Bitcoin Tumbles as PBOC Declares Initial Coin Offerings Illegal
What’s the story?
Yesterday, Bitcoin tumbled the most since July as a result of China’s Central Bank announcing that initial coin offerings (ICO’s) will now be deemed as illegal.
What is an ICO?
An ICO, initial coin offering, is an unregulated means of crowd funding via the use of cryptocurrency. The term is often confused with ‘token sale’ or crowd sale, which refers to a method of selling participation in an economy, giving investors access to the features of a particular project starting at a later date.
Why are they becoming illegal?
ICO’s have seen substantial growth over the past year, raising over $1.6 billion. They have subsequently become a threat to China’s financial market stability, as authorities struggle to tame channels that do not fit in with the traditional banking system. Below is a graph taken from Bloomberg, displaying the significant growth that ICO’s have seen in 2017 so far.
What does this mean?
China’s bank stated that they had completed investigations into ICO’s and that there will be strict punishments for people using them in the future. The regulator at the bank said that those who have already raised the money must provide refunds, yet did not state how the money would be paid back to investors.
What was the impact?
$BTC tumbled as much as 11.4%, the most since July, to $4,300.00. The ethereum cryptocurrency was also down more than 16% on the 4th September (Figures taken from CoinDesk).
As seen from the graph below, taken from Trading Elite , the price of $BTC has crept back up slightly to 4,366.81, however, is still significantly lower than it was the previous week.
Why does this matter?
The announcement by China’s bank that ICO’s will now be deemed illegal came as a shock to many. It is, therefore, crucial to stay one step ahead of the market during this time of uncertainty in order to both protect your current investments, alongside, spot potential opportunities.
How can I do this?
That’s where trading.co.uk can help. Our AI is specifically designed to help investors gain a market edge. By scanning millions of data points every day and sorting the data to only surface the most relevant and up to date information, users can rest assured they will always be one step ahead.
Author- Becki Leighton from Trading.co.uk