Bitcoin plunges on PBOC ban

The price of Bitcoins slumped on Friday, reacting to the move by the People's Bank of China to ban financial institutions from using the currency.

The price of the virtual currency dropped to 6,148.89 yuan ($1,010.62) on Friday at 5 pm from Thursday's high of 7,005.01 yuan on BTC China, the country's largest Bitcoin online trading platform by trading volume.

The PBOC said Thursday that Bitcoins have no "real meaning". Market players said the central bank's warning probably dented investors' confidence, and some holders of the currency sold their Bitcoins immediately after the PBOC warning.

"I read the warning and thought that in the future, Bitcoin might not be used and circulated in many cases. Its liquidity has been dented.

"That's why I sold all my holdings for about 12,000 yuan, with a profit of 4,500 yuan," said Zhao Qun, a Bitcoin collector in Shanghai.

Other investors, however, said people shouldn't read too much into the price slump, as Bitcoin trading is still active.

"Bitcoin prices are volatile because the outstanding amount of the virtual currency is limited, the current combined investment into the market is limited and any big capital moves can make prices gyrate," said Shen Yang, a Beijing investor.

"In the past, Bitcoin prices have sometimes doubled within 24 hours or dropped more than 50 percent within a day. Judging by the price change on Friday, the value is quite stable," said a Shanghai market insider who has knowledge of the real-time trading price and volume of Bitcoins in China and the global market.

The biggest one-day gain came on Nov 19, when the Bitcoin price surged from 3,226.01 yuan at the opening to 5,888 yuan.

Shen said Bitcoins are still accepted widely by some online e-commerce platforms and some brick-and-mortar retailers.

"Basically, you can live well without paying in cash and use only Bitcoins in China, thanks to the widespread acceptance of the virtual currency," said Shen.