Indian crypto investors can be affected in the same way as the global investor. Representative image / Pixabay
The recent crackdown on cryptocurrency mining in China shook the trading prices of almost all popular cryptocurrencies like Bitcoin, Ethereum, etc. Concerns were raised about whether the Chinese crackdown will have a long-term negative impact on these currencies. However, as of today, the prices of popular currencies seem not to be dropping much, but rather going up. But this apparent stability cannot be considered guaranteed. Because, when it comes to cryptocurrency prices, uncertainties and massive drops have become the norm.
So what if China or other countries make progress in clamping down on crypto mining activities? Or, what if China completely bans cryptocurrency mining? Experts are of the opinion that even the harshest Chinese crackdown on cryptocurrency mining can have a positive impact on Bitcoin in the long run. However, there could be some implications for cryptocurrency trading in the near future.
Professor Tushar Jaruhar, a finance professor at the Jagdish Sheth School of Management (JAGSOM) says the Chinese government recently launched eYuan and gave it to 500,000 people for testing. They don’t want Bitcoin to undermine their authority and control.
However, according to Professor Jaruhar, this will not prevent people in other countries from mining Bitcoin because there are a significant number of people who believe in this cryptocurrency.
“Cryptocurrency investors are aware of how China operates and most investors would have anticipated the uncertainty due to Chinese policies. Then there will be an impact because finance and risk are interconnected, but the expectation is that it will not be significant. There is a concern about energy consumption to mine Bitcoins, but it is not clear if this will be a key reason to make cryptocurrencies less attractive, ”Professor Jaruhar told FE Online.
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Gaurav Dahake, CEO of BitBns, believes that mining operations would further decentralize and test the anti-fragile nature of Bitcoin if there were more crackdowns. No single government, institution, or organization can take control of the Bitcoin network.
“The shock will be a short-term shock and investors don’t have to worry about the drop. Most other crypto assets are proof of stake and not proof of work. Proof of work is what powers the Bitcoin network and we see more and more cleaner energy sources being used to mine Bitcoin. So I don’t anticipate that it will make Bitcoin less attractive to investors, ”he said.
Short term impact
Abhay Chebbi, pro-Chancellot at Alliance University and finance expert, says there will be a fight to change the foundations of mining. The poorer governments will be eager to welcome mining to their soil in the hope that they can extract a portion of the revenue derived from trading Bitcoin and capitalize on the IT infrastructure built into mining to attract IT jobs in the future. .
“In the short and medium term, the value of Bitcoin will stabilize when the world of cryptocurrencies finds new bases to carry out mining and adjusts to the new amount of cryptocurrencies mined (probably less than previous levels of repression). However, the long-term future of Bitcoin will not hinge on the current Chinese crackdown. Bitcoin supporters have a libertarian worldview in which money is protected from the prying eyes of governments and their central banks. Cryptocurrency loyalists will therefore not be swayed by the temporary setback. They will continue to swear by Bitcoin and other cryptocurrencies for philosophical reasons, ”said Chebbi.
Avinash Shekhar, Co-CEO of ZebPay, also believes that the impact of the Chinese crackdown on cryptocurrency mining will be temporary. “A significant amount of mining used to occur in China and with this Chinese crackdown, mining will move to friendlier countries. The current crackdown has reduced activity creating a direct impact on the markets. However, this is a temporary situation in which the repression of one nation does not affect the market in a more distant perspective. This is a knee-jerk reaction and we will have more fundamental strength in the space that will lead to sustainable growth in the future. ”
Impact on Indian investors
Sekhar said there would not be much of an impact on Indian investors. “Each country has its own demand and supply for an underlying asset and the Chinese repression does not create a direct link with the behavior of investments in India. Investment behavior is inspired by the fundamentals of the asset such as utility, acceptance (in the world), price, development, transparency, etc. It can be simply compared to how a social media ban in China does not lead to a decline. in usefulness among Indian users of the same platform «.
However, Chebbi believes that Indian crypto investors will be affected in the same way as the global investor. “In the immediate aftermath of the news of the Chinese crackdown, the value of Bitcoin took a beating and now appears to have regained some of the lost value. However, there is likely to be a new nervousness in buying Bitcoins in the future due to the fear that other governments may also crack down on Bitcoin mining, ”he said.
(Cryptocurrency tips / recommendations in this story are from the respective commentator. Financial Express Online assumes no responsibility for their advice. Please consult your financial advisor before trading / investing in cryptocurrencies.)
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