The price of bitcoin dropped to nearly 6 percent on Friday, Nov. 4, after weeks of gains, following unverified reports that Chinese regulators may set limitations on bitcoin trading and exchange activities in the country.
An article published by coindesk.com cited a Bloomberg report which gave details on how Chinese authorities would restrict bitcoin and other digital currencies from being moved abroad as well as prohibit exchanges of the virtual currency in the country.
According to the article, the government was concerned that foreign exchange rules are being violated when bitcoin users buy bitcoin on local exchanges and sell them abroad.
Though the article was no longer be accessed or viewed online at Bloomberg, other news outlets such as Sina and ZeroHedge, cited the questionable article.
The report said that when the news on China spread on social media around 15:00 UTC, the price of bitcoin also started to decline at the same time. During the duration of the day's trading, the price fluctuated wildly, which rose to a high of $744 and dropped to a low of $677.
Some analysts believed that the market has likely used the bogus report as an opportunity to take advantage of the market panic.
"It's one of those things where a news article is really just an excuse for traders to sell instead of buy," Tuur Demeester, an analyst at Adamant Research, told CoinDesk.
Similar situations were reported by some analysts who believed that the unconfirmed reports on China has always been used to drive activity in the speculative bitcoin virtual currency market.
In 2013, at the height of bitcoin's price, news that the digital currency would be banned by China circulated, which caused an abrupt fall in the bitcoin market.
"We've had china scares like this so many times," Chris DeRose, the host of a popular bitcoin podcast, recalled. "China is effectively a black box to us here," he added.