Bitcoin crashes – China has rocked the cryptocurrency world once again with the announcement from Beijing that it would stop all
China has rocked the cryptocurrency world once again with the announcement from Beijing that it would stop all cryptocurrency exchange trading. This was soon followed by official notification from the country’s second largest exchange, BTC China, that it would stop all trading on the platform as of September 30. These two major announcements come on the heels of the September 4 joint release from the People’s Bank of China (PBoC), Chinese securities and banking regulators, and the Chinese government, that essentially made Initial Coin Offerings (ICOs) in that country illegal.
These are all serious storm clouds gathering over the cryptocurrency space. They seem to offer equal amounts of undisguised hostility toward cryptocurrencies and token sales, paired with a great deal of ambiguity as to where traders can continue to do business, and what happens to existing operations and registrations.
Observers have noted that by closing the barn doors inside the country, traders and miners will simply turn to external markets like Hong Kong, Singapore, and South Korea.
Regardless, such an all-encompassing pronouncement has led to a spectacular drop in the price of Bitcoin, losing 35% of its value, from a late-summer high of $5000 to around $3400 as of September 14.
Thousands of investors as well as organizations in the midst of planning or conducting ICOs find themselves rudderless, both in terms of where they will host their operations and how the volatility of the currency will affect the raising of capital.
As Bitcoin and other blockchain-based technologies gain greater prominence on the world stage, many countries and their banking representatives are taking a more serious look at their implications, and are demanding stricter controls and regulation.
The sentiment among market players remains bullish, however. It was expected that influential governing bodies like those in China would step in and take some of the heat out of the bubble, leading to speculation that such activities help correct the market back to more realistic valuation.
The Chinese ban does not put limits on all types of trading and activity, meaning that much of the business will simply move to other markets.
The obvious downside, however, is the perpetuation of volatility. Currencies like Bitcoin continue to be hard pressed to present as legitimate alternative monies when their value changes within hours. At best, companies that accept Bitcoin must do so that they convert them immediately into more stable currencies, or run the risk of losing out in substantial measure.
As it is with so many developments in the cryptocurrency space, only time will tell if the September 30 ban will have any lasting impact on the overall price of Bitcoin worldwide. Having survived the August fork, and with a number of other hurdles yet to come, Bitcoin continues to plow on through choppy waters, and continues to be the brand against which all other virtual currencies are compared.
The Chinese bans on trading and on ICOs will likely help stabilize the market and make it ultimately more reliable. It is unlikely to stop traders, even inside China, from pursuing their goals.
