Chinese players quit volatile bitcoin market after government steps in

Beijing's crackdown on virtual currencies has led to an exodus of investors and enthusiasts who fear financial ruin.

A number of bitcoin buyers, retailers and entrepreneurs have withdrawn from the digital currency after back-to-back demands by the People's Bank of China (PBOC), which triggered a run on bitcoin.

On Monday, the central bank ordered third-party payment firms to stop clearing services with bitcoin. Two weeks earlier it told financial institutions not to provide services for the digital currency.

Research by Shanghai-based financial consulting group Kapronasia revealed a drop in the number of Taobao shops accepting bitcoins. From December 2-13, 14 out of 56 firms ended services, while 13 out of 20 other online and bricks-and-mortar stores curtailed business to "avoid regulatory attention".

Prices, however, staged a recovery yesterday after plunging to 2,011 yuan (HK$2,549) from a high of 7,588 yuan in late November.

The world's biggest exchange by trade, BTC China, saw prices top 3,550 yuan by last night.