It’s déjà vu all over again – and perhaps even a little bit of we sort of told you so. Bitcoin’s value dropped farther yesterday (Jan. 11), hitting a low in the $750s after briefly flirting with record highs near $1,200 earlier this month.
It turns out bitcoin investors were right to be suspicious last week. The latest in a series of sudden decreases in the digital currency’s value came after China’s central bank, the People’s Bank of China, announced that it had launched a probe into major bitcoin exchanges in Beijing and Shanghai including BTCC, Huboi and OKCoin.
The People’s Bank of China (PBOC) said they were investigating possible instances of market manipulation, money laundering and unauthorized financing, though the central bank has yet to comment whether any violations were found during the probe. Current regulations limit foreign exchange to $50,000 each year, but some believe that people are using bitcoin and other digital currencies to circumvent this maximum.
The news comes just a week after the PBOC had advised investors to be cautious when investing in digital currency. The central bank’s comments come as Beijing escalates a campaign to check capital outflows, said Reuters, and slow the depreciation of the yuan.
BTCC, the major bitcoin exchange in China, had held a meeting with the Chinese central bank on Friday last week. Both the meeting and statement from the central bank led some bitcoin investors to fear China was gearing up to crack down on the digital currency.
Chinese bitcoin exchanges account for over 90 percent of worldwide trading, and over 80 percent of bitcoin mining operations are currently stationed in the nation of some 1.3 billion. A shift in Chinese demand or a sudden increase in investor concern has been shown to have a dramatic effect on the value of the popular digital currency.