The price of bitcoin resurged this week after it was pummelled by series of regulatory clampdown from Chinese authorities.
According to Coindesk Price Index, the price of a bitcoin sold at $3,978 Wednesday morning, 20th September, 2017 recovering nearly 34 percent from its Friday record drop of $2,951, its lowest since early August. However, it was still about 25 percent off its high of $4,960 on September 1.
Chinese authorities have been on a spree in their bid to protect citizens from criminals that defraud investors using cryptocurrency. The Peoples’ Bank of China began the onslaught with the ban on initial coin offerings (ICOs) which many businesses had leveraged to generate funds from investors.
That was followed with the report last week by the Wall Street Journal (WSJ) that regulators in China had plans to shut down commercial bitcoin exchanges. Since then, three of the major bitcoin exchanges, BTCC, Huobi and OKCoin in China announced they would be closing shop on transactions involving exchange in the Chinese currency.
The negative news brought the price of all cryptocurrencies including bitcoin crashing. The journal also confirmed on Tuesday, the 19th day of September, 2017 that regulators have decided on a comprehensive ban on all channels for the buying and selling of the virtual currency; prompting many analysts to suggest that China could be limiting the expansion of a system that provides competition for the yuan.
Bitcoin’s travails were compounded when JPMorgan CEO, Jamie Dimon took a shot at the virtual coin calling it “a fraud” and compared popularity of cryptocurrencies to the tulip bulb mania of the 17th century and concluding it won’t end well.
The recent recovery is because investors are getting over the initial shock and realizing that China no longer dominates the market according to market analysts.
“The market is realizing that it does not really matter what happens in China anymore. The exchanges based there no longer dominate trading activities and more mature liquidity from institutional players in Japan, Korean and Europe is providing a boost to this next bull cycle,” said Aurelien Menant, founder and CEO of Hong Kong-based token exchange Gatecoin.
It should also be noted that China’s crackdown also awakened many countries’ Central banks to take decisive steps towards regulating cryptocurrencies.
Some analysts project that China could be shutting itself out of a growing global market should the bitcoin resilience be sustained. The country’s share of the bitcoin market dropped remarkably as a result of its harsh stance on businesses in the space. China now accounts for less than 15 percent of bitcoin trading volume.
