Value of Bitcoin Drops as China Bans Initial Coin Offerings. Yesterday, the financial market has been shaken up by the news from China that says that the Chinese government has decided to put an end to raising funds through Initial Coin Offerings which is a move that rarely anyone could have predicted. The official statement from the Chinese government says that the main reason for such an action was the fact that Initial Coin Offerings were involved in too many scams and frauds and that too many people have become victims of that kind of business.
Because of that, China banned ICOs and the companies that have already collected certain amounts of money through ICOs will have to return the total amount of that money in order to protect the investors and their interests. The digital currency market has not suffered that big blow in a long time and it was expected that the value of every digital currency will be going down as a consequence of that action by the Chinese government.
It did not take a long time for the market to react as the value of all digital currencies including Bitcoin dropped significantly in the first hour after this news was reported. The drop in value occurred despite the fact that China has never mentioned Bitcoin or any other digital currencies in this campaign. They have focused their efforts only on ICOs and never involved any specific digital currency in this issue.
This week, Bitcoin has reached the record-breaking value of $5,000 which is another milestone for this digital currency. Unfortunately, the news about China banning ICOs came only hours after Bitcoin reached that milestone and as soon as the news spread, the value of Bitcoin started to drop. Eventually, the value of Bitcoin would go down $200 and it would take a long time for the prize to become stable again.
However, only a day after the drop in the value, the price of Bitcoin started to go up once again which indicates that the fact that China never mentioned Bitcoin in their statements played a huge role. Even though some were very worried about the drop in the value of this and other digital currencies, many experts are emphasizing that it is just a reasonable answer of the market on the news from China.
The value of digital currencies has not reached the level they had on Sunday, a day before China revealed that news, but it seems that they will be coming back to those rates within just a couple of days. However, China is not the only country that announced their actions against ICOs. Other countries in the world have also announced new regulations about this issue, including the United States.
Because of that, many experts believe that the value of digital currencies will go down as soon as some other countries announce those regulations. However, the biggest drop is expected when and if the United States decided to impose regulations because nobody is sure how big control the government will have in this market. However, it does not seem that any of those countries is actually close to passing those regulations and because of that experts believe that Bitcoin will be hitting new peaks very soon.
Written by Vedran Ostojic
