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Bitcoin Price Stabilizes After Rapid Losses on a Possible Chinese Crackdown

January 13, 2017 at 20:24 by Yahia Barakah

The price of Bitcoin was able to remain stable on Friday, after experiencing volatile movements in the current week on increased worries that Chinese authorities will limit access to the virtual currency.

Bitcoin started 2017 with powerful gains, which pushed the digital currency by more than 20% in the first four days of the year to break the $1,000 level as Chinese demand grew. However, investors became worried that the People’s Bank of China might be preparing for a crackdown on Bitcoin after the central bank told investors to be cautious when using virtual currencies.

The warning came as the bank held a meeting on December 6 with representatives of BTCC, one of China’s major bitcoin trading platforms. The bank stressed that Bitcoin is not a currency and cannot be used in China as a real currency. Volatility ensued in the virtual currency market following the central bank’s comment.

Five days later, the People’s Bank of China had more in store for Bitcoin traders. New investigations of bitcoin exchanges in Beijing and Shanghai were announced by the central bank. The investigations included BTCC, OKCoin, Huobi, and other main bitcoin exchanges in the country.

A statement on the People’s Bank of China website said that the investigations are looking into possible money laundering, unauthorized financing, and market manipulation. The price of Bitcoin plummeted after the announcement by more than 13%.

The virtual currency’s traders are now waiting for further signals from China’s central bank, as some speculate that the bank could limit margin trading to curb Chinese demand for the currency.

BTC/USD traded at 821.3 as of 19:50 GMT on Friday, after falling to 775.15 at 07:35 GMT. The pair opened trading today at 807.3, from 910.3 at the beginning of the week.

If you have any questions and comments on bitcoin today, use the form below to reply.

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