We’ll start with the obvious: nobody knows for sure why the Bitcoin price moves the way it does.
But while we can’t prove causation, there are certainly correlations that suggest that what’s going on in China’s crypto scene can often have a significant impact on the Bitcoin price.
This trend may date back as far as 2013. On December 5, worldwide news broke that China had banned financial institutions from handling Bitcoin transactions. The Bitcoin price fell 20 percent, from well over $1,100 to just over $900, in a matter of hours.
In late March of 2014, Chinese finance magazine reported that China’s Central Bank had ordered other domestic banks to close Bitcoin trading accounts. Bitcoin’s price dropped 8% over the following week, The Wall Street Journal reported.
In early September 2017, Chinese regulators published new regulations banning ICOs, and reports spread that the government planned to shut down crypto exchanges. On September 15, one of China’s then-top crypto exchanges seemed to confirm this on Twitter, and announced plans to stop all trading at the end of the month. The Bitcoin price (which had already been trending downward, perhaps in response to the ICO ban) swung down more harshly, dropping more than 20% over the course of the day.
Of course, September 15 proved to be a low-water-mark. From there, Bitcoin’s price rose, and by December it had more than tripled as the bull run picked up speed.
Even in those heady days, though, negative news from China seems to have had an impact. In early January of 2018, reports spread that China was moving to ban Bitcoin mining. That didn’t prove true — many Bitcoin miners are still operating in China today — but the price dropped after the reports went global on January 6, with Bitcoin ultimately shedding nearly 25% of its value over the next four days.
China’s market continues to exert its apparent influence on Bitcoin even in 2019. As we can see at the beginning of the chart below, the Bitcoin price skyrocketed alongside Baidu searches for Bitcoin immediately after Chinese President Xi Jinping’s blockchain-friendly comments were reported in Chinese state media. And at the very end of the chart, we can see the Bitcoin price dropping even as Baidu searches rise — probably a response to the as-yet-unconfirmed rumors that Binance’s Shanghai office has been shuttered.
A similar pattern is evident if we look at crypto reports in the Chinese media over the past month:
(These charts, by the way, comes from our new Bitcoin Social Metrics live data visualization, which offers a window into China’s crypto markets.)
Again, it’s worth emphasizing that none of this is proof Bitcoin’s price is responding to China’s market news. Still, the correlations — and we have only listed a few of the more major ones here — are certainly remarkable.