Bitcoin Loses Half its Value After Chinese Crackdown

[StewShearerOld]

Bitcoin Loses Half its Value After Chinese Crackdown

Bitcoin values declined more than 50 percent after BTC China announced it can no longer accept new yuan deposits.

Bitcoin took a fairly big hit yesterday. The electronic, person-to-person payment method lost more than half of its value over the course of a single night after BTC China, China's biggest Bitcoin exchange, revealed that it will henceforth be unable to accept new yuan deposits. Bobby Lee, the chief executive of BTC China, blames government regulation for this change.

Earlier this month the People's Bank of China, which manages much of the country's financial policies, <a href=http://www.theguardian.com/technology/2013/dec/05/bitcoin-price-tumbles-chinese-central-bank-warning>barred other financial institutions from trading in Bitcoins, saying that the currency has no "real meaning" and lacks legal protection. Yesterday, in turn, it expanded this ban to include payment companies like YeePay, which has been a principle cog in the Bitcoin exchange system in the country. As a result, while Bitcoins are still technically legal in China, the absence of payment companies like YeePay will make it prohibitively difficult for many Chinese citizens to buy more Bitcoins.

This fast shifting of the tides has led to a steep and swift decline in the value of Bitcoins around the world. Previously, Bitcoins had risen to a peak of £741.70, roughly $1213.42. Following the events in China this has dropped to £266.02, or $435.21. While this obviously hasn't destroyed the currency, it's nonetheless a substantial blow to its continued expansion.

Source: <a href=http://www.theguardian.com/technology/2013/dec/18/bitcoin-plummets-china-payment-processors-digital-cryptocurrency>The Guardian


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[fix-the-spade]

Bitcoin, Tulips for the internet age.

It amazes me that people like to speculate on products that essentially exist in an unregulated vacuum, I often wonder where this assumption that 'growth' will appear as if by magic with no underlying industry comes from. Bitcoin can only go down in value as regulators ban it and it's reputation for illegal use grows.

If you really want to invest in something risky that may or may not grow in the next twenty years, industrial marijuana growth, no really, look it up, medical and industrial use of the stoner's favourite looks set to be a great investment... maybe.

 

[mirage202]

Somethings value that exploded out of nowhere had its bubble burst? Whodathunkit.

 

[008Zulu_v1legacy]

I wonder if the guy who threw out the hard drive with the bitcoin wallet is reconsidering his plan to go looking for it.

 

[FiatCelebrity]

Government is the only real threat to the value of the bitcoin. Of course, the fact that money is fiat and regulated poorly by government (poorly is the only way to regulate mandated fiat currency, I'm afraid) is the only reason the demand for bitcoins exists in the first place.

 

[OldNewNewOld]

I wonder if it's safe to buy now and if the value will increase.

It was bound to happen. Bitcoin ket a high price for so long, it was only a matter of time until it drops like this.
China just sped up the process.

 

[Albino Boo]

I wonder if it's safe to buy now and if the value will increase.

It was bound to happen. Bitcoin ket a high price for so long, it was only a matter of time until it drops like this.
China just sped up the process.

Nope. The big driver of demand for Bitcoin has been Chinese people getting around restrictions about sending money out of China. Now the Chinese government has stepped in and stopped people being able to buy Bitcoins from Chinese based markets. They are not going to change their mind back anytime soon so the demand is just back to those interested in buying certain chemicals.

 

[Jadak]

I wonder if the guy who threw out the hard drive with the bitcoin wallet is reconsidering his plan to go looking for it.

Yeah, becuase 4-5mil is just totally not worth any effort.

Not that such an effort is likely to accomplish anything regardless.

 

[Chloe Berg]

http://bitcoincharts.com/charts/mtgoxUSD#igDailyztgSzm1g10zm2g25zl

Look at what happened the first time BTC hit 10$, and again the first time it hit 100$. And now when it hit 1000$... Yeah. That's a pattern, not a bubble.

Personally I'm not that worried. After the 2011 peak we had 6 months of decline on mostly bad news, as site after site got "hacked" and lost user funds.

