New restrictions from China cause Bitcoin’s price to drop once again

The People’s Bank of China has once again privately warned banks and payment companies to restrict customers’ access to bitcoin exchanges, reports indicate. The news is likely to have affected the international bitcoin price, which dropped by around $40 in the space of a few hours yesterday morning. PBOC officials held closed meetings this week with major banks and payment processors to reiterate their desire for all interaction with bitcoin companies to cease.

Bitcoin, which has recently traded under $400 and over $500, shed more than 10% of its value over the past few days, falling from around $500 to under $440, before recovering slightly. As has happened many times in recent months when it comes to Bitcoin price swings, this downturn is based in news from China. This time around, BTC China has decided to stop accepting local-currency deposits from China Merchants Bank, a large financial institution in the country. Why does Chinese usage of Bitcoin matter? It’s widely thought that Bitcoin could have a large future in the country, where government control over banking and the like might make the decentralized cryptocurrency quite attractive to the average person. If the Chinese government exerts enough pressure to all but ban its use, that potential is undercut, harming the value of Bitcoin itself.