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.
Read the initial news statement from Sina:
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:
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.
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.
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.
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.
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.
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.
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
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish, a cryptocurrency exchange, which in turn is owned by Block.one, a firm with interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets including bitcoin and EOS. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.