Bitcoin has always been a volatile currency, although most of those large price swings had quieted down over the past few years. Unfortunately, the price has been dropping all day steadily. The People’s Bank of China issued a new statement regarding the usage of Bitcoin in the country and allegedly targeted BTCC in their comment. Things are not as bad as some people want others to believe, though.
PBOC Hints At Bitcoin Volatility
As most cryptocurrency enthusiasts are aware of, Bitcoin is not legal tender in China. That has never been much of a problem, even though the PBOC “forbade” payment processors from dealing with Bitcoin companies back in 2013. Ever since that time, the bank has not mentioned Bitcoin in a way that affected the price negatively. That was, until today.
Rumors started circulating on the Internet as to how China’s largest exchange – BTCC – would “have to clean up their act.” A very unusual statement, considering BTCC has been working diligently to operate in accordance with all local laws and regulations. Moreover, there has never been a hint related to any BTCC investigation either.
— Bobby Lee (@bobbyclee) January 6, 2017
As it turns it, the press release issued by the PBOC today has caused a lot of panic, even though that is entirely unfounded. The bank wants to protect Chinese consumers from financial harm and merely hinted at the market volatility present in cryptocurrency. Their reference to BTCC is how all citizens need to be aware of the current policies on cryptocurrency, and the risks involved with trading in volatile markets.In essence,t he “warning” is nothing the world has not heard before, and a confirmation that Bitcoin isn’t legal tender in the country.
Unfortunately, this type of news can cause quite a bit of panic. It all depends on Chinese and international media outlets report the news. If the translation of the original text goes awry, or journalists leave out an important factor, the message can become very scary rather quickly. Thankfully, it appears there is nothing to worry about, and China has no immediate plans to curb Bitcoin transactions or exchanges.
That being said, the Bitcoin price took a serious nosedive earlier today. Across the Chinese markets, losses of over 2,000 CNY were noted this morning, and the price has not recovered since. On the USD market, the price dipped well below US$875 around noon but has recovered to above US$900 once again. The Euro market seems a bit more bullish on Bitcoin right now, although buy support is still rather thin until we reach the 800 Euro level.
It was to be expected the Bitcoin price would see its momentum falter at some point. A very strong uptrend over the course of one week is bound to have market repercussions sooner or later. For now, the price correction caused a lot of volatility, but things are slowly starting to stabilize. That doesn’t mean there will be no further volatility in the coming days, though.
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