Bouncy Bitcoin Rebounds Over $400 as Price Hinges on Reports Out of China

Bouncy Bitcoin Rebounds Over $400 as Price Hinges on Reports Out of ChinaBitcoin price gyrations continue to hinge on announcements or rumors out of China as the last two days demonstrate.
By mid-Friday, bitcoin had rebounded 16 percent and jumped back over $400  after it had collapsed by about 10 percent Thursday to about $360. By late Friday, prices across major exchanges had reached $430.
But even after Friday’s rally, bitcoin is down about 50 percent over the last three months and more than 60 percent since it reached its all-time high over $1,100 late last year.
Thursday’s drop was prompted by notices sent out by Chinese banks to local bitcoin exchanges, reportedly announcing that their accounts would be frozen on April 15. That action would effectively cut off the exchanges from accepting yuan-denominated assets. The action had been anticipated in the wake of rumors simmering for weeks.
Friday’s rebound was reportedly the result of news that Zhou Xiaochuan, the governor of the People’s Bank of China (PBOC), had issued new statements suggesting that China would ban bitcoin and other digital currencies entirely.  Xiaochuan said bitcoin would potentially generate a new classification and that the PBOC may be considering exactly how to oversee cryptocurrencies.
Any level of acceptance out of China, where bitcoin trading volume has helped propped up the cryptocurrency’s price, is a big bullish factor for the bitcoin community.
Meanwhile, authorities in the U.S. are still fine-tuning or grappling with oversight of bitcoin, especially at the state level.
Texas will not treat bitcoin and its ecosystem of altcoins as legal money, according to a new memo from the Texas Department of Banking. However, some companies that deal in bitcoin transactions could see new state oversight, even if they are based outside of Texas.
Texas Banking Commissioner Charles Cooper issued a memo this month outlining the agency’s stance on bitcoin.
“At this point a cryptocurrency like Bitcoin is best viewed like a speculative investment, not as money,” Cooper said in a statement.
In his memo, Cooper’s reasoning reflected that of the Internal Revenue Service. Last month, the IRS announced that, for tax purposes, it would treat bitcoin as property, instead of currency. That posiition is mostly based on the fact that no government recognizes the cryptocurrency as legal tender.

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