On January 6th 2017 Bitcoin entered a steep drop in price after a rapid (and steeper) climb upwards just weeks before. At the time of publication 1 Bitcoin was worth £655.18, nearly 30% lower than it was just days ago (although worth adding that it is also up 6.5% from the same time last month). The reason for such volatility is likely due to some unsettling news coming out of both China and the USA which might hint at a cause for such shaky hands.
People’s Bank of China (PBOC)
Samson Mow, COO at BTCC (one of the largest Bitcoin mining pools in China) made this Tweet days after the price of Bitcoin sharply declined. At the same time, the PBOC announced that they were conducting investigations into the operation of BTCC and other Bitcoin exchanges – leading to widespread speculation that China was looking to heavily regulate, or potentially ban, the cryptocurrency.
Reassurance from BTCC and other key players in China has done little to abate the panic. Many in the Bitcoin community have taken a positive view of the investigations, stating that better regulation in Bitcoin markets across the world will help reduce price volatility.
With the PBOC dominating the headlines across most Bitcoin media, a little known development in the Winklevoss Brothers’ plan to launch a Bitcoin exchange traded fund may be another clue to the falling price. The deadline for the SEC to make a decision on whether to approve the ETF was set at the end of last year, but a changing climate after the US election pushed the deadline back to March 11th 2017.
After launching their Gemini cryptocurrency exchange a couple of years ago, the Winklevoss twins were considered to be headed straight towards ETF approval and a potential injection of half a billion dollars into the Bitcoin market. The outlook on the ETF was extremely positive – particularly given Bitcoin’s steady growth and adoption throughout 2016. It was not until November/December of last year that a sudden and dramatic rise in Bitcoin’s price spread doubt over the SEC’s willingness to approve something so volatile. The ETF is looking like it may not be won so easily.