Bitcoin takes a beating: down 50% as China cracks down (UPDATE)

19 Comments

Update 1: China’s biggest Bitcoin exchange confirmed that it is no longer accepting deposits in yuan, the Guardian reports.

Update 2: The popular US-based Bitcoin company, Coinbase, shows prices at a new recent low of around $500. The original story, with background on the crash follows below.

Remember the giddy highs of $1000 Bitcoin? That’s so two weeks ago. Lately, the virtual currency is in the midst of another of its famous crashes — or swoons if you prefer — as bad news trickles in from overseas.

Here’s a chart, via Bitstamp, that shows the latest price tumble. The currency reached a new record high of around $1,132 on December 5th but has since lost nearly half its value:

Bitcoin prices screenshot

After falling to lows of around $650 this week (it’s hard to pinpoint an exact price as rates vary significantly between various exchanges), the currency is slowly ticking up again.

The Chinese government appears to be the culprit for the currency’s latest misfortunes. Bloomberg reports that central bank officials have banned banks from clearing Bitcoin transactions, and said that all transactions in the currency must cease by Chinese New Years in late January. The announcement appears to make good on a threat from early December.

Coindesk, a news site that provides reliable accounts of the Bitcoin world, claims the China ban was responsible for a one day fall of more than $200.

Despite the recent price troubles, some US-based investors remain bullish on Bitcoin. Last week, a group of influential venture capital firms, including Andreesen Horowitz and Ribbit Capital, announced a $25 million Series B for Coinbase, a company that wants to turn Bitcoin into a mainstream payment platform.

19 Comments

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jordanhodgson

In the first paragraph (after the updates) ‘of’ is repeated twice. “…midst of another of of its famous crashes…”

joan627

how can something with such a high price tag become mainstream in america when so many can hardly afford to pay their bills ?

Damian Straton

Bitcoin will hit $10 by mid 2014. I can hear the scream BTC holders already.

Fig Legen

China shmina. As a currency and scarce commodity with an openly distributed ledger, for fast, global and low-cost transactions, bitcoin has great appeal and utility. The current price swings are disconcerting, but are influenced by the still small size of the bitcoin economy and the difficulty of trading. As this economy grows, including some institutional investing, the volitility will dampen. IMHO the patience of early investors will be rewarded.

hatman

Coindesk is very unreliable. They’ve been known to print false stories, to print paid advertisements disguised as articles and to censor comments on their site that call out their errors. Do not trust them.

David Common

Let’s hope other world governments don’t follow suit. What we need is a Bitcoin friendly bank. Richard Branson maybe???

Janne Baguette

Kevin Deselms, yes, things usually works out when the US steps in..

Kevin Deselms

Not sure why the world seems to be looking to a communist country clawing its way out of third world status to blaze the trail for the rest of us when it comes to the adoption and use of crypto-currencies like Bitcoin and Litecoin, but I think some people think that if it succeeds in China, it can succeed anywhere…which is true. But try driving in traffic or forming an orderly line in China, sometime. They are the last country in the world that should be leading the way, on this.

Time for the United States and UK to step up and do what they always do. Lead the rest of the world into the future.

POONSLAYER

Hate to break the news to you, but China is leading the world now. America and the UK have fallen behind, lost their edge.

Cheeky Lucious

China Communist? Puh-lease. I can call myself Che Guevara all I want – I am not Che Guevara. China is just a form of Capitalism. At most you would call it Socialist, but even that is a far stretch. Of course, properly naming things demand actually knowing what one is talking about.

OliGG

Only few people owns bitcoin, same for litecoin ( litecoinrichlist com ),
so it s very risky to invest in!

Kevin Deselms

For some reason, people think that they can identify ownership of Bitcoin/Litecoin by looking at the contents of addresses…which is completely wrong. Addresses are used to store the currency but those addresses can be used by any company conducting business in the currency. So Coinbase, Mt. Gox, BCT-e, BTC China, every mining pool in existence…they all use addresses to store and traffic coin.

You cannot hope to attach a name/identity to a Bitcoin/Litecoin address. I can assure you, the ownership of US Dollars is completely disproportionate to the individual citizen, too.

wtfk

Any talk of “crashes” and “taking a beating,” etc., has to be in the context of exactly what’s happened over the couple months, but especially the last three or four weeks. Bitcoin is still up for the month, and in context, at an “all time high” if you disregard the apparent response (in both directions) to China news.

If anything, the lack of a true loss and leveling off after each disappointing story shows the strength of the bitcoin. I’m not planning on selling mine any time soon, unless it goes over 1000 and stays there, at which time I might spend a couple.

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