Bitcoin takes a beating: down 50% as China cracks down (UPDATE)

Update 1: China’s biggest Bitcoin exchange confirmed that it is no longer accepting deposits in yuan, the Guardian reports.

Update 2: The popular US-based Bitcoin company, Coinbase, shows prices at a new recent low of around $500. The original story, with background on the crash follows below.

Remember the giddy highs of $1000 Bitcoin? That’s so two weeks ago. Lately, the virtual currency is in the midst of another of its famous crashes — or swoons if you prefer — as bad news trickles in from overseas.

Here’s a chart, via Bitstamp, that shows the latest price tumble. The currency reached a new record high of around $1,132 on December 5th but has since lost nearly half its value:

Bitcoin prices screenshot

After falling to lows of around $650 this week (it’s hard to pinpoint an exact price as rates vary significantly between various exchanges), the currency is slowly ticking up again.

The Chinese government appears to be the culprit for the currency’s latest misfortunes. Bloomberg reports that central bank officials have banned banks from clearing Bitcoin transactions, and said that all transactions in the currency must cease by Chinese New Years in late January. The announcement appears to make good on a threat from early December.

Coindesk, a news site that provides reliable accounts of the Bitcoin world, claims the China ban was responsible for a one day fall of more than $200.

Despite the recent price troubles, some US-based investors remain bullish on Bitcoin. Last week, a group of influential venture capital firms, including Andreesen Horowitz and Ribbit Capital, announced a $25 million Series B for Coinbase, a company that wants to turn Bitcoin into a mainstream payment platform.