China Central TV has run an investigatory news story on the perils of cryptocurrency speculation, warning that a bubble continues to brew on the market for blockchain-based money.
According to the news report entitled “Blockchain Cryptocurrency Bubble Accumulates” (区块链”代币泡沫堆积), the crackdown on cryptocurrencies that kicked off last year with a ban on initial coin offerings has done little to deter the enthusiasm of China’s speculative retail investors.
It cites the example of a cryptocurrency investor (杨超) named Yang Chao, who has lost tens of millions of yuan since the start of the year with mistimed bets on Bitcoin.
“In actuality, this isn’t the first time that Yang Chao has speculated on coins,” said the report. “Prior to the banning of ICO’s and cryptocurrency trading platforms, his losses already exceeded 2 million yuan.
“Yang Chao feels that the ICO ban launched by the central bank has not had any affect whatsoever on investors like himself.
“Yang said that investors like himself are far from few in number…the main reason that he invests in cryptocurrrencies is that the prices undergo large-scale fluctuations.
“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.”
The report concludes with a stern warning on the perils of speculation in blockchain-based virtual currencies.
“Even if there are no projects backing coins made of air, as long as capital is willing, there is still the possibility of large-scale gains in prices.
“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 are 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.”