Bitcoin Price Crashes as Chinese Exchanges Halt Deposits

• Update: Bitcoin Price falls Below $400 For First Time in Five Months

The price of bitcoin has fallen by almost $50 (£30) in a 24-hour period following announcements from bitcoin exchanges in China that they will be suspending bank transfers from customers.

The exchanges BTCTrade and BTC100 both issued notices to their customers confirming that they had been ordered by the Chinese government to close accounts taking customer deposits.

The announcements resulted in a 10% fall in the value of bitcoin from over $450 to $403 in just 20 hours, causing a market-wide drop across almost all major cryptocurrencies. Only the recently launched Isracoin, the unofficial national cryptocurrency of Israel, rose in value.

The news from BTCTrade and BTC100 falls in line with last month's statement from the Chinese government that all banks in the country will be required to close accounts operated by bitcoin exchanges by 15 April.

Heavy heart

"We hold a very heavy heart publishing this announcement," BTCTrade wrote in a statement to its customers. "BTCTrade just received a telephone call from our bank the Kejicheng branch of China Agricultural Bank Hangzhou, that if we do not stop using our bank account to conduct bitcoin related business by 15 April our account will be frozen."

According to the exchange, cryptocurrency withdrawals will not be affected until that date.

In a show of defiance against the tightening regulations of China's central bank, BTCTrade claimed that the announcement would fail to inflict too much damage on the exchange.

"We want to say: The passing madness continues into the distance but we firmly believe that the future is bright for BTCTrade and for the future of bitcoin," the statement concluded.

Bitcoin's value has since bounced back slightly and is currently stabilised at around $412 according to the CoinDesk Bitcoin Price Index.

Last week we saw a similar bitcoin price drop when fellow Chinese exchanges OKCoin and FXBTC received official notices from regulators that some of their accounts would be terminated. Another Chinese exchange, BTC38, has also announced that it is to suspend flat-to-digital currency trading following a shift in policy from the People's Bank of China.

It is unclear what impact the continuing threats of restrictions imposed by the Chinese government will have on the price of bitcoin, but going on past trends it is unlikely to be positive.