Overnight the Bitcoin price plunged over 14% to US$3,319 after one of China’s largest online exchanges announced that at the end of the month it would no longer handle trades following a crackdown on cryptocurrencies by the Chinese government.
This was the fifth day in a row of declines, its worst losing streak for over a year.
According to Bloomberg, the BTC China exchange has stopped accepting new account registrations and will cease all trading activities on September 30.
BTC China looks likely to be the first of a number of exchanges that will stop operations at the end of the month. According to Reuters, sources in Shanghai have revealed that all Bitcoin exchanges will be shut down by the end of September.
Considering how much cryptocurrency trading occurs in the massive China market, I believe this could put significant pressure on the Bitcoin price.
Should you buy the dip?
While there are reasonable arguments for why Bitcoin could be a good addition to a balanced portfolio, I believe that at this point in time the risks far outweigh the rewards.
Because of this I would suggest that investors stay well clear of the cryptocurrency and focus on the quality shares on offer in the local share market.