Bit­coin value plum­mets af­ter China or­ders halt to trad­ing in e-cur­rency

The Guardian - - FINANCIAL - Ru­pert Neate

The value of bit­coin col­lapsed be­low $3,000 (£2,200) at one point yes­ter­day af­ter Chi­nese author­i­ties an­nounced a crack­down on the dig­i­tal cur­rency.

The value of the cur­rency, which emerged in the af­ter­math of the 2008 fi­nan­cial cri­sis, fell as low as $2,972 yes­ter­day – a drop of 40% from a high of $5,000 ear­lier in the month - be­fore re­cov­er­ing to about $3,600 in the af­ter­noon.

The drop came af­ter Bei­jing or­dered cryp­tocur­rency ex­changes to stop trad­ing and block new reg­is­tra­tions, be­cause of fears that in­creas­ing num­bers of con­sumers pil­ing into the mar­ket could spark wider fi­nan­cial prob­lems.

“All trad­ing ex­changes must by mid­night of 15 Septem­ber pub­lish a no­tice to make clear when they will stop all cryp­tocur­rency trad­ing,” the gov­ern­ment no­tice said, ac­cord­ing to Se­cu­ri­ties Times, a Chi­nese state news­pa­per.

BTC China, one of the biggest Chi­nese ex­changes, said on Thurs­day that it would stop all trad­ing by 30 Septem­ber. Other ex­changes, in­clud­ing OkCoin and Huobi, an­nounced clo­sures yes­ter­day.

China ac­counts for al­most a quar­ter of bit­coin trades and is home to many of the world’s biggest bit­coin min­ers, who use huge amounts of com­put­ing power to make trans­ac­tions in the dig­i­tal cur­rency.

Us­ing bit­coin al­lows peo­ple to by­pass banks and tra­di­tional pay­ment pro­cesses to pay for goods and ser­vices di­rectly. Banks and other fi­nan­cial in­sti­tu­tions have been con­cerned about bit­coin’s as­so­ci­a­tions with crime, and it has not been adopted by any gov­ern­ment.

The dig­i­tal cur­rency’s value had soared more than 700% in the year to the end of Au­gust. But it came un­der pres­sure this week when Jamie Di­mon, the chief ex­ec­u­tive of the biggest US bank, JP Mor­gan, warned that the cur­rency was “a fraud”.

Di­mon said he would fire “in a sec­ond” any­one at the in­vest­ment bank found to be trad­ing in bit­coin. “The cur­rency isn’t go­ing to work. You can’t have a busi­ness where peo­ple can in­vent a cur­rency out of thin air and think that peo­ple who are buy­ing it are re­ally smart,” he said. “If you were a drug dealer, a mur­derer, stuff like that, you are bet­ter off do­ing it in bit­coin than US dol­lars.”

Alex Gure­vich, a for­mer JP Mor­gan ex­ec­u­tive, re­sponded on Twit­ter, say­ing: “Jamie, you’re a great boss and the GOAT [great­est of all-time] bank CEO. You’re not a trader or tech en­tre­pre­neur. Please, STFU [shut the fuck up] about trad­ing.”

David Coker, an ex­pert in bit­coin at West­min­ster Busi­ness School, said it was sur­pris­ing that Di­mon at­tacked bit­coin as JP Mor­gan was work­ing on its own cryp­tocur­rency, called Quo­rum. “One can’t help but won­der if Mr Di­mon’s com­ments re­gard­ing cryp­tocur­ren­cies would ap­ply to JP Mor­gan’s own of­fer­ings, should they come to mar­ket.”

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