Bitcoin Black Swan - Will Crypto Currencies Get Banned?

Currencies / cryptocurrency Jul 22, 2021 - 02:53 PM GMT

Whilst we can all get carried away projecting into the future based on past trends, comfortable in the reliability of calculations. However, there are always black swans lurking out of sight that could result in that panic event that few see coming. And where Bitcoin and the crypto's are concerned is if the Governments decide to BAN trading and investing in crypto's.

I know the crypto bugs will come out with statements such as it is impossible to ban decentralised crypto currencies.

However, bitcoin / crypto's threaten the fiat currency banking system that effectively the worlds central banks have a monopoly over.

So this could go one of two ways or spectrum of each.

1. The governments embrace Bitcoin and effectively nationalise it by making it an reserve asset.

2. The governments seek to outlaw crypto's and also seek to supplant the block chain technology with their own for instance the US Fed Coin, which is centralised banking. So that bitcoin and crypto's remain largely relegated to the sidelines and never achieve the dominance that crypto bugs assume as inevitable.

Cannot happen? Well India is doing that today, seeking to outlaw bitcoin!

Turkey banned crypto payments.

Thailand has ordered crypto exchanges to delist meme coins such as Doge coin.

At this point in time what is most likely to happen is a mixture of the two.

1. Bitcoin becomes a reserve asset if not for the banks then for corporations.

2. The Fed and other central banks implement their own block chain centralised crypto currencies's backed by the tax payers of the state. These coins will be palatable to the bulk of citizens of each nation.

For instance most moms and pops are going to be scared shitless when told that if you send you coin to the wrong address it is gone forever or you forget your password all your coins are lost for good!

Whereas a centralised banking system based coin offers the safety of a transaction chain so that errors can be undone which given that most people are not engaged in illegal activities will be happy with, so they get access to the benefits of crypto currencies without the risks of price volatility and perhaps as they become more educated in they will begin to use exchanges such as Coinbase that acts as a middle man that stores their crypto in various currencies in a sort of safe place as compared to personal wallets which if lost one loses all their Bitcoins on the block chain.

Whish is why I view the likes of coinbase stock as a good long-term investment as the masses have yet to awake fully to what the block chain has to offer with a lot of innovation to follow in this field over the coming years that Coinbase will profit from.

So understand this the governments will seek to make bitcoin less desirable then their fiat currencies and coming block chain versions of fiat currencies such as the US dollar. The government has a multitude of options to play with such as various taxes when people try to transact with crypto currencies i.e. buying cars or property.

The only way to capitalise on bitcoin / crypto's is to keep transactions outside of the financial system, as soon as it enters the financial system by means of a transaction that involves fiat currency then it becomes trackable and taxable. Which is why I spend the little bitcoin I mine on services paid for in bitcoins.

For me the only way a traditional bitcoin investment could work is if it can be held it within a tax free wrapper such as a SIPP or ISA. Unfortunately the government has been locking down that loophole for instance the UK has banned the holding of bitcoin / crypto funds within ISA's and SIPPs. Hence options such as Coinbase stock is so valuable in terms of gaining tax free exposure to crypto currencies.

As a reminder in the UK one can invest tax free upto £20k per year into a Shares ISA PER adult. And a total of just over £1 million in a SIPP, though effectively one would want to stop investing in a SIPP once the SIPP value gets to about half the limit, so currently about 550k. Which combined should be more than enough for most investors, especially couples. And of course any increase in the value of the home you live in is tax free.

This article is an excerpt from my extensive analysis of the crypto markets including a detailed Bitcoin price trend forecast has first been made available to Patrons:

Bitcoin Bear Market Trend Forecast 2021 and Model Crypto Portfolio Buying Levels

Investing in the Tulip Crypto Mania
Bitcoin Price Trend Forecast Review
Lessons Learned
Cathy Crypto Wood's View on Bitcoin
BITCOIN HALVINGS TREND TRAJECTORY
Stock to Flow Infinity and Beyond!
Bitcoin, Crypto's and the Inflation Mega-trend
Black Swan 1 - Will Crypto's Get Banned?
Black Swan 2 - GOOGLE
Black Swan 3 - USDT Tether Un-Stable Coin Ponzi Schemes!
BLACK SWAN 4 - Bitcoin 51% Network Attack by China?
Black Swan 5 - Bitcoin is Already Obsolete
US Trending Towards Hyperinflation
BITCOIN TREND ANALYSIS
Bitcoin Bear markets analysis - How low could she blow?
Bitcoin Trend Forecast
Bitcoin Long-term probable Next bull market price target
Alternative Scenarios
My Crypto Bear Market Investing Strategy
Crypto 1 - Ethereum (ETH) $2600
Crypto 2 - Bitcoin $40,375
Crypto 3 - Ravencoin $0.078
Crypto 4 - Cardano $1.59
Crypto 5 - Pokadot $25
Crypto 6 - ChainLink $26
Crypto's 7 to 10
Creating The Perfect Crypto
How to Invest in Crypto Without Getting SCAMMED
CHIA SCAM COIN
Binance vs Coinbase
Have ARK Invest Funds Bottomed?

Which was first been made available to Patrons who support my work. So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

For crypto trading and investing see Binance for 10% discount on trading fees - Discount Code LZ728VLZ

For managing your crypto's see Coinbase

For GPU mining check out Nicehash (affiliate links).

Whilst my more recent analysis is focused on the risks of Financial Crisis 2.0 - Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH!

And then AI forecasts tech stock prices 3 years forward - AI Predicts AI Tech Stock Price Valuations into 2024, Time to Buy Chinese Tech Stocks?

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AI Predicts AI Stock Valuations 3 Years Ahead..
More X10 Biotech Tech Stocks - 60% done
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US Dollar and British Pound analysis
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Again for immediate access to all my work do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.\

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Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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