The crypto world saw extreme volatility return to the market this week caused by comments from China and South Korea. In recent years, under the guidance of Xi Jinpin and his five year plans, China have emerged to be the second largest economy in the world. The promotion of free trade and the belt and road initiative, recognition and protection of Intellectual property, opening its doors to foreign investment, and continued efforts to improve human rights have all contributed to this positive state of affairs.
However, the yuan, or renminbi, are not yet traded freely and there is still work to be done before they are a fully fluid part of the the finance world, and with entry to that system comes great responsibility. Of course it's fine to govern your own country and make the rules, but when your statements affect millions of others from hundreds of countries you have to be delicate with the delivery. That does not mean weaker regulation or controls, it is just more professional and reassuring to the markets. The old method of communist control and dictatorship is not well received and this is what we have seen this week.
Perhaps a focus on spiraling debt and the potential lost revenues by fighting the techies would be wise. A failure to embrace the new monetary systems and work to make it a safer and less volatile environment for all will see China take a giant leap back after so many positive steps forward.
Watch for my next article on Leonardo Da Pisa, better know to traders as Fibonacci. A 38.2 retracement is seen as a correction and not a crash. (Sound familiar?) Amazing considering he would now be nearly a thousand years old.