BitcoinHow a China Crackdown Caused Bitcoin’s Price to PlungeGeoffrey SmithThe value of the cryptocurrency bitcoin is melting down Thursday, having dropped 20% against the dollar by midday Eastern Time in only two hours of frantic trading.The move reversed an almost equally feverish rise in recent days that had appeared to be driven by concerns that China will introduce new measures to stop its citizens moving money out of the country.China accounts for over 90% of reported bitcoin trades and around 70% of bitcoin "mining" (the production of new bitcoins through the building of blockchain that makes up the currency's infrastructure).So it's unlikely that the source of recent volatility lies anywhere else.While it's impossible to pin down the exact source and motive for the bitcoin rally, there are plenty of signs that what's going on with bitcoin is, ultimately, driven by what's going on with China's official currency, the renminbi (also known as the yuan).The renminbi has fallen sharply since November but rallied over the last two days thanks to a brutal short squeeze engineered by China's central bank to put a bit of fear into speculators.RelatedFortune 500Hackers Leaked ‘Orange Is the New Black’ Despite Receiving $50,000 RansomFortune 500Hackers Leaked ‘Orange Is the New Black’ Despite Receiving $50,000 RansomAfter nearly touching 7 to the dollar on Monday, the renminbi rallied over 2.5% Thursday to reach 6.81 in the offshore Hong Kong market.

That abrupt reversal was magnified many times over in a bitcoin market that doesn't have anything like the same liquidity or transparency as the market for official currencies.By anyone's reckoning, bitcoin was, as the analysts say, "due a correction."It had risen by 45% against the dollar since Dec.21, and by an eye-watering 521% since September 2015.Those moves are all the more striking because the dollar has strengthened against virtually every other national currency in the world in that time.The question was, what would trigger the correction?The answer appears to have been a series of nudges and winks from the authorities about the introduction of new capital controls to slow the renminbi's decline.Over the new year, the People's Bank of China, China's central bank, said that banks will be required to notify it of all cash transactions over 50,000 yuan ($7,100), down from a current ceiling of 200,000 yuan.It said the move was merely aimed at improving the monitoring of money-laundering and tax fraud.

Meanwhile, the State Administration for Foreign Exchange (SAFE) imposed onerous new reporting requirements requiring people to explain why, where and how they intend to use their annual quota of foreign currency (which is capped at $50,000 per person).While Beijing has allowed the renminbi to weaken over the last 18 months, it doesn't want a disorderly rout that would both trigger panic at home and invite fresh accusations of currency manipulation from the new U.S.bitcoin anleitung deutschPresident.The fact is, such manipulating as Beijing has done over the last 18 months has been to support the renminbi rather than weaken it.ethereum os xCapital outflows from China in the first 10 months of 2016 rocketed to an estimated $530 billion, while the country's stash of foreign reserves has fallen nearly 25% from a peak of just under $4 trillion in early 2014.payer en bitcoin en france

Analysts estimate that the PBOC spent over $34 billion in November alone to prop up the currency, and figures expected next week from SAFE are expected to show reserves dropping below $3 trillion for the first time since 2011.Chinese bets against the renminbi have snowballed since Beijing let it fall by 2% against the dollar in August 2015, the first revaluation in years.deutsches bitcoin portalAnd, as this chart shows, the renminbi and the bitcoin rate to the dollar have become increasingly closely correlated (though bitcoin's rise, in percentage terms, has of course been far more dramatic).Today, once again, that correlation was affirmed, dramatically.stripe bitcoin blogIf ever China actually tries to close down bitcoin exchanges as a form of capital control, the fallout will be truly exciting to watch.bitcoin canada quad

The digital currency markets experienced widespread price declines today, as concerns surrounding the latest developments in China motivated many traders to sell off not only bitcoin, but alternative digital assets.The development follows the PBoC's announcement today that it warned several domestic exchange operators that they must comply with regulations or risk being shut down.bitcoin botnet sourceTraders also received startling news from major operations Huobi and OKCoin that, effective immediately, they would suspend bitcoin withdrawals for one month.litecoin in cadMarkets reacted strongly to these developments, with bitcoin prices falling to as little as $942 at 14:30 UTC, a more than 10% decline from the opening price, according to the CoinDesk Bitcoin Price Index (BPI).alfred bitcoin

The digital currency then recovered, rising to $975.21 at the time of report.Yet, even after this increase, bitcoin prices were still roughly 7.5% lower for the session, BPI figures show.Even in alternative digital asset markets, the impact of the development in bitcoin was widely felt.Ether, which powers the smart contract-based platform ethereum and is the second-largest cryptocurrency by market capitalization, fell to as little as $10.67 on CoinMarketCap, down close to 7% since the start of the day.The digital token then recovered lost ground, reaching $10.92 at the time of report.Yet, even after making these gains, ether was roughly 4.8% lower for the session at time of writing.Ether classic, which was created roughly six months ago as a result of an ethereum hard fork, provided the most striking example of a price decline, dropping upwards of 20% for the day to $1.20 on CoinMarketCap, after trading at $1.47 at 12:04 UTC.The digital currency, which helps power the smart contract-based platform ethereum classic, later rose to $1.28 at the time of report.

At this price, ether was roughly 12% lower for the day.Monero, a digital currency that leverages ring signatures to help provide market participants with a high level of privacy, fell to as little as $11.83 during the day, close to 8% below the price of $12.83 at 12:04 UTC, according to CoinMarketCap.At the time of report, the digital currency had recovered slightly, trading at $11.91, still more than 7% lower for the session.The fact that digital currency prices suffered widespread declines today, and then proceeded to recover, is merely part of a broader trend, Jacob Eliosoff told CoinDesk.He emphasized that in some cases, news that bodes poorly for bitcoin "may actually help (or at least be neutral for) other major coins."He pointed to a bug in bitcoin's blockchain or a major disagreement between bitcoin developers as potential examples.However, news that causes bitcoin prices to push lower usually has the same effect on the price of altcoins, he said.The high correlation that exists between the price of digital currencies may simply be a sign of the market’s immaturity.

Bitcoin was the first cryptocurrency to scale, and has grabbed the lion's share of the total market capitalization owned by these digital assets.(In most cases, you have to buy bitcoin before purchasing other altcoins).However, several altcoins have risen to prominence by offering some compelling value not provided by bitcoin.Ethereum, whose currency ether had a market capitalization of roughly $970m at the time of report, has drawn interest by offering developers a platform where they can create applications that rely on smart contracts.Likewise, Monero, the fifth-largest digital currency by market capitalization according to CoinMarketCap, has carved out its own niche by offering a level of privacy far higher than that of bitcoin.In this way, Eliosoff and others are hoping that the "extreme correlation" that exists between the prices of digital currencies today will diminish over time as more establish singular use cases and establish unique infrastructure.As evidenced by today's moves, however, this development remains in the distance.