Bitcoin Price Rising Despite Chinese Crackdown

china bitcoin

With the deadline for the Chinese Bitcoin exchanges to be cut off from their bank accounts upon us as of today (Tuesday), the Bitcoin price is rising.

Wait, what?

bitcoin priceAs counterintuitive as it might seem, the CoinDesk Bitcoin Price Index is up about 10% today to about $500, although Bitcoin prices rose as high as $514.72.

At $500, the Bitcoin price is up a startling 40% from the low of $355 hit on Friday when several Chinese Bitcoin exchanges received notices from their banks that their accounts would be closed.

Even the Chinese are buying again, with the Bitcoin price in yuan up about 8.4% today to 3,125 yuan – up about 38% from its lows on Friday.

Bitcoin prices plunged last week on concerns that the People’s Bank of China (PBOC) was quietly telling Chinese banks to sever ties with the exchanges by April 15 and that eventually it might even ban the digital currency.

But those fears were not realized.

For one thing, not every Bitcoin exchange has received a notice that its bank accounts would be closed, even though the deadline was today.

That includes the biggest Chinese exchange, BTC China.

“Our situation hasn’t changed. We’ve been talking to banks, the ones we have personal relationships with, and so far we’ve not received any notice to close our business with them,” BTC China Chief Executive Officer Bobby Lee told CoinDesk.

And just hours after the reports from the Chinese exchanges getting notices from their banks appeared Friday, the governor of the PBOC, Zhou Xiaochuan, made these surprising remarks at a regional economic conference:

“It is out of the question of banning Bitcoin as it is not started by central bank,” Xiaochuan said. “Bitcoin is more a kind of tradable and collectible asset, such as stamps rather than a payment currency.”

While not an official statement from the PBOC, the remarks eased the worst concerns about the central bank’s intentions.

And it started the rally in the price of Bitcoin in both yuan and dollars that picked up even more steam today as several of the Chinese exchanges were able to continue doing business unhindered.

But with no official policy statements forthcoming, the events of the past several days still leaves a cloud of uncertainty hanging over Bitcoin in China.

Here’s why that’s probably not going to change for a while…