Bitcoin Clampdown Rumors in China Suppresses Sentiment
China is rumored to be considering policies that impose drastic changes to bitcoin usage. These changes include restrictions to be placed on all of China’s domestic bitcoin exchanges that will prevent any digital currency from being moved outside of the country.
They aim to cap the amount of bitcoin that can be sent abroad, which is fueling rumors of widespread evasion tactics according to a report given by a masked journalist who goes by the pseudonym of “Tyler Durden’’ on ZeroHedge.
The article points out the correlation between the rising value of bitcoin versus the declining Yuan, “A quick look at the uncanny correlation between the decline in the Yuan and the rise in the bitcoin, confirms that the digital currency has indeed been largely used to evade capital controls.”
Durden goes on to point out the not-so-subtle hints that have been dropped in our laps recently that support these rumors. Stoking the fire wildly, notice how bitcoin’s price grew 21 percent September 2016, while the Yuan’s value has steadily declined.
This could easily be interpreted as confirmation of the allegations of Chinese investors evading the government’s financial controls. At the end of September 2016, China tightened its rules for UnionPay Co’s cards to purchase insurance products, which had been previously been a method used to move money digitally, circumventing the policies of China’s Central Bank.
This news perhaps has already taken its toll on the global market, evidenced by a roller coaster ride in bitcoin’s price today.
A stunning spike this morning showed bitcoin at $744.77 per bitcoin at 6 a.m. Pacific Standard Time, November 3 followed by a dizzying drop to $690.00 per bitcoin as of 11:55 a.m. Pacific Standard Time, November 3. This sounds extreme, but market participants should keep in mind that bitcoin’s price exactly 1 year ago was $315.00.
Bloomberg columnist Christopher Langner made a disturbing and comical prediction when he said, “Bitcoin is soon to be a thing of the past…” in an article published November 3, echoing dozens of ‘bitcoin obituaries’ that have surfaced over the years.
The jury is still out on Langer’s prediction, but realistically it is not likely that Bitcoin will vanish anytime soon, even with the rumors of China’s Bitcoin regulation.