Bitcoin Forum

What are your guys thoughts on what will happen the week before and off course on the 31st of January? I read multiple articles which claim that trading in bitcoin will come to a complete stop or hold on the 31st of January in China? Or at least in Yuan/BTC  Since OKcoin and BTCChina now found a loophole by funding their site through the use of vouchers I wonder if this way of funding will also be banned by the Chinese central? And if we can expect a dump a week before the 31st of January?

maybe we could get some of the posters in the china subforum to comment on this.  can't the banks just shut down the merchant bank account of btcchina?

Great idea! I will start a post in the chinese subforum hopefully they'll repsond

5k yuan.

Jan 31 is the last day for 3rd party payment services to stop service. Since now almost all 3rd party payment services have already stopped service, 31 Jan does not have any special meaning in my opinion.

Jan 31st is the start of the Chinese new year as well I believe. I did some research yesterday and apparently 2014 will be the year of the horse. Which   is a good sign for investing :P

However about the 3rd party payment services. How will this develop with the vouchers? Seems to me it will be a matter of time before the central bank also hammers down that option?

The voucher is just a way to reduce the fiat withdrawing. The situation is that some people sold BTC and withdraw fiat from the exchange, but those who want to buy bitcoins cannot deposit the fiat. How about the latter give money to the former and keep the money in the exchange? That's the reason why voucher is proposed. Those who want to withdraw fiat generate vouchers instead and sell them to the one who want to deposit, and then the latter use the voucher to deposit.

You can see that there's no fiat increase by using vouchers. It's just a way to reduce the amount of fiat withdrawn from the exchange.  

Vouchers can be bought online elsewhere, for example on paipai.com: http://auction1.paipai.com/DC08877D0000000004010000356FA6A5

They started with 100.000 vouchers, each is 10.000 CNY and now there are 99932 left. That means 68 people spent 10.000 CNY elsewhere, presumably to deposit with BTC China. That doesn't seem like a lot yet, but it will be interesting to see how it develops.

~$112k doesn't make much of a dent no. Don't they restock the vouchers to 100,000 total?

Quoting for the posters above.
There is no NEW money in china. It's a way to stabilize the outflow.

Because of how the vouchers work now, when BTC China removes RMB withdrawal on Jan 31, these transactions should cease.  Never depend on these workarounds in China anyways.  If the government wants to take something down, it will have no problem doing so.

It's possible for BTCChina to release some vouchers themselves, but by doing this may increase the legal risk. I am not sure about this.

No any source tell us RMB withdrawal will cease after 31 Jan. it's illegal to stop withdrawal actually.

What is the 31st deadline? Does trading cease? Or is that date not actually significant?

No, it's not significant in my opinion, unless there're new updates from the China government.

January 31st could be very significant.  If we look at what one credible source, Bloomberg, has said about the new rules in China:

http://www.bloomberg.com/news/2013-12-18/btc-china-says-it-can-t-accept-new-deposits-for-bitcoin-trading.html

"Chinese central bank officials told third-party payment service providers to stop offering clearing services to online Bitcoin exchanges, China Business News reported yesterday. The newspaper is affiliated with the Shanghai government,

Companies currently offering services must end them by the Chinese New Year, a weeklong holiday that begins on Jan. 31, the newspaper cited Zhou Jinhuang, deputy director of payment clearance at the People’s Bank of China, as saying at a meeting with more than 10 third-party payment service providers."

Third party payment service providers started by immediately halting deposits to the exchanges. So now the question is, what happens on January 31st to withdrawls?  Quoting the same article:

“The PBOC statement on Dec. 5 was somewhat vague and there is more clarity now,” Zennon Kapron, managing director of financial consultancy Kapronasia, said in an interview yesterday in Shanghai. “The way it’s reading now is that after the Chinese New Year, you won’t be able to get your money off the platforms.”

Think about that.  As of January 31st, you will no longer be able to withdraw money from Chinese BTC exchanges.  Let that sink in for a second. 

