The price of Bitcoin has been growing steadily in what seems to be a recovery from the setback it suffered on Wednesday, January 18 following reported allegation of irregularities in the operations of major exchanges in China by the People’s Bank of China (PBOC).
Officials of the Bank had met with key exchanges – BTCC, OKCoin and Huobi – on January 11 to remind them of their responsibility to conduct their activities according to the laws of the country. The news of the meeting dipped the price of Bitcoin from the $916 range to as low as $761 due to panic selling which emanated from fears that the onsite inspection could jeopardize investment in the digital currency.
However, after a review of messages from all indications – the PBOC, the exchanges and cryptocurrency insiders, nothing new came out of what was misconstrued for a ban in some quarters aside reiterating what the Chinese government had earlier established about Bitcoin and other digital currencies not being legal tender in China.
It is not new for a ban on cryptocurrency-related activities to come to mind when it comes to China as the country is estimated to be handling about 90% of the world’s Bitcoin operations and holdings. This is a view that has been held for long and hinged on the need for the digital currency’s distribution to be considered a geopolitical risk exposure.
The PBOC’s involvement in bitcoin trading could lead to regulation of the industry.
Rather than a ban in this instance, the government called for a “self-examination” which, in retrospect, means the exchanges and other stakeholders’ need to manage the digital currency’s price fluctuation responsibly owing to the price sudden rise in the first few days of 2017.
The CEO of Decent, Matej Michalko, blamed the “bad players” for the situation. He says in a chat:
“The heated discussion about BTCC compliance with People’s Bank of China showed a palpable misunderstanding of context. The point was to adopt the set of regulatory policies called AML/KYC, that calls for detailed anti-corruption due diligence information sharing and anti-money laundering. Bitcoin came under fire because of the outright abuse of the technology. Various people avoided capital outflow laws and transferred large sums of money, what grabbed the attention of financial agencies. Fault isn’t precisely on the state, nor currency itself, but on the bad players.”
The Chinese government’s expressed concern seems to indicate that it wants to see the price of Bitcoin remain stable. And that was what has been seen in the market for the following days. After the dramatic drop, the price started building up again from January 13 moving between the $801 and $831 range for four days when Theresa May’s speech on the Brexit plan triggered interest in Bitcoin.
It gained more than $80 in the less than 24-hours that followed until the news came out that the results of the PBoC probe into China exchanges would be released on Friday, January 20. The $913 height was back to $864 but has been climbing back to $877 (according to CoinMarketCap) as at the time of this writing.
While it is clear that China has not come down hard on Bitcoin and its recent involvement could be seen as a legitimate concern that could obliquely publicize Bitcoin as recognized by the government, what would happen in the next few days would be critical for Bitcoin owing to the caution that is being exercised presently by the three most influential exchanges in China as well as observing Bitcoin investors.
It is unclear whether the price stability that is currently at play will be sustained for longer to bring about the real growth that is anticipated in the long term based on predictions that 2017 would be a better year for Bitcoin. However, what is clear is that the quick spike to over $1000 in the first five days of the year has put all the major stakeholders on alert and we just have to wait to see what the year would bring for Bitcoin.
Image from Shutterstock.
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