Bitcoin fell below $7,000 this week, part of a $3,000 plunge over the last 30 days. There’s one major catalyst -- China.
The Chinese government has begun a crackdown on businesses engaged in all forms of cryptocurrency, but especially Bitcoin. The digital currency traded around $10,000 during October.
China is also the reason for October’s Bitcoin rally. When Chinese President Xi Jinping gave a speech saying his country should be more open to blockchain technology, traders took that as a buy signal. But that suggestion never made it to official policy.
Over the weekend, China’s central bank (the People’s Bank of China) announced that it would take action against digital currency exchanges and warned Chinese investors to think twice before buying the digital assets. That accelerated the sell-off.
Bitcoin’s value has always fluctuated on supply and demand. With investors realizing their hopes that China would do an about-face and embrace the coin were mistaken, there has been a rush to sell and an absence of new buyers. As a result, the value has gone into freefall.
Even after the sell-off, Bitcoin is worth about double what it was at its 2019 low when the out-of-favor digital currency fell to just over $3,100. But its value is a far cry from its all-time high in December 2017 when Bitcoin’s value reached more than $19,000.