Bitcoin has collapsed 38% since early September as China cracks down on digital assets. Within hours of each other this week, two major exchanges announced they will shut their doors: ViaBTC said it w
Bitcoin has collapsed 38% since early September as China cracks down on digital assets. Within hours of each other this week, two major exchanges announced they will shut their doors: ViaBTC said it will cease operations on September 30, and BTCChina made the same announcement the day before. BitKan, a trading app with significant user base, halted its over-the-counter transactions on Tuesday.
Behind the closures sat a ruling from China's central bank. Officials issued a blanket ban on initial coin offerings and required companies to return funds raised through token sales. The government also opened investigations into 60 major ICO platforms. The move sent cryptocurrency markets into free fall, destroying $65 billion in value. Just weeks earlier, the total crypto market had reached nearly $180 billion.
Jason English, VP of Protocol Marketing at Sweetbridge, offered a different view. "It is hard to believe that China intends to exit a market with so much potential upside. Even the apparent ban on ICOs seemed to be more of a stopgap in order to get some policies in place," he said. "If anything, this example shows the volatility of the space and that some market-makers can likely take advantage of an unclear news cycle to create a sell-off and buy back opportunity. China is practically building a cottage industry for mining and exchanging bitcoin and other cryptocurrencies," he noted.
Jamie Dimon, who runs JPMorgan Chase, delivered sharper criticism this week at the Delivering Alpha conference. He branded Bitcoin "a fraud" and said he would terminate any staffer trading bitcoin, calling it "stupid." "It's worse than tulip bulbs. It won't end well. Someone is going to get killed," Dimon told attendees at the banking industry conference organized by Barclays. "Currencies have legal support. It will blow up." The market responded to his words with a 2% drop.
Scott Nelson, CEO and Chairman of Sweetbridge, contested Dimon's position. "Bitcoin may be a bubble and it may be replaced in the future by other cryptocurrencies," he said. "But comments like Jamie's show a failure to grasp the significance of the blockchain and the power of brand in a fundamental sea of change."
Yoni Assia, Co-founder and CEO of eToro, provided a different angle. "Blockchain might be the big disruptive idea, but Bitcoin itself is a disruptive threat to the big banks. Bitcoin has a different utility from government and bank issued fiat currency. Its popularity amongst investors over the last year is directly linked to increasing understanding of this real-world utility." He continued: "Blockchain technology and cryptocurrencies have the potential to sweep away all of today's incumbent financial institutions. We shouldn't be surprised that this threat sparks extreme reactions from the industry's top insiders."
The price fell below $3,300 on Thursday. Bitcoin now sits at $3,050, a 27% decline from where the week began.
