The subject line of one recent email read, ”I invested $20 in bitcoin – see how much I made in one week” Well … the coin (pun intended!) can flip both ways. You can lose big time in bitcoins in one week also!
The price of bitcoin dropped from $4.971 on Sept. 1 to about $3,226 on Sept. 14. What happened?
Australia’s Financial Review quoted a source who said China used to have “the most favorable approach to bitcoin,” but almost overnight, it became the most unfriendly.
The 19th plenary session is scheduled to begin on Oct. 18 when new leaders for the next five years are to be picked. A lot is at stake for the Chinese Communist Party. Perhaps the clampdown on bitcoin trading is one way to ensure social and financial stability leading up to the political powwow.
For weeks, rumors abound that the Chinese government would crackdown on bitcoin exchanges. Then on Sept. 13, China's Internet Finance Association stated that bitcoin lacked a legal foundation. The next day, China’s longest running and largest bitcoin exchange, Shanghai-based BTC China, announced it would suspend its local trading service by the end of September. Its announcement was followed by two other major Beijing-based exchanges, Huobi and OKCoin, who said they, too, would cease trading by the end of October.
Rumor also has it that executives from bitcoin exchanges have been prohibited from leaving the country in order to “cooperate with the investigation” in the “clean-up” of the cryptocurrency industry.
However, just because the exchanges will no longer use the Chinese currency in local cryptocurrency trading, nor offer one-to-one trading services (confirmed in a Wall Street Journal article that the move was “per official instructions”), they will continue their international operations.
Up until mid-September, China accounted for approximately 10 percent of bitcoin trading activity globally. Therefore, some believe this local stoppage may be temporary and may resume eventually when additional regulations are in place. Until then, Hong Kong cryptocurrency exchanges are getting many queries from mainlanders wishing to list their tokens on the Hong Kong exchanges.