Chinese news outlets reported that the government would penalize any banks dealing in Bitcoin after April 15, and the news spread like wildfire.
Over the course of about four hours, according to Bitcoincharts.com, the price of 1 BTC dropped from about $560 to less than $520. At the time of writing, the price is fluctuating between $516 and $521.
Here’s the problem: that news doesn’t appear to be true.
“We didn’t get any official announcement,” China-based OKCoin’s CEO, Star Xu, said. BTCChina’s Bobby Lee said the same.
That news caused the price of 1 BTC to drop 5% against the yuan.
Lest we forget, it was the Bank of China that brought Bitcoin down from its all-time high of $1200-plus back in December, when the central bank there told banks to stay away from cryptocurrencies. Thus, these rumors sound believable… and that’s exactly when panicking starts.