When Mt.Gox began having issues with withdrawals, other exchanges simply popped up and filled the void.  This cannot happen in China, since these rules apply to all Chinese exchanges, and there are already restrictions on the flow of money in and out of China.  Sure, BTCChina and other exchanges have found some workarounds, including using vouchers
http://www.reddit.com/r/Bitcoin/comments/1tnf8e/btcchina_adds_a_fundingwithdrawal_option_btcc/ , but that still involves using Chinese Banks, many of which are controlled by the Chinese Government. 

Unless the Government changes their stance, there are a few possible outcomes to all of this, I believe:

1.) This is already built into the price, and those in China who wanted to sell have already, and nothing will happen on January 31st.
2.) The weak hands in China were the ones who sold leading to the recent drop in price. The strategic investors are holding until the price rebounds (already under way), and are going to dump in the weeks before the deadline. China is out.
3.) The weak hands in China were the ones who sold leading to the recent drop in price. The strategic investors will continue to hold, and will move underground to trade Bitcoin. 

I'd love to hear anyone's thoughts, especially those who are in China and can confirm what the sentiment is like now and what people are thinking.  Perhaps there are other scenarios that may play out that I haven't considered.  I personally think that scenario #2 is the most likely, or at least perhaps a combination of #2 and #3.  Even if #3 were to play out, there would still be drastically less people in China willing to go through all the hassle of dealing with vouchers and other potentially shady ways of dealing with bitcoin.  Regardless of which of the 3 scenarios that play out (or another scenario that I have not considered), this will be a "blip" on the radar in the life of Bitcoin.  There is a bright future for crypto and 2014 will be the year that we really see BTC gain momentum.  If we play our cards right, there could be an amazing buying opportunity at the end of January :)

My 2BTC anyway

BTCChina is currently 8% less than gox, but who is able to withdraw from gox anyway? I wouldn't even try to submit a SEPA from gox.
I think number 3 is the most probable, China might come back on their decision and decide the heavy regulate (and tax!) Bitcoin, both trading, capital gain, and e-commerce, giving it no chance to compete with the usual markets

I hope you are right, and the Chinese government just regulates.  But I think that is highly unlikely.  They are simply enforcing their grip on their own currency.  Bitcoin interferes with that grip and they have better things to deal with that regulate a new form of currency.  I still think option #2 is the most likely. 

We should all be thankful that the Chinese government took the time to handle this the way they did.  They could have simply banned Bitcoin overnight, the way they did with QQ http://www.theregister.co.uk/2009/06/30/china_bans_virtual_money_to_buy_real_world_goods_and_services/.  Instead, they gave everyone time to withdraw their funds and gave ample notice of their intentions. 

I'm in Hong Kong and I think Hong Kong is going to be part of the solution here. Hong Kong will likely adopt a friendlier stance towards crypto currencies and any deposits / withdrawals will be done through exchanges in Hong Kong.

With the Chinese 1 country 2 systems policies, they can test the economic consequences of bitcoin in Hong Kong before deciding to accept it in China.

If you are choosing option 2 then why did you say this 2 days ago?

"I wasn't aware that there is a large underground industry catering to Chinese who want to send large amounts of RMB to Hong Kong, with fees apparently as low as 0.5%

I guess where there's a will there's a way, when it comes to bitcoin trading in China.  I guess as many suspected trading is just moving underground, for now anyway."

So, two days ago you were option 3 and now you are option 2?  I am now skeptical of you.

Thanks for that, it's an interesting point.  Do you think Hong Kong will be more involved with China BTC as a whole (new exchanges pop up there, where mainlanders can exchange fiat for BTC), or just a testing ground as you said?

BTC China is situated in the Free Trade Economic Zone in Shanghai, which is another version of the "one country two systems" currently working in Macau and Hong Kong.  Theoretically, the Shanghai Free Trade Zone operates by its own rules.  We shall see what happens in practice.

I also believe currency flows between China and HK is porous.  Same could apply to Shanghai FTZ.

Yes, and there is another in Shenzhen, just across the HK border, there may be developments there as well. I don't think we've heard the last from China just yet.

