Moneycontrol
Sep 14, 2017 02:36 PM IST | Source: Moneycontrol.com

Bitcoin price dips below $4,000 as ban of exchanges in China spooks crypto-street

At time of reporting, bitcoin was trading at USD 3,835 levels, as per the Coindesk price index.

Sidhartha Shukla @shukla_05sid

The price of bitcoin against the US dollar fell below USD 4,000 on September 13 and losses were extended on Thursday with the exchange rate around USD 3,800.

At the time of filing this copy, bitcoin was trading at USD 3,835-levels, as per the Coindesk price index.

The price of bitcoin is down 23 percent from its all-time high of USD 5,000 on September 2 and it has lost a total market cap of USD 19 billion since then.

coindesk-bpi-chart(1)

Other major crypto-assets, such as ethereum, litecoin, ripple and bitcoin cash, have witnessed a double-digit fall over the past one week.

dimon

While many blame JP Morgan CEO Jamie Dimon's recent remarks — on bitcoin being a 'fraud' — for this price fall, traders still believe that China remains to be the reason behind it.

Crypto traders who were short on bitcoin may have been influenced by Dimon's comments but crediting him for the entire price fall is stupid, a trader said.

Many market elites and bigwigs ranging from Nobel prize winning economists like Robert Shiller to legendary fund manager Howard Marks have spoken against bitcoin but that did not impact the price movement.

In fact, Dimon had spoken against bitcoin in the past as well.

In 2015, he had said, "This is my personal opinion, there will be no real, non-controlled currency in the world."

“There is no government that’s going to put up with it [bitcoin] for long … there will be no currency that gets around government controls.”

Almost a year after his comments, Japan accepted bitcoin as a currency and formed regulations around it. Recently, the municipality of Chiasso in Switzerland said that it will accept tax payments in bitcoin.

The crypto-community and traders don't pay much heed to such negative comments from bankers and market pundits and giving Dimon the credit for this price drop may not be wise.

It has been observed that rather than expert comments, any negative news in the past regarding the technological development or regulatory landscape around bitcoin has led to a price correction.

A few examples would be the Silk Road incident, China's initial crackdown on exchanges earlier this year and the heated scaling debate. All these instances which clouded the future of bitcoin's technological development and mainstream acceptance have led a price fall in the past and the same is happening again.

Experts believe that this is a temporary pullback due to the recent ban on initial coin offerings (ICOs) and bitcoin exchanges in China and the rally will continue once there is more clarity.

It should be noted that the country has not banned bitcoin and still allows for over-the-counter (OTC) purchase of the cryptocurrency.

The Chinese government understands very well that like the internet, bitcoin as a whole cannot be banned as it is not constrained within the borders of one nation. The best that they can do is to regulate the businesses based on bitcoin, like cryptocurrency exchanges, as a ban would allow bad actors to find means of using bitcoin through circumvention technologies.

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