Bitcoin down a further seven per cent as poor week worsens

Comments from the People’s Bank of China likely responsible for recent drop off

The price of Bitcoin (BTC) has fallen significantly in the past day, wiping hundreds of millions of dollars off its value.

The currency fell 7.25 per cent in morning trading, to stand at $7,170.53, a level not witnessed since May. Ethereum (ETH), Bitcoin Cash (BCH) and Ripple (XRP) were down 8.78 per cent, 9.28 per cent and 4.43 per cent respectively.

Market analysts are unsure as to what has caused this crypto-wide drop off and are similarly unsure as to how long or how deep it will go on for, though some believe that comments from the Chinese government were responsible for triggering this crash.

In recent weeks, the price of Bitcoin has surged, as comments by Chinese President Xi Jinping suggested that the company’s ban on the currencies could be loosened. Xi’s call for China to “seize the opportunity” offered by blockchain technology increased traders’ hopes that regulations against cryptocurrencies would soon be lifted or lessened.

However, comments from the Chinese central bank, the People’s Bank of China (PBoC) have dashed these hopes. The Bank stated: The PBoC stated: "Once [bitcoin or cryptocurrency trading] is discovered, it will be disposed of immediately, and it will be prevented from happening early.”

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China banned cryptocurrencies around seven years ago, stating that the currencies represented a decentralising threat they pose to the state monopoly on the money supply and therefore power.

The PBoC said that Xi’s recent comments about blockchain should not be misinterpreted as support for the currencies themselves, maintaining: "Recently, in the process of promoting blockchain technology, virtual currency speculation has shown signs of rising. Investors should be careful not to mix blockchain technology with virtual currency.”

FURTHER READING: Chinese president labels cryptocurrencies ‘financial fraud’

FURTHER READING: Financial experts back bitcoin to outperform the S&P 500 in 2020

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