The price of Bitcoin today, on March 30, stands at around $464, still falling rapidly since it began its recent decline. On March 25 the price was around $588, and Bitcoin has fallen from a value of over $1000 a few months ago. The immense drop seemed to arise due to a number of internet and media rumors circulating about the legality of Bitcoin in China. The confusion is not quite over yet, and although it has been established that for the time being Bitcoin is not illegal in China, the value is still falling at a worrying rate.
On March 21 a Chinese report, which is believed by many to be fake, sent the value of Bitcoin into steep decline. To put it bluntly it plummeted. The original report, which has now been retracted, claimed that all Bitcoin transactions in the country would be stopped by the People’s Bank of China, as of April 15.
A matter of days after the original news report was declared fake the news resurfaced, this time reported as fact by Chinese media sources. These reports declared that bitcoin would be restricted to protect against crime, money laundering, and price volatility.
Whilst the reports did seem to be true, and could be feasible, the Chinese cryptocurrency exchanges denied any knowledge of this. CEO’s of the exchanges have tried to verify the claims with the People’s Bank of China, but have not had any official response. Direct evidence to prove, or disprove, whether or not there are plans in China to make Bitcoin illegal is not available, but what is clear is that all of the uncertainty is having a dramatic effect on the value which is still falling, now at around $458 (March 15).
A conference, named CoinSummit, was held on March 25 at the Yerba Buena Centre for the Arts in San Francisco. The first of its kind involving Bitcoin, many key speakers spoke on topics as wide as investment opportunity, regulator challenges, mining, and altcoin among others.. The event also provided and opportunity for Bitcoin emphatics to network and drink coffee.
Bobby Lee, CEO of BTC, a Chinese based bitcoin exchange company, made a speech where he addressed the China rumours directly. He said explicitly that “Bitcoin is not illegal in China,” and that the media should be blamed for the misconception. Instead, he tells attendees of his lecture that Bitcoin has been classified as a virtual commodity, meaning it can be spent and traded, but will not be supplemented by financial services such as loans and insurance.
The speech somewhat clears the air concerning the legality of Bitcoin in China. However, with the media in China still reporting the change, and the People’s Bank of China still to give an officially statement, the uncertainty and doubt is still lingering. As hope-inspiring as Bobby Lee’s comments were, they have not steadied the value of Bitcoin.
What the true outcome for Bitcoin in China will be is still a little uncertain. Until the People’s Bank of China makes an official statement, the air will not be fully clear. What can be discerned is that the value of Bitcoin is extremely volatile. Despite the affirmation made by Bobby Lee that Bitcoin is not illegal in China, the value of the cryptocurrency is still rapidly falling, and it could be possible that future rumours and decisions could also badly fluctuate the value.
By Matthew Warburton