational behavior of retail investors will be transmitted to the society.

Regardless of the country’s policy itself, I am afraid that there will be two major changes in the entire mining industry, including Bitcoin mining:

One is that POW-based digital currency mining will migrate on a large scale, gradually moving from China to overseas; even in China, it may only exist in hydropower-based areas such as Sichuan.

Second, in order to prevent risks, mining companies may gradually face enterprises and large-capital investors, rather than open to retail investors.

Just after the news was sent, it was reported on the Internet that a large domestic mining company had begun to cancel the mining machine purchasing service provided to retail investors. In the future, the threshold of funds that may participate in mining will be adjusted very high by mining companies to block the participation of retail investors.

With this example, in the future, not only Bitcoin mining, but also domestic mining companies such as Ethereum mining and Filecoin mining may not directly open it to retail investors in order to avoid regulatory risks.

In addition to the troubles caused by this new policy, ordinary investors also face the problem of deposits and withdrawals for a long time in the industry. But in fact, it is also retail investors who are more affected by this problem.

Therefore, it seems that this industry now has an increasingly obvious signal: the threshold for retail investors to participate is getting higher and higher, and in the future, retail investors with small capital will have less and less space to find opportunities here.

The country hopes to use this rectification and rectification to allow small and medium-sized retail investors to withdraw from this field, so as to avoid social unrest caused by retail investors because of difficulties in controlling risks and investment damage.

Therefore, if we understand the country’s policy from the perspective of risk management and control, we can understand the intentions of supervision. In the final analysis, it depends on whether each investor has a clear understanding of the risks in this field and whether he can bear the various risks in this field.

Investors have a clear understanding of all these risks, including those from supervision, and it is also a test for every rational investor.