Further Slide In Bitcoin Prompted After Bitcoin Exchange Btcchina Says To Stop Trading

A further slide in the value of the cryptocurrency that left it over 30 percent away from the record highs it hit earlier in the month was started off after the Chinese bitcoin exchange BTCChina said on Thursday that it would stop all trading from Sept. 30.

As investors and speculators flocked to domestic exchanges that formerly allowed users to conduct trades for free, boosting demand, China has boomed as a cryptocurrency trading location in recent years.

But in a bid to stamp out potential financial risks as consumers pile into a highly risky and speculative market that has seen unprecedented growth this year, that has prompted regulators in the country to crack down on the cryptocurrency sector.

A Sept. 4 directive from Chinese authorities ordered a ban on so-called initial coin offerings, or ICOs – the practice of creating and selling digital currencies or tokens to investors to finance start-up projects and BTCChina said its decision was based on that directive that expressed concern over investment risks involved in cryptocurrencies.

According to industry website Coinmarketcap, a sell-off that has helped wipe almost $60 billion off the total value of cryptocurrencies since they hit record highs at the start of the month was prompted by that ban, as well as warnings by regulators in other countries, which has driven fears of a wider crackdown.

“The Chinese ban is causing a panic in the market as mixed messages and lack of clarity has turned sentiment negative,” said Charles Hayter, founder of data analysis site Cryptocompare.

“The closure of BTCChina is perhaps a portent of what the other Chinese exchanges face.”

Registration of new users from Thursday will be stopped by BTCChina, one of China’s largest bitcoin trading platforms, which also runs an international exchange out of Hong Kong, it said on its official microblog.

“We will stop all trades on the digital trading platform starting Sept. 30,” it said. However, the move would not affect trading on the BTCC international exchange, its co-founder, Bobby Lee, said.

According to Coinmarketcap, with bitcoin’s main rival ether – sometimes called ethereum – also down around 10 percent, panic also spread to other cryptocurrencies.

While the Chinese regulator is yet to make an announcement, several media claimed, citing sources, that China planned to further ban exchanges that allowed virtual currency trading.

State-run media have said, citing data from the National Committee of Experts on Internet Financial Security Technology that investors in China contributed up to 2.6 billion yuan, or $397 million, worth of cryptocurrencies through initial coin offerings in January-June.

A slide of as much as 11 percent in bitcoin on Wednesday was helped fueled by comments that the cryptocurrency was a “fraud” and was set to “blow up”, spoken as warning by Jamie Dimon, chief executive of JPMorgan, which added to bitcoin’s woes this week.

Bitcoin is on track for its worst month since January 2015.

(Adapted from Reuters)

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