China plans to ban bitcoin exchanges

China might be banning Bitcoin exchanges

Bitcoin prices have tumbled over $1,000 over the past month as China clamps down on cryptocurrency. As Fortune points out, Chinese investors use Bitcoin to protect themselves in case the yuan crumbles.

It's important to note that the potential regulations will make it hard for new users to start trading, but won't have a huge impact on existing Bitcoin owners.

BEIJING-Chinese authorities plan to shut down domestic bitcoin exchanges, delivering a final blow to a once-thriving industry of commercial trading for virtual currencies, which took off inside the mainland four years ago.

The Wall Street Journal is a massively influential mainstream media publication in the global finance sector.

The latest Chinese action could push Bitcoin down even further. But, in contrary, bitcoin has recovered to over $4,200 today, with the Chinese bitcoin exchange market demonstrating high trading volumes and United States investors moving bitcoin price upwards. Owning Bitcoin and other virtual currencies would still be allowed, but users won't be able to exchange it into fiat currency online.

China might be banning Bitcoin exchanges
Bitcoin exchanges in China await clarification of shutdown talk

Given that the Chinese government and its financial regulators had not released any abrupt regulations on bitcoin, Ethereum and the cryptocurrency market in general, bitcoin price was on an ideal trajectory towards achieving the interim targets of various prominent financial analysts including Max Keiser, who have altered their short-term price target from $5,000 to $10,000. No official proclamations have been issued by the Chinese government or regulators, although some exchanges are already taking steps and indicating they have been contacted.

Despite having less than 2 percent of the network's transactions SegWit-enabled, the solution has led to a 0.8 MB average block size, substantial drop in the size of bitcoin mempool from 150 million to 6 million bytes, and most importantly, the elimination of bitcoin blockchain congestion.

The currency went into freefall on Friday, after reports that China was about to ban cryptocurrency exchanges. According to bitcoin market data provider Coin Dance, demand toward bitcoin in over-the-counter and peer-to-peer bitcoin markets such as LocalBitcoins has actually increased over the past two weeks.

That news came after the announcement on Monday to ban ICO financing that I reported here.

Featured image from Shutterstock.

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