Bitcoin Price Update LIVE: Bitcoin recovers amid China BTCC and exchange shut down

The digital currency is now sitting at around $3,500 – after racking up heavy losses since the start of the month, when the price had come close to breaking $5,000.

The Chinese government is launching a crackdown on exchanges, which is fuelling the cryptocurrency sell-off.

BTCC has now announced it will end trading at the end of the month, and it’s feared more exchange closures could come.

The world’s second largest economy previously decided to ban initial coin offerings, which are used to raise funds with new digital tokens.

The moves signal a marked hostility towards bitcoin and cryptocurrency in China.

And to make matters worse, JP Morgan boss labelled bitcoin a “fraud” that will collapse and also said he would fire staff found to be trading the digital currency becuase they are “stupid” and “dangerous”.

The comments put further pressure on bitcoin’s price.

The JP Morgan chief told an investment audience: “I’d fire them in a second. For two reasons: It’s against our rules, and they’re stupid. And both are dangerous”.

Mr Dimon said bitcoin’s epic popularity is worse than tulip bulbs, referring to speculators in Holland in the 17th century, who drove up prices of almost worthless bulbs.

Naeem Aslam, chief market analyst at Think Markets UK, said: “China’s plan to shut down the domestic bitcoin exchanges has taken a lot of wind out of Bitcoin.

“The PBOC has prepared a draft which would ban the Chinese platforms from offering bitcoin trading- a serious blow for Bitcoin.

“Remember the Asia region has massively influenced the demand for bitcoin.

“The fading geopolitical tensions are also impacting the bitcoin price.”

Other countries have also moved to regulate the market in recent weeks.

Australia recently introduced new measures targeting criminal use of the cryptocurrency and strengthened the Anti-Money Laundering And Counter Terrorism Financing Act.

And the latest move by China is now another tightening of the market.

However, the adoption of bitcoin by a number of celebrities has helped the cryptocurrency into the mainstream.

Underwear entrepreneur Michelle Mone last week announced the launch of £250million luxury property development in Dubai, priced in bitcoin – claiming the currency is the future.

Experts said Mr Dimon could now be very wrong.

Yoni Assia, co-founder and chief executive of eToro said: “Most large financial institutions are well on the road to accepting the enormous potential of blockchain technology, and many have invested significant sums in research, product development, and directly in cryptocurrencies.

“Blockchain technology and cryptocurrencies have the potential to sweep away all of today’s incumbent financial institutions.

“In the next 20 years we can expect all financial assets to move over to the blockchain.”

“Big institutions such as JP Morgan will need a plan if they are to avoid being a casualty of the financial revolution.

“Jamie Dimon’s comments were specifically about Bitcoin. Blockchain might be the big disruptive idea, but Bitcoin itself is a disruptive threat to the big banks.

“Bitcoin has a different utility from government and bank issued fiat currency.”Its popularity amongst investors over the last year is directly linked to increasing understanding of this real-world utility.”

David Coker, Lecturer at Westminster Business School, said: “While the Chinese regulator’s crackdown in Bitcoin exchanges was not surprising – China has been trying to put a stop on capital flight for several years now – its actions simply won’t be effective for three reasons.
 
“First, anyone in China with a valid public key – a large numerical value that is used to encrypt data and is generated by a software program or provided by a designated authority – can still receive and sell Bitcoin. Keys are freely available for the asking. The Great Firewall of China won’t be able to block Bitcoin traffic originating on Blockchain’s decentralised network.
 
“Second, it is well known foreign travel by Chinese citizens has surged in response to the crackdowns on capital flight. Any Chinese citizen traveling to the United States or Western Europe can easily purchase Bitcoin at any one of several thousand public ATMs selling the cryptocurrency.
 
“Third, the history of economics teaches us capital always finds a way. Financial markets exist to channel capital from where it is to where it wants to go. Much as land yields to the flow of water, regulations restricting the free flow of capital eventually yield as well. Capital always finds a way.”