Bitcoin Drops $1000 Following the Announcement of Potential Ban in China

China has been causing a lot of problems in the digital currencies market and Bitcoin is the one digital currency that suffered the most. A couple of weeks ago, China banned all Initial Coin Offerings and ordered all companies to return all the money gathered by using that method. Back then, the value of Bitcoin dropped significantly but that is nothing compared to the drop that this digital currency experienced a couple of days ago. Now, China has been doing, even more, damage not only to Bitcoin but to all digital currencies in the market.

Bitcoin Spinning Out of Control

On Friday, the reports indicating that China might ban all cryptocurrency exchanges had a huge effect on the value of all cryptocurrencies. As we have said, Bitcoin suffered the most as its value is by far the biggest of all cryptocurrencies. On Friday, Bitcoin started the free fall. Considering that before those reports, Bitcoin has breached the $5,000 mark, its fall has been huge. The current value of Bitcoin is around $3600 and it has dropped more than $1000 in comparison to the value this cryptocurrency had last Tuesday.

So far, there has been no confirmation that cryptocurrencies will be banned in China and China’s biggest cryptocurrency exchanges, Huobi and OKCoin, stated that they have not received any information or order to stop trading. Besides that, China’s central bank has also kept silent about these claims which might indicate that either it is true and cryptocurrencies will be banned in China or this is false information and the market of digital currencies will continue operation without any changes.

Official Governments Looking to Bring Down Bitcoin?

The biggest problem that many countries, including China, have with cryptocurrencies is the lack of legislations that would regulate this market. However, in that case, the solution seems to be passing bills that would impose control over the market and not banning the entire aspect of the financial market. Many believe that China’s effort to make cryptocurrencies illegal is just another attempt of established structures to degrade Bitcoin and other cryptocurrencies as they have been gaining more and more power in the global financial market.

Even though, the price of Bitcoin has dropped significantly in the last seven days, there are those who claim that if it becomes official that China has banned cryptocurrency exchanges, the price of Bitcoin might skyrocket as investors from all over the world will compensate and the cryptocurrency market in the rest of Asia, especially in Japan, Korea, and the United States is enough to soften the blow that the ban will have on this market.

Only the rumors have affected the prices of Bitcoin significantly and one cannot but to wonder what might happen if this ban becomes official. While some claim that it could be the end of the cryptocurrencies’ rise, others, like a former Facebook employee and current owner of Golden State Warriors, Chamath Palihapitiya, claim that the cryptocurrency market is strong and stable enough to survive that ban. However, nothing can be said with certainty at this point and only time will tell what will be happening in this market in the near future.

Written by Ivan Potocki