Bitcoin prices drop 7% to USD890 on China crackdown concerns

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Investing.com - Bitcoin prices fell sharply on Monday, amid ongoing concerns China will take additional steps to crack down on transactions made using the virtual currency.

BTC/USD fell 6.1% during U.S. morning hours to trade at USD890.00 on the Tokyo-based Mt. Gox Bitcoin exchange. The currency fell by as much as 12% earlier to hit a session low of USD880.11.

Chinese e-commerce giant Alibaba banned bitcoin from its shopping websites last week effective January 14, a crippling blow that could make it much harder to use the virtual currency in China.

Last month, the People's Bank of China clamped down on Bitcoin, saying the digital currency doesn't have "real meaning" and lacks legal protections.

China's central bank subsequently banned third-party payment processors from handling payments for Bitcoin exchanges, effectively ending legal purchases of Bitcoin in the country.

Prices of the virtual currency soared to an all-time high of USD1,241.10 on November 29. It was trading at USD100 in early October.

Demand for the virtual currency remained supported amid speculation an increasing number of online retailers in the U.S. will begin accepting Bitcoin payments in the year ahead.

In the past month, the number of businesses on CoinMap, a website showing physical companies and vendors accepting Bitcoin, has tripled to more than 2,300.

Bitcoin is digital cash for the internet and it is not backed by a government or central bank to regulate or issue it. It can be used to purchase goods and services from stores and online retailers.

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This article appears in: Investing , Forex and Currencies

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