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China may ban Bitcoin trading, but the market doesn't seem to care

Late last week, a report from Caixin shook the Bitcoin world. According to the state-owned media outlet, China plans to ban all cryptocurrency exchanges. The report was followed by a similar one from The Wall Street Journal, which cited anonymous sources familiar with the matter. 

And, initially, the price of Bitcoin plummeted, falling from roughly $4,600 to $4,000. But three days later, the price of Bitcoin (and most other major cryptocurrencies including Ethereum) is rising again. 


So what's happening? Was the report false? The answer is unclear at this point, but the market either no longer believes the report, or it simply doesn't care. 

SEE ALSO: Here's how to deal with those ridiculously high Bitcoin transaction fees

Make no mistake—China definitely can pull such a move. The country clamped down hard on Bitcoin several times in the cryptocurrency's history. And the People's Bank of China recently banned cryptocurrency ICOs (Initial Coin Offerings, or token sales) in the country. 

The reasoning behind China's actions towards Bitcoin is complex, but is mainly driven by the fact that cryptocurrencies are tough to control and can be used to move money out of the country, which does not sit well with China's authorities. 

Banning all crypto trading on exchanges is a far more serious move than the ICO ban. Several of the world's largest cryptocurrency exchanges reside in China, and the country is neck and neck with the U.S. in terms of Bitcoin trading market share.  

In other words, Bitcoin should be plummeting. Instead, it's rising steadily and sits at $4,320 at the time of writing, meaning that the market isn't overly concerned about the ban. 
There are several indicators that Caixin's report on China banning all crypto exchanges might be false or only partially true. 

First, even though several days have passed since the original report, there has been no official notice on the matter from the People's Bank of China. Second, three of the largest exchanges in China—OKCoin, BTC China and Huobi—said on Monday that they haven't heard anything about a ban from the country's regulators, at least not officially.