(Bloomberg) — China’s crackdown on cryptocurrencies is likely to increase and could even lead to an outright ban on holding the tokens, according to Bobby Lee, one of the country’s first Bitcoin moguls.
Lee knows what it’s like to be on the wrong side of Beijing: He sold BTC China, the country’s first Bitcoin exchange and at one point the world’s second largest, in the wake of a 2017 crackdown .
China has launched a new campaign against cryptocurrencies this year, taking action against miners and imposing restrictions on crypto banking and trading. The moves have fueled Bitcoin’s decline to about half way from its mid-April record near $65,000.
“The next thing they could do, the last straw, would be something like ban cryptocurrency altogether,” Lee said in an interview at his office in a WeWork space in downtown Shanghai, without explaining how a ban would be. can be enforced. “I estimate it at 50-50.”
Lee recently returned to China after spending time in the US and publishing a book, “The Promise of Bitcoin”. He is now focusing on his latest venture, Ballet Global Inc., which produces a hardware wallet that stores cryptocurrencies. Still a Bitcoin bull, Lee predicts it could end at around $250,000 this year and hit $1 million by 2025. He declined to disclose his Bitcoin holdings. Lee’s comments below have been edited for clarity and brevity:
What do you think of the current Chinese crackdown on miners?
The government realized that in order to achieve financial stability, they do not want to see an unregulated, volatile financial product traded, used and invested by the Chinese people.
China actually didn’t bother to differentiate green, renewable energy-powered Bitcoin mining facilities from the dirty coal-fired ones. So to me, that’s a sign that it wasn’t about the cleanliness of the mining, but rather some sort of higher-level perspective on financial stability for the country.
Is the government done with their measures to tackle Bitcoin?
I think they can do a few more things. China knows that it still has many companies, exchanges operating in China. So the government can kick them out. I heard rumors that they might be doing that soon, if not already.
The final straw would be something like banning cryptocurrency altogether. We have heard over the years that China has banned Bitcoin, technically that is not true. Even today, in July 2021, Bitcoin is legal to own. You may buy it, sell it to your friends or strangers. However, it’s just that you can’t do it through any platform or company because all those companies, all those platforms are closed.
When Bitcoin goes to $500,000, $1 million, China could ban Bitcoin altogether if people are no longer allowed to hold it. And that will be a lot of selling pressure on Bitcoin at that point. I set the odds at 50-50.
What advice would you give miners?
If they have capital goods, they have to sell it because it will depreciate in value over time. I know many people export these machines. North America has a huge appetite for mining machines because they have a lot of space, a lot of cheap electricity and a lot of investors willing to put their money into this hardware.
How important is the mainland Chinese market for Bitcoin?
The Chinese market for Bitcoin has always been important, but in the future it will become less and less important. China, like many of the Asian countries, has always had a population that is very interested in investing in volatile assets. And that is why Bitcoin has been very popular.
I think there will be a few more announcements in the coming months that will really stop all exchanges in China. So unfortunately trading crypto will be a thing of the past once you get past this year. And in a way, it’s a good thing for crypto, because in my heart I’ve always known that Bitcoin’s success never depended on China. Just like it doesn’t depend on a country, a group of people.
Is the Digital Yuan the Reason for the Crypto Crackdown?
The digital currency version of the central bank of RMB is not a real competition against what we call traditional cryptocurrencies like Bitcoin and Ethereum. The digital yuan is really an evolution of the existing fiat money used in China. For the most part, I don’t think the regulatory perspective on Bitcoin is driven by the impending digital RMB.
And your forecast for Bitcoin?
I am not officially giving financial advice, but personally I am confident that Bitcoin will go above $65,000 again in the second half of this year. I think it will be over $250,000 later this year.
Next year will be a bear market cycle. So we will see Bitcoin fall 50%-80% from its all-time high. I think Bitcoin will have its bull cycle every three or four years for the next few years. I expect Bitcoin to easily pass a million, two million dollars in the next 10-15 years. In fact, I predict that the next cycle will be in the year 2024 or 2025, which is when Bitcoin will cross half a million dollars and maybe even reach $1 million.
What is the next big thing in the Chinese crypto industry?
Two topics are very hot. There is decentralized finance, or DeFi, which started last year and is now the subject of non-replaceable tokens or NFTs. Personally, I think they’re both more of a hype. I think this year, with the bull market coming up, the hype is going to get stronger. I think they will rest in peace next year or the year after that. We support DeFi and we support NFTs, so I’m happy to be on the bandwagon for both.
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