Bitcoin and Ethereum are being hammered on rumours China will shut local exchanges

Emma Haslett
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Bitcoin has had a rollercoaster ride this week. (Source: Getty)

There was more bitcoin drama this afternoon, after the cryptocurrency slid more than seven per cent on rumours China is planning to shut local exchanges.

Bitcoin slid as low as $4,241 in afternoon trading in the UK, while Ethereum was also hit, falling to $294.

The news followed rumours in Chinese media that the government is planning to shut down local cryptocurrency exchanges.

Earlier this week bitcoin plunged more than 20 per cent after Chinese regulators banned initial coin offerings (ICOs), which allow companies to issue digital tokens in return for equity, and have become increasingly popular in recent months.

Having broken through the $5,000 barrier last weekend, bitcoin fell as low as $3,900 on Tuesday on news of the ICO regulations. Today it jumped as high as $4,686, before falling back this afternoon.

This week Chris Carter, a cryptocurrency expert, argued in City A.M. that the Financial Conduct Authority (FCA) should follow China's lead by banning ICOs.

"The digital currency universe has swollen in size in just 12 months from $12bn to near $180bn and many, including the fabled celebrity-class, have profiteered at the expense of their doting fanbases who haven’t a clue what they are buying into," he said.

"ICOs are an ugly offshoot of the wider digital currency universe, presently in the midst of a massive speculative bubble. Deliberately over hyped by a nexus of extremely effective marketing, these assets are driving a neo-penny stock scam in the form of so-called 'digital currency'.

"Disappointingly, thus far we have heard nothing from the FCA on these con artists. If someone there is reading this, I entreat you to ban ICOs on our shores this instant."

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