Chinese Bitcoin Investors Fret as Value of Virtual Currency Plunges

By AUSTIN RAMZY

The virtual currency Bitcoin has taken a sharp tumble in value since Chinese regulators moved to restrict its usage. That has created no small amount of grumbling among Chinese Bitcoin buyers, who have been some of the most enthusiastic investors in the digital money.

“The drop in Bitcoin’s value in the last few days has been terrible, I’ve felt really uncertain,” an investor surnamed Chen told The Securities Times, a Chinese financial newspaper. Mr. Chen said he had bought five coins recently at a price of 3,100 renminbi, or about $510, apiece. On Wednesday the value dropped to three-quarters of that. “I thought I’d make a little short-term investment,” he said. “I didn’t think I’d lose money.”

On Wednesday, BTC China, the country’s largest Bitcoin exchange, said it had been told to stop accepting deposits in Chinese currency. The announcement was the latest in a series of steps that have restricted the ability to buy and use Bitcoins in China. The country’s leading third-party payment processors were told on Monday by the central bank to stop accepting the currency, according to Chinese news reports. And on Dec. 5, the People’s Bank of China and other regulators ordered traditional financial institutions in China to stop Bitcoin transactions.

Those moves have raised widespread doubts in China over the virtual currency, which saw values climb to 7,395 renminbi, or $1,218, on Dec. 1. After dropping to 2,300 renminbi late Wednesday, the price for a Bitcoin quoted by BTC China recovered slightly to around 3,000 renminbi by Thursday afternoon.

Chinese economists had warned investors about the risks inherent in the virtual money.

“When it comes to Bitcoin, early on I said that ordinary people should stay far away from it,” Yi Xianrong, an economist with the Chinese Academy of Social Sciences, wrote on his Tencent Weibo microblog after the central bank began making moves to restrict Bitcoin in early December. “It’s not a real currency — it doesn’t have a guarantee of creditworthiness. The risks are very high, and if ordinary people play the market they’re on their own. The central bank announcement told us what would happen with people who thought they were going to get rich quick and just got burned.”

One Chinese Bitcoin investor bought 10 Bitcoins when the price was at 2,000 renminbi each after seeing friends earn good returns, The Economic Daily News reported. “After half a month or so the price climbed to 7,000. It was unexpected and I was so happy. But I didn’t sell them. I thought, even if it dropped a little, I would still be ahead,” the investor, who was identified only by the surname Xu, told the paper.

Some Chinese media outlets said the website of the People’s Bank of China was inaccessible for a short period on Wednesday afternoon, and said it might have been the target of a hacking attempt launched in retaliation over the moves to restrict Bitcoin use. The Beijing Times newspaper quoted a bank representative who confirmed that the website had been down but was operating normally by 6 p.m. The bank representative offered no explanation as to the cause of the temporary problem.