After the April peak we had 3 months of decline on mostly neutral-good news.

Now we've got more interest in the sector than ever, and even the "bad" news coming from China isn't necessarily as bad as it's being spun.

It would make a nice pattern if this time it declined for 1.5 months before recovering.

 

[Serrenitei]

It's an interesting concept - I'm not an economist by any means, but I have a rudimentary understanding of fiat currency -- enough that suggestions that the only substantial difference between our USD and the BitCoin is that USD has a physical component associated with it.

I think the biggest bias is that people still consider the internet a free-for-all--full of anonymous people who will just as soon rip you off as you as help you. Regardless, BitCoin has potential and while it's still young I think it will end up being a much more stable currency then the USD or any other gov't regulated currency.

I dunno, we'll see. This was a setback, a relatively minor one.

 

[mindfaQ]

Bitcoin, Tulips for the internet age.

Bitcoins have the ability to revolutionize payment and could make us nonreliant on capitalistic financial institutes that are basically the cancer of our time. You might not want to use it, but I certainly do. No use to reduce Bitcoins to a simple means of speculation like it happened with tulips. It is obvious that it won't rise endlessly, noone is arguing with that.

 

[Ftaghn To You Too]

That's what you get for investing in something even more imaginary than regular currency.

 

[Jandau]

I think the biggest bias is that people still consider the internet a free-for-all--full of anonymous people who will just as soon rip you off as you as help you.

Are you trying to say that's not the case? And if yes, are you being serious?

 

[barbzilla]

Yeah, it is already trending back up. I'm showing almost $100USD growth in the past 12 hours.

It was a scare, since China close it off, a bunch of people realized that countries can do that. Now it is going to boom right back up from investors trying to get in cheap. It will go up for a couple of days, and there will be a big fire sale that will drive it right back down (potentially lower than the first raise), then it will go back into normal growth.

This is just my prediction by the way, I am in no way advising anyone to buy into it. Other countries could follow China's lead on this and that would hurt it for a much longer time.

 

[Albino Boo]

It's an interesting concept - I'm not an economist by any means, but I have a rudimentary understanding of fiat currency -- enough that suggestions that the only substantial difference between our USD and the BitCoin is that USD has a physical component associated with it.

I think the biggest bias is that people still consider the internet a free-for-all--full of anonymous people who will just as soon rip you off as you as help you. Regardless, BitCoin has potential and while it's still young I think it will end up being a much more stable currency then the USD or any other gov't regulated currency.

I dunno, we'll see. This was a setback, a relatively minor one.

The Dollar and all other national currencies are backed by a central bank. These banks have vast sums in other currencies, government debt, gold and silver. The US central bank passed on to the US treasury its annual profits of $80 odd billion. That gives you idea of how big the holdings we are talking about. Bitcoin has nothing of the sort behind it.

 

[Albino Boo]

Yeah, it is already trending back up. I'm showing almost $100USD growth in the past 12 hours.

It was a scare, since China close it off, a bunch of people realized that countries can do that. Now it is going to boom right back up from investors trying to get in cheap. It will go up for a couple of days, and there will be a big fire sale that will drive it right back down (potentially lower than the first raise), then it will go back into normal growth.

This is just my prediction by the way, I am in no way advising anyone to buy into it. Other countries could follow China's lead on this and that would hurt it for a much longer time.

Well Norway is saying its not a currency but an asset and as such is subject to capital gains tax, other European countries are looking into the matter of tax with regards to the profits on bitcoin. I don't think its going to get shut out of the international clearing system but tax authorities are looking for their share now.

 

[Psychobabble]

Bitcoin, Tulips for the internet age.

Bitcoins have the ability to revolutionize payment and could make us nonreliant on capitalistic financial institutes that are basically the cancer of our time. You might not want to use it, but I certainly do. No use to reduce Bitcoins to a simple means of speculation like it happened with tulips. It is obvious that it won't rise endlessly, noone is arguing with that.

Unfortunately this is exactly why I feel in the long run Bitcoin is doomed. Governments and financial institutions like you being under their thumb so won't willingly give up that monopoly.