Bitcoin Price Plummets, as PBOC Extends Bitcoin Oversight
The price of bitcoin has fallen by over $100 in a matter of minutes, fuelled by tightening regulation in China and concerns over an upcoming SEC ruling in the United States.
The digital currency, which had soared to unprecedented highs in recent weeks, fell by around 5% in early trading on Tuesday morning, to almost $1,218 per coin, from a high of $1,260 per coin after 6.00am ET.
These rough trading conditions have yet to be formally attributed to a single cause, but a number of theories are emerging about factors that could be weighing down on the market.
The People’s Bank of China today announced that it would extend recent regulation measures affecting the bitcoin market, which had until recently been considered temporary steps.
This follows the decision by a number of Chinese exchanges to implement a 0.2% transaction fee, with others clamping down on some withdrawals.
At the same time, the Securities and Exchange Commission in the United States is expected to shortly rule on the approval of three bitcoin-based funds, exchange traded instruments that would allow investors to take exposure to bitcoin investments.
While the decision from the SEC is expected ahead of a Saturday deadline, some analysts are conflating apprehension about the SEC’s ruling, alongside the events in China, with the rapid fall in bitcoin value.
For early investors in bitcoin, today’s price drop will do little to reduce the long term value of their investments. 2015 saw the price of bitcoin rise by 27%, while 2016 brought further growth of over 120% in the price of the currency.
While some will see the developments in this morning’s trading as an unfortunate reminder of the volatility at present in bitcoin markets, others will no doubt respond to the price slump by investing further in bitcoin.
With prices falling back from their recent historic ties, and little in the way of any fundamental change to the outlook for the currency for the short term, this will be seen by some as a good opportunity to buy more bitcoin in anticipation of future price rallies.
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