There has been an increasing level of discussion within financial circles about a legislative action that may put all investors and retirees at significant risk.
A number of top economists and financial managers are concerned that on Tuesday, April 17, a ban on Bitcoin and cryptocurrency trading will be announced.
The primary concern is that the politicians who have been pushing for this legislation do not understand the macroeconomic consequences of such actions.
Those in favor of this ban are under the erroneous impression that the effect of this ban will be isolated to the cryptocurrency markets.
Economists and finance professionals, on the other hand, are concerned that the consequences of such a ban will be much worse; that it may release a “contagion” that will quickly spread to other markets in the US and across the globe.
In short, they believe that a Bitcoin crash, a drop which they estimate to be within the range of -$8,000, will crash not only the cryptomarkets, but all of the major indices as well.
And the stock indices to be affected will not be isolated to the US, as Bitcoin is an internationally-traded asset. Economists believe that Asian and European markets will also be infected by this rapidly-spreading contagion.
To make things worse, the announcement of the US ban is expected to take place overnight, when all US stock exchanges are closed.
This means that retirees and all stockholders will NOT have the opportunity to convert their stock to cash until after the first phase of the selloff.
Unfortunately, retirees will bear the brunt of this crash, as many of them rely on stock dividends and a steady withdrawal of funds for their income and livelihood.
Neither economists nor finance professionals can predict what exactly will take place on April 17. But as they are responsible for directing and managing financial strategies and portfolios for millions of Americans, the potential aftermath of such legislation constitutes a major risk management issue.
Finance professionals cannot afford to take chances when countless retirees and stockholders risk getting sideswiped by the collateral damage of this anticipated legislation.
We will continue to monitor any incoming information on this event.
For now, we urge all retirees to exercise caution with regard to their stock portfolios.