Bitcoin whipsaws its holders

<p>Kia ora,</p><p>Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news China is going on the offensive over commodity prices it sees as too high.</p><p>But first, we start today noting what most media is noting - that crypto currencies went on a very wild rise overnight, almost all of them. After falling steadily all week, bitcoin touched US$40,000 and then basically collapsed to US$30,000 to more than -50% below its high in early February. Then it recovered just as fast, but not quite all the way back, leaving holders with a big -9% daily loss.</p><p>Perhaps the trigger this time was <a href="https://www.chinabankingnews.com/2021/05/19/china-issues-new-ban-on-finance-and-payments-organisations-engaging-in-cryptocurrency-related-operations/" target="_blank"><strong>a set of unofficial warnings</strong></a> in China that using cryptos is illegal - and that penalties and prosecutions are about to get harsher. Three state-backed organisations, including the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China issued warnings on social media. Cryptos are a favoured way to launder money and avoid China's outbound capital controls. Beijing is also <a href="https://www.caixinglobal.com/2021-05-19/china-hits-cryptocurrencies-with-double-whammy-101715213.html" target="_blank"><strong>cracking down</strong></a> hard on bitcoin mining operations.</p><p>This car crash happened in the absence of any other major economic news or drivers, so it is getting outsized media coverage today.</p><p>The American mortgage market seems to be rising, even if it is at a measured pace. The number of mortgage <a href="https://www.mba.org/2021-press-releases/may/mortgage-applications-increase-in-latest-mba-weekly-survey-x279918" target="_blank"><strong>applications are rising</strong></a>, average mortga