Bitcoin’s Price Volatile at $900 as China Concerns Linger
Bitcoin prices experienced intense price volatility on 9th January, continuing a trend that’s been the new normal since late last week.
Prices fell nearly 5% in less than two hours across global exchange today, declining from an opening price of $913 to a daily low of $878, according to CoinDesk USD Bitcoin Price Index (BPI) data. After falling, bitcoin prices rose roughly 3.4% to $908.37, before tapering off again below $900.
The continued market volatility comes in the wake of new concerns that the Chinese government may impose further restrictions on the digital currency.
Recently, the People’s Bank of China (PBOC) met with representatives of Chinese exchanges OKCoin, Huobi and BTCC, though the details of what was discussed in the meetings, as well as the history between the two camps, remains largely veiled.
What we do know is that the PBOC released two separate statements to the public on 6th January, which both quoted a 2013 government document warning that bitcoin is not a currency and that interested investors should be sure to weigh all relevant risks.
Separate reports have stated that the PBOC may have imposed (or otherwise reinforced) their desire that the exchanges limit marketing and enforce know-your-customer and anti-money laundering rules.
These moves have provoked memories of 2013, when bitcoin’s sharp price gains prompted China to tighten restrictions on the digital currency.
Causing confusion is now what appears to be a divide between what is being reported by local Chinese news sources and the exchanges themselves.
China Securities Journal, for instance, reported today that domestic regulators were considering a “third-party hosting platform” to protect investors, according to a prominent local Twitter news feed.
Representatives from major bitcoin exchanges, however, continue to indicate that the meetings were ordinary, with one exchange employee calling the articles “conjecture”.
In comments to CoinDesk, Star Xu, CEO and founder of bitcoin exchange OKCoin, confirmed that he was present at the 6th January meeting, but stated that the exchange would not be making changes to its operations based on the conversations.
Xu told CoinDesk:
“OKCoin conducts multiple risk-based measures, including screening users, seeking proof of funds, attesting proper use of the trading platform, verifying ownership of their bank account, and when necessary, rejects their trading capabilities of users who do not satisfy OKCoin’s risk-based controls.”
Elsewhere, both OKCoin and BTCC distanced themselves from reports that suggested they were under additional scrutiny due to the potential of capital flight.
As for how the the developments will impact markets ahead, market participants seemed uncertain.
Angel investor Chandler Guo, for instance, said that he believes this is “just a start” to what could be other activities from the Chinese government to crack down on bitcoin trading, though he did not add any perspective on his opinion.
“Winter is coming,” he said, without elaborating further.
Other traders, include Bitcoin Core developer BTC Drak spoke to their general distrust of the Chinese government, noting that the actions seem to have occurred during a particularly positive period for the digital currency and its outlook.
“The timing was no accident. The price was going crazy, over $1000 [and it was] covered on Chinese state TV,” he said.
The comments, while unsubstantiated, speak to the general perception in the market regarding developments in China and the practices of China-based exchanges, which have previously come under fire for volume reporting practices.
Amid this environment, it’s unclear what might happen next.
Bitcoin prices alternate between periods where they are either rangebound or experiencing wild volatility, cryptocurrency fund manager Jacob Eliosoff told CoinDesk.
“We’re still in the wildly volatile mode, where minor news can trigger large moves. Sometime soon it will stabilize a bit and we should see the wall of bids and offers building up on both sides, helping stabilize the price.”
Cryptocurrency hedge fund director Tim Enneking also emphasized the key role of market dynamics, noting the sharp price gains enjoyed over the last several sessions. He asserted that bitcoin’s prior resistance levels became support because of these rallies.