Bitcoin value drops 40 percent after more bad news from China

December 18, 2013

 


Bitcoin value on Mt. Gox over the past 5 days. (Bitcoincharts.com)

For the second time in less than a month, news out of China caused a significant dip in Bitcoin value. The price of the digital currency dropped from a high of $750 on Tuesday to a low of $455 on Wednesday morning on the popular exchange Mt. Gox, a nearly 40 percent drop. The drop appears to be related to the news that China's largest Bitcoin exchange, BTC China, was forced to stop accepting deposits in Chinese renminbi.

Chinese news reports suggest that the Chinese central bank met with more than 10 of the largest third-party payment processing companies in the country Monday, ordering them to cease transactions involving digital currencies like Bitcoin. This follows a Dec. 5 announcement from the central bank banning financial institutions from using Bitcoin. The bank argued that risks posed by Bitcoin speculation and criminals could end up hurting average Chinese consumers. After that announcement, Bitcoin value dropped 30 percent on Mt. Gox, from $1,240 to $870.

Before the government crackdown, Chinese interest in Bitcoin was on the rise. BTC China trading volume breezed higher than that of Mt. Gox, and it raised $5 million in venture funding in November.

Andrea Peterson covers technology policy for The Washington Post, with an emphasis on cybersecurity, consumer privacy, transparency, surveillance and open government.
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