Bitcoin has experienced multiple setbacks, some people have chosen to withdraw, but the enthusiasm of supporters remains unabated

Bitcoin has experienced ups and downs recently. At the beginning of this month, negative rumors about regulation emerged one after another, and Bitcoin fell for several days in a row, once falling by 20%. Some commentators believe that the price of Bitcoin is experiencing a trend similar to many asset price bubbles in history.

There have been many asset price bubbles in the history of financial markets, from the tulip speculation in the 17th century to several recent examples, such as the Internet stock bubble in the late 1990s and the US real estate bubble in 2008. Bitcoin has recently soared to $5,000 per coin, an increase of nearly 350% this year, disappointing those who are skeptical of it and cheering those who continue to join the ranks of supporters.

When we compare the trend of Bitcoin with the trend charts of historical asset bubbles, we can find that Bitcoin seems to be in a frenzy and bubble stage.

The market must now decide whether Bitcoin’s recent decline following China’s decision to ban ICOs is a bull trap that foreshadows an eventual bubble burst.

On the 4th of this month, the Central Bank, the Central Cyberspace Affairs Commission and seven other ministries and commissions issued the "Notice on Preventing Risks in Token Issuance and Financing", requiring that all types of token issuance and financing activities should be stopped immediately. Organizations and individuals that have completed token issuance and financing should make arrangements for liquidation, reasonably protect the rights and interests of investors, and properly handle risks.

Influenced by this news, the price of Bitcoin plummeted. In four trading days, the price of Bitcoin dropped by nearly 10,000 yuan, with the lowest price once dropping to 22,592 yuan.

On the 8th of this month, according to multiple media reports, the regulatory authorities decided to close virtual currency exchanges in China; after the news came out, Bitcoin fell by 20% at one point, and fell sharply for three consecutive days, falling to below 22,000 yuan.

Foreign media reported on Monday that China plans to ban on-site trading of virtual currencies such as Bitcoin, a blow to the $150 billion market after the ban on initial coin offerings (ICOs) last week. People familiar with the matter who declined to be named because the information is private said the ban only applies to on-site trading of virtual currencies.

People familiar with the matter said that the authorities have no plans to ban over-the-counter trading of virtual currencies. Bitcoin fell sharply last Friday after Caixin magazine reported the ban, and hit its biggest weekly drop in nearly two months.

Bitcoin transactions in China account for about 23% of global transactions. Bitcoin's hardcore fans are not losing their enthusiasm.

Roger Ver, one of the earliest investors in Bitcoin, said in an email:

“As long as there are exchanges in the world, Bitcoin will still be useful around the world. I don’t think the closure of some exchanges will have much impact.”

Brock Pierce, president of the nonprofit Bitcoin Foundation, said governments may allow exchanges to reopen after they establish a registration process for ICOs, weed out fraud and guard against possible capital outflows.

“And this is just China, this is just one market,” Pierce said, noting that China is the world’s third-largest digital currency trading market, behind South Korea and Japan.