China Just Handed Us a Bitcoin Buying Opportunity

by Greg Wilson, International Man:

Gong Yi Feng kept checking his phone. He couldn’t believe his eyes.

His portfolio losses now topped $30,000.

Retired, and with most of his assets in the stock market, Mr. Gong was naturally worried.

For nearly three years, it had been smooth sailing. The Shanghai Index had risen 127% during that time.

But in July 2015, regulators pricked the bubble.

During that time, China’s stock market was experiencing a margin lending-fueled bubble. Margin lending is a process in which brokerages lend money to customers so they can buy more stocks.

From 2013–2015, China’s margin lending grew 780%. And that powered stock market growth.

The wild growth attracted fraudsters. And Chinese regulators quickly stepped in.

First, they banned the biggest brokerages from opening new margin accounts. Then they targeted the grey market. Those markets are outside authorized channels… and a hotbed for fraudulent activity.

The crackdown on margin lending put the brakes on China’s bull market.

From its peak in June 2015, the Shanghai Index dropped 43% in less than three months.

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Nearly $2 trillion in market value vanished. And like many in China, Mr. Gong got caught up in the regulatory storm.

If you own bitcoin or cryptocurrencies, you likely feel the same right now as Mr. Gong did back in 2015.

In the last month, not only has China banned initial coin offerings (ICOs), but cryptocurrency exchanges, too.

Peak to trough, the cryptocurrency market fell 44%. Bitcoin fell 40%.

The price action is scary. But as I’ll show, regulatory bans by China don’t stunt growth in the long term. In fact, China just provided us with a buying 

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