Bitcoin Prices Plummet On China Regulatory News
While Bitcoin prices have had there ups and downs throughout the years, it has recently taken what most sources are referring to as a “free fall”. And it is leaving many to wonder why the shift has been so dramatic. Why are investors finding it so difficult to hold on to this currency at such low prices? Well, the answers can be found in China–specifically, Beijing.
On Thursday BTC, China’s largest digital currency exchange which specializes in the trading of Bitcoin, announced that it would stop trading by the end of the month. This is primarily due to Beijing authorities initiating a border crackdown on virtual currencies. The announcement comes on the heels of Chinese authorities banning all fundraising for new digital currencies.
Many would assume that this would be an isolated event–that the impact would mostly be felt in China. However, it’s important to keep in mind that two-thirds of all Bitcoin issued daily is “mined” in China.
This means that there are a host of companies which have benefited from the country’s efforts. So the impact will be far-reaching, especially toconstruction firms that build Bitcoin farms as well as to equipment suppliers.
Reasons Behind The Announcement
So what caused China to make such changes? Despite it’s opportunity for growth and new developments in technology, Chinese officials are concerned that Bitcoin, and other virtual currencies like it, would allow consumers to be able to work around tight restrictions on how much money they are allowed to send overseas and eventually lead to money laundering. What makes the threat even more impending is the fact that Bitcoin is traded peer to peer and anonymously.
China has sought to counteract these scenarios. As this virtual currency has gained more popularity in the country, Chinese regulators have worked to assert more control over how it is used and traded. However, the more oversight there was, the more rapidly the trading volumes fell.
Current Bitcoin Prices
When it comes to the price of Bitcoin, there have been a significant amount of fluctuations involved. In fact, over the last eight years this digital currency has had a daily rise and fall–from being up as high as 18 percent to down as low as 13 percent. On September 2, it is reported that Bitcoin had hit a record high of around US$5,000. However, following the announcement on Thursday, the price of Bitcoin dropped more than 10 percent. Within just a matter of hours, it fell to around $3500.
According to the statement that BTC China published on the WeChat messaging platform, trading will officially stop on September 30. While many investors take the news to be a death sentence to this particular form of currency, others are hoping that the change will instead open new doors.
In fact, some argue that this new development will allow for a bigger geographic distribution in the trading and mining of online currency. Only time will tell what the Bitcoin market holds for the future. No matter which end of the spectrum investors are on, it is clear that for the moment, as it concerns Bitcoin, China is looking to head for the exits.