Bitcoin has lost more than half of its value in the last two weeks, as the virtual currency’s trade in China has been restricted.
Growing numbers of people had been using Bitcoin in China, but local payment companies have been blocked from providing BTC China with clearing services, the firm has claimed.
As a result, use of the virtual currency has slipped from a high of 7,588 yuan (£764) per Bitcoin towards the end of November to 2,560 yuan today, the South China Morning Post reported.
Japan-based MtGox has also witnessed a large fall in the value of the currency, seeing the exchange rate for one bitcoin dropping from $717 to just $480 in Wednesday’s trade.
Emily Spaven, editor of digital currency news site CoinDesk told the BBC that interest in Bitcoin in China has “gone through the roof” in the last few weeks, fuelling a rise in its value.
“People are getting frightened that with the new regulations the country could now drop out of the ecosystem. Going forward, it’s certainly not the end of Bitcoin, but people have been panic selling,” she said.
Bitcoin in 2014
Bobby Lee, chief executive of BTC China, explained the company will continue to run a Bitcoin exchange in China legally, while it will also still allow users to deposit and withdraw Bitcoin.
“We essentially got notice from our third-party provider today that they will discontinue accepting payments for us and new deposits,” he said.
Bitcoin’s rise and fall has been one of the major currency stories of the year, but its future has been cast into doubt by the move from China to restrict its usage in the Asian nation.
Jinny Yan, an economist with Standard Chartered bank, explained Chinese authorities are aiming to keep as many yuan within the country as possible.
He said: “They don’t want to curtail any innovation in the financial sector. However, at the moment any unexpected growth and development in channels that allow by-passing of capital controls will cause anxiety.”
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