The price volatility experienced by the digital currency Bitcoin reflects its sensitivity to government decisions, The New York Times The Dealbook reported. The quick moves of governments in various countries in dealing with the Bitcoin has led to a price plunge of about 60% on the morning of Wednesday, December 18 from the high it attained earlier in December. It made a bit of recovery as the day progressed.
Despite the promised status of the digital money as the first currency that will not be subject to government regulation, the report said the price swings highlighted its vulnerability to what government officials say.
Boston University Finance Professor Mark T. Williams who had been monitoring Bitcoin told The Dealbook, "This tight regulation is really counter to what a lot of folks thought was going to happen. Regulation is the future of e-currency, not decentralization as many had hoped."
In another blow against the digital currency, BTC China said that it would not anymore be accepting deposits in the Chinese currency renminbi. The largest Bitcoin exchange said on its Weibo account, "For reasons we all know, BTC China has had to cease renminbi-account charging functions." The exchange added that it would still continue to operate and that there would be no effect on existing deposits and renminbi withdrawals. From the peak price of 7,395 renminbi on December 1, BTC quoted Bitcoins at 3,200 renminbi on Wednesday, December 18.
This comes barely two weeks after financial institutions were banned by Chinese authorities from using the virtual currency. There were also a series of moves in other countries which happened before that. In the last week, the European Banking Authority and Danish, Norwegian, Australian and New Zealand authorities had also expressed their concerned about the Bitcoin's speculative nature. As a result, the warnings caused a sharp downfall in price for the currency that had risen close to 500% last month, the report said.
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