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TheStreet Open House

Bitcoin Plummets After New Chinese Restrictions

Investors who bought into bitcoins at their high of more than $1,000 are now seeing big losses if they didn't sell them at higher prices already.

The value of a bitcoin was cut in half overnight after BTCChina, the world’s largest bitcoin exchange, said it would no longer accept deposits made in Chinese yuan. The price of the digital currency plummeted on BTC China, as well as Japanese exchange Mt. Gox and U.S.-based exchange Coinbase.

Bitcoins dip below $500

On Mt. Gox, volatility appears to remain within the bitcoin market. As of this writing, the exchange listed the lowest trade of the virtual currency as around $455 and the highest as being around $750. At Coinbase, the current price was listed as around $542. Bitcoins had been trading at over $1,000 each earlier this month.

Last week a European watchdog group warned of the dangers in investing in bitcoins, highlighting the extreme volatility the market has seen. Just a single bit of news like today’s announcement from China is able to send prices soaring sky-high or plummeting to the ground.

China’s bitcoin exchange stops accepting yuan

Overnight for the Western world anyway, BTC China said it was “temporarily” not accepting deposits made in China’s currency, the yuan. On Tuesday there were reports that the People’s Bank of China met with approximately 10 big payment processors to order them to no longer work with bitcoin exchanges. A spokesperson for BTC did tell Coindesk that although it would no longer accept deposits made in yuan, users could still withdraw yuan from the exchange.

One of the reasons the price of bitcoins has soared recently is because of significant demand in China. As a result, the news from China is an especially big deal for those interested in the digital currency.

U.S. Treasury also cracks down on bitcoin

China isn’t the only nation to crack down on bitcoin-related business. On Tuesday Reuters reported that the U.S. Treasury’s anti-money laundering division reminded businesses related to bitcoins that they could have to start meeting the legal and regulatory requirements which currently affect other money transmitters.

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