Bitcoin price fell over 8.1 percent to $3560.41 on Thursday, according to the CoinDesk. Unnamed sources told Bloomberg that Chinese regulators were told of the agenda by a "central bank-led group" considering the risks of cryptocurrency.
As the news broke, bitcoin price has plunged by 16% and is expected to come down below $3,000.
Bitcoins are meant to serve as an alternative for normal currencies and is not controlled by any country or central bank, making it an easy way for people to do business beyond the reach of government regulation.
The selloff accelerated on Tuesday, after J.P. Morgan Chase CEO Jamie Dimon called the cryptocurrency a fraud that was "worse than the tulip bulbs" and that "won't end well".
Bitcoin from 14 August to 14 September
China has been a hub for digital currency trading in recent years, but earlier this month, Chinese authorities banned intial coin offerings (ICOs), which allow companies to issue digital tokens in return for equity. Its value nosedived after one of China's largest online exchanges, BTCC, announced that it will end bitcoin transactions by September 30.
At last, it was made public by several mainland China-based bitcoin exchanges that new policy will see renminbi disallowed on exchanges. Rumors began spreading regarding a potential suspension of all Bitcoin trading activity by centralized exchanges.
However, there is much speculation that the Chinese government will establish a licensing process for cryptocurrency exchanges, with one theory being that OKCoin and Huobi will receive licenses before or shortly after their suspensions take effect. This appears to be only part of a major crackdown on cryptocurrencies in China as it had earlier banned initial coin offerings (ICO's) by which some were raising funds to launch new currencies.
As if the Bitcoin price has not retraced enough already, more volatility is erupting across all markets. The U.K. Financial Conduct Authority, the country's top regulator, warned this week that investors in the virtual currency should be "prepared to lose your entire stake".