Be skeptical all you want, I am merely trying to determine how events could unfold.  As I mentioned in that post 2 days ago, it seems as though they have figured out a way to trade underground, for the time being.  It wouldn't be wise to assume that just because there is a semi-underground workaround that the volume in BTC trading would remain the same as before.  Its like alcohol prohibition back in the 20's; yeah you could still get alcohol, but were the average American people sneaking out to speak easy's every night to get a glass of wine?  Probably not.

It's about 3rd party payment services in the source you quoted. They all have already stopped, much earlier than the proposed deadline 31 Jan. No 3rd party services are used in deposit and withdrawal now.

Really?  Are you saying you cannot withdraw funds form Chinese exchanges now?  Can you provide a source for this? 

http://www.scmp.com/business/banking-finance/article/1390224/bitcoin-service-firms-best-investment-not-virtual-currency (http://www.scmp.com/business/banking-finance/article/1390224/bitcoin-service-firms-best-investment-not-virtual-currency)

The currency control theory, namely the Chinese government is killing the domestic Bitcoin trade to prevent Bitcoin from being used to do an end run around CNY currency controls, makes a lot of sense. My take is that those in China wishing to purchase BTC, will be able to do so through an exchange either outside of China or in one of the special zones such as Hong Kong provided they first get their CNY out of China.

As for those who have BTC in China will they be able to sell outside of China or in one of the special zones such as Hong Kong and repatriate their CNY? Are there any restrictions on how much currency a Chinese resident can import into China?

As for the impact on price my take is say 90% (1) and 10% (3).

There are restrictions on both sides.  For the average person, they are relatively equal.

the exchanges have always been and it seems will always be the weakness in bitcoin

I am not a bitcoin bull (at all), but I reckon if bitcoin exchanges functioned as well as say your leading trading brokerages, and in every country, bitcoin would be well over $10 000

I thought Chinese new year is 31st Jan...

You can directly withdraw to your bank accounts, but not through 3rd party payment services any more.

I see, thanks for clarifying.  So does that mean as of January 31 you can no longer withdraw at all?

No any reliable source mentioned about this. I think it's not possible to forbid withdrawal via direct bank accounts.

Analysis on Reddit

http://www.reddit.com/r/Bitcoin/comments/1tutrc/analysis_of_chinas_change_of_policy_and_the/

exactly, all 3rd party payment have already stopped service, but China not stop bitcoin trading in Okcoin and BTCChina. 31st of January is China's new year, people will get end-year bonus and buy gifts for family.

I read somewhere that there was going to be some meeting between btc exchange people and gov at 29 dec. Can someone shred more light to the case?

the picture would remain incomplete unless one were also to observe the important fact that they made trading in bitcoin a legally recognized lawful activity.

I don't think any government staff works on Sundays.

China is different...
I'd love to know about the meeting too.

As the third party payment service providers have already stopped transacting with BTC China and other exchanges, does anyone know the current trading options in China, other than face-to-face, to exchange BTC for currency?

Bobby Lee and BTC China did a survey a while back and they found that a significant number of people using Bitcoins were highly educated people who saw BTC has a long-term value hold. Are people just going to sit on their bitcoins and wait for them to rise?

Just like everyone else

Ask yourself this.  If you had the chance to own a chunk of something that could appreciate tremendously against all currencies over your lifetime but you couldn't convert it directly to your country's currency, would you buy it?  Obviously, you would.  There's nothing stopping a Chinese citizen from purchasing something overseas either directly with Bitcoin or through an intermediary, and having it shipped to China if desired.    This is really no different than buying a stock of gold which is stored out of sight.  I really don't see what the fuss is.  What you should really be concerned about is whether the Europe, Russia and the Americas will maintain their accommodating Bitcoin stance.  If it is banned damn near everywhere, then you have a problem.  From a long-term investment standpoint, Chinese regulations simply don't matter.

That's not to say bad news from China will not further rock the markets.  It will, and I wouldn't be surprised if there is more bad news to come.  Traders will exploit the expected panic, the sheep will run, the price will drop, rebound, those who cashed out will regret it, and the whales will have their bellies full of plankton.  Just another boom, panic, rebound cycle in the Bitcoin world.  Just make sure you're either the guy selling the rumor and buying the news or a long-term holder.  Otherwise, you're a sucker.

