Reports that the People's Bank of China (PBOC) planned to shut down the bank accounts of Chinese Bitcoin exchanges became all too real today (Thursday), as the exchanges began receiving official notices from their respective banks.
The news sent the Bitcoin price today falling as much as 12.4% to a low of $385.32, adding to the losses that started after the first rumors leaked out several weeks ago. Bitcoin prices have fallen from more than $600 in mid-March and more than $800 at the start of the year.
Two Chinese Bitcoin exchanges, BTCTrade.com and BTC100.org, said early today that they had received notices from their banks that their accounts would be closed on April 15, just as earlier reports had suggested.
While the largest Chinese Bitcoin exchange, BTC China, said it had not yet received any such notice from its banks (or the PBOC, for that matter), it appears now to be just a matter of time.
It's just the latest move from Chinese authorities to curb what it considers dangerous speculation in the digital currency.
The long descent of the Bitcoin price from its heights of more than $1,100 last fall started when the PBOC declared in mid-December that Chinese merchants could not accept the digital currency as payment for goods and services and instructed banks not to convert Bitcoin into yuan.
Fears that the Chinese government will eventually ban Bitcoin outright have led many Chinese investors to abandon it. Volume at BTC China, for instance, is down 80% from its peak.
"The people who are actively trading are few and far between," BTC China Chief Executive Officer Bobby Lee told PCWorld. "Certainly, the mainstream audience, if they ever get back in, is sitting on the sidelines."
Lee said BTC China is trying to find ways it can still satisfy customers' desires to obtain Bitcoin without violating any of the new rules.
The heads of other Chinese Bitcoin exchanges were similarly optimistic, despite the seemingly grave situation.
"OK is always here, rumor-spreaders can leave now, we already have plans for April 15th," said OKCoin's Vice President He Yi.
But even if the Chinese exchanges find a way to survive this latest blow, the implosion of the Chinese Bitcoin market will weigh down the Bitcoin price for months.
But eventually, the Bitcoin price will rise again.
About the Author
Dave has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.