Investors in increasingly popular Bitcoin felt the pain today as the price of the crypto-currency fell by 20 percent or over 1,200 Yuan in heavy trading in China, and down more than $100 to just under $800 a coin on comparable US markets.
This follows China’s central bank saying it had launched “spot investigations” on bitcoin exchanges in Beijing and Shanghai in order to fend off market risks.
Chinese authorities have been worried in recent months that the weakness in the Yuan was being fuelled by capital flight out of the country through the use of Bitcoins.
The investigation of the Bitcoin exchanges, including BTCC, Huobi and OKCoin, was to look into “possible market manipulation, money laundering, unauthorized financing and other issues”, according to the statements posted on the People’s Bank of China’s website.
The Chinese currency lost more than 6.5 percent against the U.S. dollar last year.
Bitcoin was the top performing currency in the world in 2016 up some 126 percent while the Nigerian Naira was one of the worst performers (see Fig : 1).
Many Nigerians have recently begun buying Bitcoins both as a means of making purchases (as the dollar shortages bite) and also a store of value or investment.
The volatile nature of the currency though is a signal to potential Nigerian investors to carefully approach such investments.