Bitcoin value drops sharply in China after ban rumors
Staff Reporter
2014-03-26
An apt illustration of the bitcoin phenomenon. (Illustration/Xinhua)
A false report published on a financial news feed run by Chinese microblogging site Sina Weibo about the People's Bank of China (PBOC) halting all bitcoin transactions in the country effective April 15 has created a stir in the virtual currency market, reports the Shenzhen-based Securities Times.
The report claimed that the central bank issued a notice on March 18 calling for all bitcoin transactions to be halted by April 15. However, the bank subsequently denied the statement on its official microblog.
The bank had previously stated in a notice issued in December 2013 that bitcoin was simply a virtual commodity and had no legal status or monetary equivalent and should not be used as a currency. It further stated, "Ordinary members of the public have the freedom to participate in bitcoin transactions as a kind of commodity trading activity on the internet provided they assume the risks themselves."
The central bank's position on the currency is important as it has a direct impact on the domestic bitcoin market and even the entire virtual currency market, the paper said.
After the rumor surfaced on March 21, bitcoin prices across China's biggest exchanges dropped by nearly 10% within an hour after the market opened and fell to the 3,300 yuan (US$530) mark. Trading prices on the website of Chinese bitcoin exchange Huobi also sank from 100 yuan (US$16.10) to 1 yuan (US$0.16).
As of March 23, China's bitcoin prices had rebounded to about 3,500 yuan (US$560), while litecoin prices had recovered to 95 yuan (US$15.30).
Investors told the newspaper that if the rumors may have been spread as a money-making scheme, so the instigators could rake in larger-than-expected profits due to the price fluctuations. The investors added that the government should come up with comprehensive rules about regulating virtual currency trading platforms.
Meanwhile, the security of bitcoin trading platforms has become a major concern in the market after the Huobi site recently reported that it has "fended off" a large number of DDOS attacks, the paper said.
