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The reason why the Bitcoin price is falling today is a familiar one: China.
After climbing back to $500 last Thursday, the Bitcoin price started to tumble on news that the People's Bank of China had privately told banks and payment companies to cease all interaction with digital currency companies such as Bitcoin exchanges.
That dropped the Bitcoin price about $50, or 10%, on Friday.
Earlier today (Monday), the largest Chinese Bitcoin exchange, BTC China, announced it would voluntarily close its accounts with one of the Asian nation's largest banks, the China Merchant's Bank. That pushed the CoinDesk Bitcoin Price Index down as low as $421.08, although as the day progressed the Bitcoin price recovered to about $440.
Some insight into what the PBOC is thinking came from a statement last week by Alipay, a company that operates a PayPal-like service in China, explaining why it would no longer conduct any transactions associated with Bitcoin.
Alipay said it needed to cease Bitcoin transactions "to protect the property rights of the general public, support the renminbi's [yuan] place as the legal fiat currency, [and] prevent money laundering risks."
It's unlikely Alipay, or nay of the Chinese banks, came up with that rationale on their own. That sounds like a central bank talking.
What's unclear – and so very maddening about all this – is why the PBOC won't just come out and announce its policy on Bitcoin once and for all. At this point, the uncertainty over what the PBOC may or may not do is feeding Bitcoin price volatility more than a settled, public policy would.
At least then, the Bitcoin community would know the true limits of the digital currency in China and could adapt accordingly.
Instead, everyone has had to resort to the equivalent of reading tea leaves…
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, 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.