A man walks past a bitcoin exchange facility in Hong Kong. (Photo : Getty Images)
Following the announcement by Chinese authorities that it will conduct an inspection of bitcoin enterprises, the price of bitcoin dropped by about 10 percent, according to a report by CNBC.
On Thursday, Jan. 12, the People's Bank of China published an announcement that it will inspect the sites on Jan. 17, to check on the licenses of enterprises involved in bitcoin business to ensure that they have anti-money laundering systems in place and if market manipulation is happening.
From around $915, the digital currency dropped to $784.56, after the PBOC announcement.
Currently, bitcoin is worth around $806.
The global bitcoin is dominated by Chinese investors and Chinese regulators are worried about the effect that bitcoin may have on the renminbi.
Last week, three of China's largest bitcoin exchanges were called to a meeting by the PBOC to discuss market regulations, the report said.
Charles Hayter, chief executive and founder of digital currency comparison website, CryptoCompare, referred to the announcement of the Chinese authorities as a "ratcheting of the rhetoric".
"Instead of 'we're watching' you it's now 'we're investigating' you," Hayter told CNBC.
"The intentions of the Chinese state are clearer and it looks like they're trying to bring the Chinese bitcoin exchanges to heel - whether they are looking to make an example is yet to be seen," the executive noted.
Hayter however, believed that in the long term, the move may benefit the industry by bringing more respectability to it as it develops.
"But in the short term this could affect volumes which have been one of the key drivers of the recent rally," Hayter added.
Throughout 2016, bitcoin made a steady climb and it reached more than $1,000 on Jan. 5, near its record high, until it eventually crashed and slid back to $900.
Earlier this month, bitcoin dropped nearly 20 percent hours after reports came out that the government is set to introduce new measures to curb capital outflow.
Analysts said that signs indicate the bitcoin decline is related to the yuan's movement, although the cause of the rally could not be exactly pinpointed, Forbes reported.
