The price of bitcoin has fallen about $120 over the last few days on news that the PBOC was cracking down on Chinese citizens using bitcoin.
We don’t think that these Chinese capital controls will have a long-term effect on either the price of bitcoin or the availability of bitcoin.
Here’s our brief take on why.
The number one most newsworthy item when it comes to bitcoin over the last year has been China. The fact that the country has imposed capital outflow controls and the fact that bitcoin exchanges in China make up numbers as high as 90% of all bitcoin trading mean that the country has a profound effect on how the price of the digital currency acts. Spikes and pullbacks in the price of the currency are usually almost always immediately attributed to China and these past two weeks have been no different.
The price of bitcoin has fallen about $120 over the last few days on news that the PBOC was cracking down on Chinese citizens using bitcoin to get cash out of the country.
Bitcoin has continued its fall today, now trading at about $960. Bloomberg reported,
China’s three biggest bitcoin exchanges took steps to prevent withdrawals of the cryptocurrency amid pressure from the nation’s central bank to clamp down on capital outflows.
BTC China subjected all bitcoin withdrawals to a 72-hour review, while Huobi and OKCoin suspended them completely, the three venues said in separate statements on Thursday. They all said the measures were in response to central bank requirements. Conversion to and from the yuan is not affected and the curbs will be dropped after updates to compliance systems, the exchanges said.
Exchanges have seen volume fall and price has fallen presumably as a result of the bid of a substantial amount of Chinese buyers falling out from underneath the market. This has a lot of bitcoin owners and traders guessing about whether or not the future of the digital currency may be at risk, simply because one of its largest proponents may continue to be extremely strict about how bitcoin is treated in China.