But what if you couldn't buy that asset by traditional means, because the government blocked the ability to do so.  And then, if you sold that asset, you wouldn't be able to easily access your profits or even the principal investment.  Would you still buy that asset?


You may be correct in this assumption, but it seems like too much hassle.  And then there is the fact that at this point there is not a lot you can buy with Bitcoin.  Or at least, less than you can with fiat. 



Long term I agree.  And I am about as bullish on BTC as anyone on this forum, but I am surprised there is not more focus on what is going to happen in China on the 31st.  Imagine this, you just invested into a new and risky medium, which the government has unexpectedly cracked down on, and told you you have the ability to cash out of this investment for one more month.  After that, you can not get your money out.  What would you do?

Just trying to be the devils advocate here :)

I was discussing the situation where an investor already has BTC and is contemplating selling due to not being able to Yuan out beyond a certain date.  But sure, if it is now harder to acquire in China, it will naturally become more expensive.  This assumes that its value overseas remains solid.  I agree that its usefulness in China has been diminished.  However, the real question is whether that loss in usefulness outweighs the potential upside over the next few years.  It's like buying a chunk of real estate overseas at a deep discount that you won't be able to touch for several years.

You're right, there isn't a lot you can directly purchase, face-to-face with Bitcoin, relative to fiat.  Then again, the same is true of gold and diamonds.  The difference is, Bitcoin can grow into that space.

Regarding the 31st, what would I do?  Well, the only reason someone would cash out in that scenario is if they believe Bitcoins will lose value to them beyond that date.  Assuming Bitcoin continues to rise over the long run (which I think we all do), then logically you'd only cash out because the hassle of turning a Bitcoin into something useful exceeds its value.  If coins increase in value by another 10 or 100 fold, that would have to be one incredible hassle.

So I guess the bottom line is this:  If you jumped into Bitcoin for a quick buck, you'll pull out before 1/31.  Otherwise, hodl.

I think you are right about the sentiment generally.

Many Chinese, including most big players, will not give up their investment.

For the returns the extra efforts required to cash out are well worth it. They will sit on their investment as long as Bitcoin keeps evolving in the US etc. I've said that western bitcoiners need to make an effort mentally to stop following China, but actually we will likely revert to the Chinese following the US / west price naturally.

Even if China was to ban its citizens from holding Bitcoin (which is highly unlikely in my opinion), many people would still be able to get around it. Investing in a US-based hedge fund offering bitcoin investments for example, having an overseas family member hold your bitcoins for example, and many other loopholes and ways, legitimate and illegitimate. Look at the Macau chips phenomenon. Think about Hong Kong. There really are lots of opportunities for those who look for them. And it is my gut feeling that there is a sense of pride among people and investors in working their way around obstacles. I live in Belgium, for example, and we have the highest rate of income tax in Europe. Avoiding paying income tax any which way possible is almost like a noble sport here... honestly. Everyone does it, and people enjoy helping eachother to do it also!

T.Stuart - Great analysis. I am still positive about BTC in China long term.

Since everyone knows what will happen at 31st januari i dont think it will influence that much.
Everyone who wants to get out will be out before that date or are already out, the others just hold. Just look at the volumes in china.

People say it's artificial/fake.

Looking at the volumes my best guess is most of them are keeping their btc and wait instead of cashing out.

Nothing is going to happen in 31 all chinese bitcoin volume are now in powerful hands who actually wants to trade and hold it, now there will be no problem chinese will come out from china and start trading in HK or SG so nothing will happen. Chinese Government is kicking there ass themselves.

We're leading now baby!  ;)

China is the worlds largest exporter, that makes it the largest user of international transactions, which is what bitcoin is all about no?
If bitcoin loses china userbase it will not be a good thing. Hopefully this may force bitcoin in China to circulate and serve the purpose it was made for.

Won't be able to figure out what that meeting is all about.  Nothing but rumours out of China.  They are not the most open place.  We'll have to wait and see what the price tell us around the end of Jan.

