BTC Price Declines Following False Report of Bitcoin Ban in China

A false report published by Sina Weibo was responsible for bitcoin's sharp price decline across top Chinese exchanges today.

AccessTimeIconMar 21, 2014 at 3:50 p.m. UTC
Updated Sep 14, 2021 at 2:08 p.m. UTC
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Updated 15:00 GMT: Updated with commentary from co-founder of BitAngelsClub Eric Gu.

A false report published on a financial news feed run by Chinese microblogging site Sina Weibo was responsible for the sharp decline in bitcoin prices across China's biggest exchanges today (21st March).

At 10:22 am GMT, Sina's financial live feed issued a now-retracted news report indicating that China's central bank, the People's Bank of China (PBOC), would move to halt all bitcoin transactions in the country effective 15th April.

If true, the news would have interrupted a period of improved relations between the burgeoning bitcoin ecosystem and the nation's lawmakers, but coincided with the PBOC's temporary ban on QR codes issued last week.

Read the initial news statement from Sina:

"It is rumored that on March 18th the PBOC had issued a notice calling for all bitcoin transactions to be halted by April 15th. As of today the PBOC has not confirmed nor denied the statement."

The story was later retracted by the news site following clarification from Chinese regulators, in a release issued more than an hour later at 11:48 GMT on 21st March.

Read a translation of the updated post:

"Regarding the PBOC statement issued on 3/18 requesting all bitcoin transactions to be halted before 4/15, those close to the regulatory body told Sina Finance on Friday, the PBOC did issue a document, but it was not to ban/halt bitcoin transactions, instead to strengthen regulatory oversight of bitcoin transactions, circulation and redemptions."

The PBOC later took to the Weibo platform and Twitter to clarify the news.

"The report by certain media that 'PBOC has issued a document as of 3/18, requesting all bitcoin transactions be halted by 4/15' is in error. The attitude of the PBOC towards bitcoin has been clearly stated by the [5th December] document issued by the PBOC and five other agencies."

The company acknowledged the damage its report caused, noting that it "quickly caused panic in the bitcoin community", and that "bitcoin's domestic prices [were] likely to fall significantly" as a result of its error.

CoinDesk's Bitcoin Price Index indicates that the price of bitcoin was down 2%, or roughly $12 on the news, though prices were impacted more severely on China-based bitcoin exchanges.

Price decline

Sina indicated that its report caused the price of bitcoin to fall 5%, dropping from 3,691 yuan ($592.99) to 3,400 yuan ($546.24), though a closer look at bitcoin price data across the major China-based exchanges shows the damage was far worse for certain investors.

Data from Bitcoincharts suggests the price of bitcoin on BTC China hit a low of 3,301 yuan at 11:00am GMT, dropping from 3,568 in just 30 minutes.

Screen Shot 2014-03-21 at 10.33.50 AM
Screen Shot 2014-03-21 at 10.33.50 AM

BitcoinWisdom shows that China-based exchange OKCoin experienced a more aggressive fall in price, crashing from around 3,600 yuan to 3,100 and below from 10:30am GMT to 11:00am GMT.

Screen Shot 2014-03-21 at 10.40.08 AM
Screen Shot 2014-03-21 at 10.40.08 AM

BitcoinWisdom's Huobi data shows a similar decline on this exchange, from roughly 3,600 yuan to a low of approximately 3,200 yuan within the same time window.

Screen Shot 2014-03-21 at 10.40.40 AM
Screen Shot 2014-03-21 at 10.40.40 AM

Community reaction

Community members reactions ranged from begrudgingly bemused to irate, with some reddit users falling into the former camp given the fact that China's stance on digital currencies has seemingly changed frequently over the last few months.

Others suggested that the digital currency's susceptibility to such negative news is a weakness that will hinder adoption.

Screen Shot 2014-03-21 at 11.12.37 AM
Screen Shot 2014-03-21 at 11.12.37 AM

Reaction in China's bitcoin business community leaned more toward outrage at the news organization's seemingly negligent reporting.

VC investor and CoinDesk contributor Rui Ma took to Twitter to clarify the news, and voice her frustrations about the actions of the social media giant.

— Rui Ma (@ruima) March 21, 2014

Eric Gu, co-founder of BitAnglesClub, an international incubator focused on digital currencies, chose to view the events with a hint of optimism. Though, he acknowledged that they are evidence of the fragile state of China's market.

"The fact that [the] Chinese central bank swiftly came out off working hour to dismiss the rumor indicated that [it] has no plan to shutdown bitcoin exchanges any time soon."

At press time, the price the price of bitcoin on BTC China had recovered to a low of 3,519 ($565.36 at press time), though this was down from an opening low of 3,654 yuan, suggesting that the damage from the report was still impacting the market.

Shanghai skyline at dusk image via Shutterstock


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