After weeks of gains, the price of bitcoin fell back today, dropping roughly 6% on unconfirmed reports that Chinese regulators may soon take measures to restrict domestic exchange activities.
First reported by Bloomberg, the news source is said to have published a report detailing how Chinese officials could soon prohibit domestic bitcoin exchanges from moving certain volumes of bitcoin and other digital currencies abroad.
Of note, the article alleges, are concerns that bitcoin exchange users may be buying bitcoin on local exchanges and selling abroad, thereby evading foreign exchange rules.
Price declines began at 15:00 UTC, seemingly coinciding with the spread of the news across social media. The price would fluctuate wildly over the course of the day’s trading, rising to a high of $744 and falling to a low of $677.
But given the uncertainty surrounding the news, some analysts said the market was likely using the reports as an opportunity to capitalize on a pending market panic.
Adamant Research’s Tuur Demeester told CoinDesk:
“It’s one of those things where a news article is really just an excuse for traders to sell instead of buy.”
Other analysts reported that similar behavior was likely given that fake news about China has often been used as way to encourage speculative market activity.
Such comments recall the height of bitcoin’s price climb in 2013, when the news that China would perhaps “ban” the digital currency caused steep market declines.
“We’ve had China scares like this so many times,” Chris DeRose, the host of a popular bitcoin podcast, recalled.
He added: “China is effectively a black box to us here.”
Chinese coins via Shutterstock