From The Economist:
WHEN America sneezes, the world catches a cold. And when China bans oddball alternative investments, they plummet in price. That is what has happened to Bitcoin, which has lost around a third of its value since last night, falling below $500 earlier today from a high of more than $1,200 earlier this month. (It is now trading at around $580.) The reason for the panic is that the Chinese state has stopped financial firms from dealing with Bitcoin exchanges, which makes it almost impossible for anyone in China to buy or sell Bitcoin for yuan.
The Chinese, it seems, are worried that people may be using Bitcoin as a way to take yuan—not yet fully convertible—out of the country. They may also have concerns about its more nefarious uses enabling gambling or drug dealing. Since the Chinese have been rather enthusiastic buyers of Bitcoin of late, that Bitcoin owners took this as a cue to sell is hardly surprising. On the Reddit Bitcoin forum, the administrators have posted details of a suicide hotline as the threads are inundated with people who put their savings into the new currency.
Whocouldanode that bitcoin faced regulatory risk?
