Bitcoin value – and reputation – plunges after China balks

Bitcoin falls nearly 40 percent in value after Chinese Bitcoin exchange freezes deposits. Refusal by China's central bank to recognize the electronic currency calls into question whether Bitcoins are viable for international transactions.

Rick Bowmer/AP/File
Mike Caldwell rolls a stack of Bitcoin tokens at his shop in Sandy, Utah. The value of Bitcoins has fallen from $1,200 in November to some $560 today.

The value of Bitcoins on the Mt. Gox exchange plunged more than 40 percent Wednesday before recovering somewhat, in response to an announcement that the largest Bitcoin exchange in China has frozen all yuan deposits.

BTC China announced yesterday on Sina Weibo, a Chinese social media site similar to Twitter, that the exchange is temporarily halting all yuan account recharging functions.

Yesterday’s announcement came two weeks after the Chinese central bank refused to acknowledge the cryptocurrency and barred financial institutions and payment systems from selling, trading, or storing Bitcoins. That announcement sparked another crash that slashed the value from a high around $1,200 in November down to $800. 

Today’s backlash knocked the value down even further to $455, meaning that the currency has lost nearly 60 percent of its value since the November high, although hours later it was trading around $560.

“It’s not surprising to see these sorts of fluctuations,” says Ethan Mollick, a business and finance professor at Wharton in Philadelphia. “There’s nothing backing it. It’s just sort of a commodity based on hope and it’s going to be very volatile.

Despite its ups and downs, the Bitcoin had come a long way toward earning status as a legitimate currency in the past year, Prof. Mollick says. However, the vote of no confidence from China blows a gaping hole in one of the major promises of Bitcoin.

It might just be too risky even as a way to make simple international transactions without fees and government controls. 

“The narrative of Bitcoin has been that, aside from all of its Libertarian roots, one of the benefits of it is to allow the frictionless transfer of finances between countries in a way that’s not regulated by governments,” Mollick says. “I think that what this showed is that there is a long way to go before that’s true – if it ever will be.”

BTC China maintains that it will continue operations and will seek alternative means for users to recharge their accounts, according to the Associated Press.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to

QR Code to Bitcoin value – and reputation – plunges after China balks
Read this article in
QR Code to Subscription page
Start your subscription today