Perhaps the crash in China created some massive Bitcoin whales (someone paid CNY for them $240 coins). Perhaps these whales are holding out, in anticipation of a U-Turn from the Chinese government. Perhaps insiders know that Bitcoin will be allowed to continue in China.....


.......but perhaps not.

Perhaps if China does not change it's stance on Bitcoin, perhaps these whales are going to be forced to dump, in which case we had all better run for cover when the time comes, if we see it coming!?

I doubt very much they are all going to dump. Think about it. Looking west and towards the future of Bitcoin, would you dump?

Bitcoin offers a very real opportunity to an investor. It also offers a strong incentive to a bigger buyer to look out at the world as if it was their oyster.

An excellent point.

If I were wealthy Chinese, I would certainly be interested in having a stake in an asset that has so far exploded in value and over the longer term, looks set to continue to gain value. If nothing else, a great way of shifting wealth around the world off the radar of the PBOC.

However, even if your assertion is generally true, it is not going to be universally true. But lets say it is generally true and when the curtain comes down on CNY Bitcoin transactions (still over 50% of all Bitcoin exchange transactions btw, whether they be fake or real), and a staggering 70% of Chinese held Bitcoins simply go into cold storage, that still leaves 30% that are going to be getting liquidated before the month is out. This would still be a very significant volume of Bitcoin and even they were all bought on the cheap by wealthy Chinese investors accepting that these Bitcoins are for cold storage, are the USD exchanges simply going to behave as though the big wind down in China doesn't exist?

Despite your numerous posts stating that CNY exchanges are no longer leading the market, I have looked and would say that CNY exchanges are still most certainly leading the market. I bought in at $770 last night, and went to bed calmed by the fact that Huobi had just taken a great big leg up (yes, Bitstamp followed).

First thanks for explaining your position.

I don't know about Huobi but BTC China was most definately following Gox and Stamp with some clear lag. Stamp led the whole thing.

It's time to show some resilience in the face of any Chinese pressure. It is already happening. If we had had this negative news three weeks ago I bet prices would have halved instantly! But look at today so far: a return to a normally bullish trendline.

Just remember that Bitcoin has huge untapped markets to move into in many countries, and that this is starting to happen.

This means that fundamentally there is no reason for anything happening in China to affect Bitcoin at this early stage. Like if you put a rock on top of a seed it'll grow right around it; chop a tree down and it's finished.

Bitcoin is not a tree yet which means that as long as it has any room for growth (and it has plenty) fundamentally it will not be affected  by China.

The problem is us! It's psychological. If we panic, lose face, turn and run, we will just be wasting our time. There's nothing to fear. Don't falter in the face of negative propaganda, which sadly will probably be passed about even by a few people here.

Hodl on!

Nothing to fear?

would the possibility of:

MtGox: $160 Bitstamp $110 BTC38: $0.00

fear you out a bit?

When I first became aware of you on here T.Stuart, you seemed balanced enough in your posts, but as time has progressed you have become more and more fanatical.

I bought in at $835, had every opportunity of turning a tidy profit, but when I came back from a walk, I saw that Bitcoin on Bitstamp had broken through a very important $905 short term resistance and was trading at $880, before any 'news' came on the scene, I recognise this to be a bearish signal and like a skittish reactionary bitch, I sold everything right away (as opposed to waiting on the inevitable bounce). Although I cut my own throat once again, turns out I did read the signals correctly despite being a nervy trigger happy bitch which is my flaw, being drunk on Bitcoin punch is yours.

I would suggest that there is not much more upside in this market for the time being, but a good bit of downside is yet to come. You have been raving on about Bitcoin since $500 level, so I am assuming that you bought in then. If so, take some profits man!

Bitcoin is no longer about anarchy or monetary freedom, just look at the human behaviour that has enveloped around it. Bitcoin is the spawn of Satan and the only reason you should be into Bitcoin is for what it can do for you, whether that be buying substances that you couldn't pay for using conventional means, shifting money around, or speculating. I suspect that the reason so many around here have such a hard-on for Bitcoin is for the latter reason, speculation. That means they are out to seek profit and if this is the case, the need to get of the Bitcoin kool-aid and recognise when the right times are to take some profit.