The price of Bitcoin which surged to more than $1,000 last month with a peak at $1,200 dramatically drop to a low $700. The reason of this big drop was due to the announcement from People’s Bank of China to prohibit financial institution in the country from processing or insuring Bitcoin transactions. This was also followed by Baidu’s aka ‘Chinese Google’ and largest search engine to suspend the payment with the digital currency.
“Due to the recent fluctuations in the price of Bitcoin larger unable to protect the interests of users, in response to the risk of state-controlled bitcoin spirit Baidu music accelerate decision to suspend with immediate effect from accepting bitcoin buy.”
“The bitcoin market’s reaction underscores what Stanford economist Susan Athey has said–that the value of bitcoins lies in their potential to facilitate transactions. The more transactions you think can be done in bitcoins, the higher their price. Because the Chinese government’s statement may reduce confidence in bitcoin trades there, the market plunged. Bitcoins will undoubtedly rise in quoted value again, and also fall again. The one inevitability about them is their volatility, to which there’s no end in sight.”
Los Angeles Times – The bitcoin crash of 2013: Don’t you feel silly now?
Business Insider – Meltdown : Bitcoin Crashes to $576
Mashable – Bitcoin Prices Plunge after China Cracks Down on Currency