Things are not looking all that great in the cryptocurrency markets right now. Yesterday’s “fake news” regarding Chinese regulators looking to ban all exchanges has created a lot of fear among cryptocurrency holders. This has had a negative effect on virtually all currencies in the top 20. The Bitcoin price, for example, dropped by nearly 8% on the purported news.
Bitcoin Price Drops on China Scare
It is not entirely surprising to see the Bitcoin price responding negatively to yesterday’s China news. There is still some uncertainty regarding what the regulation entails exactly. Some news sources claim all exchanges will be banned from operating, whereas other sources indicate this was just a misunderstanding based on the earlier news regarding China’s ban on initial coin offerings. It is hard to make sense of it all, but for now, major Chinese exchanges are still operating normally.
Unfortunately, a lot of damage has been done in the wake of this “news”. The Bitcoin price took a very sharp tumble, resulting in an 8% loss over the past 24 hours. Although it is not the biggest dip we have seen in history, it also shows it only takes one (potentially fake) shred of news from Chinese regulators to send the price downward. This goes to show that many people still pay close attention to what the Chinese government aims to achieve.
With the Bitcoin price having declined by 8%, its market capitalization has also taken a big hit. More specifically, the Bitcoin market cap hovers around the US$70 billion mark for the time being, whereas it was nearly US$76 billion not too long ago. Rest assured this lost value will be recovered sooner or later, as there is no way regulators can keep the Bitcoin price down for long periods of time. It’s also not the first time we have seen the Chinese trying to crash the market with news that can be interpreted in many different ways.
Luckily, it appears the Bitcoin trading volume is holding its own with relative ease. Although a lot of people will liquidate some of their assets in the coming days – until there is an official clarification of what is going on in China – the trading volume isn’t drying up. With 28 billion in 4-hour volume, Bitcoin has seen a lot of action across many different markets. In a way, it is remarkable that the price is still over US$4,200 right now.
Most of this trading volume originates from the Bitfinex exchange, which is not entirely surprising. OKCoin, BTCC, and Huobi are next up, and all of those platforms trade Bitcoin at values of US$3,900 and lower. It is evident there is a lot of negative market pressure in that part of the world, whereas other exchanges are all trading between US$4,270 and US$4.385. The Asian exchanges are certainly bringing the global market average down by quite a margin. Japanese and Korean exchanges aren’t showing such low prices right now, which could be an interesting trend to keep an eye on.
All things considered, it appears these Chinese “scares” have less of an effect every time they occur. We have seen nearly a dozen warnings from regulators regarding cryptocurrency over the past few years. Every time one happens, the price goes down for a few days before moving up again. This time, the downward momentum is far less prevalent than people would have expected. If there is any truth to this “ban” in the end, things could get very ugly very quickly, though.