Bitcoin extends losses to drop below $4000 amid China uncertainty

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One important indicator of the Chinese bitcoin market's recovery which investors must acknowledge is the rapidly growing trading volume of the Chinese exchange and over-the-counter markets. And if it doesn't, will China get tougher, banning Bitcoin investment entirely?

Notably, the ban has yet to be officially announced in China, according to the Wall Street Journal.

All of this has hurt bitcoin's current trading price as, in the space of a week, it has slumped from a record high of $5,000, to $4,247 at the time of writing. Many analysts expected the release of WSJ's report to slow down the momentum of bitcoin even further.

Officials had previously considered using anti-money laundering rules to have more control over bitcoin exchanges but it seems now that they have chosen to take a stronger approach as virtual currencies have skyrocketed in value over the past year.

Exchanges including Okcoin and Huobi have already said that they received no notices from the Chinese government and that business is as usual. Momentum is rebuilding in China, despite the ongoing bitcoin exchange ban talks and the PBoC's supposed introduction of plans to suspend bitcoin exchanges indefinitely.

Cryptocurrency price September
Bitcoin has now dropped $500 after more reports China will ban cryptocurrency exchanges

Despite having less than 2 percent of the network's transactions SegWit-enabled, the solution has led to a 0.8 MB average block size, substantial drop in the size of bitcoin mempool from 150 million to 6 million bytes, and most importantly, the elimination of bitcoin blockchain congestion.

The central government's office overseeing internet financial risks has ordered local authorities to shut down virtual exchanges trading digital currencies with the yuan, a source close to the office told Caixin. Unfortunately for Bitcoin, the Chinese government is not a fan of cryptocurrencies, which are mostly traded by Chinese citizens who are hedging against falls in the yuan. However, the Chinese market has shown that it does not necessarily perceive the suspension as a threat.

Bitcoin fell Friday after reports of China's plans in Caixin magazine.

Featured image from Shutterstock.

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