People's Bank of China hammer the Bitcoin

[ivomm]

On Saturday night, December 7, the value of bitcoin on world markets continued the decline which begun on Thursday, falling to nearly $ 820. Last the cryptocurrency traded at these levels on 22 December. There are several reasons but one of them is a quite important precedent in crypto world. I am talking of an outright attempt of the PBOC (People's Bank of China) to hammer the bitcoin with the hope to stop the devaluation of the yuan.

Recall before it became known about the meetings that had PBOC with the representatives of the three leading bitcoin exchanges in China - BTCC, OKCoin and Huobi. According to its results, the regulator said that due to the high volatility of Bitcoin institutional and individual investors, we need a rational approach to the issue of investment funds in cryptocurrency.

Representatives of the exchanges themselves have tried to reassure the community, saying that we are not talking about any "ban" of Bitcoin in China. However, there are new messages on Saturday night that the PBOC intends to limit the possibility of exchanges in regard to attracting new users.

In particular, according to the publication in Caixin, the central bank intends to prohibit exchanges to mention in its promotional materials yuan's devaluation and the attractiveness of Bitcoin as an alternative investment vehicle, and promote their offline services.

It is also alleged that some of these exchanges were forced to take them to put forward demands and withdrew their marketing strategies.

BTCC posted this notice on their site:

"BTCC regularly meets with the People's Bank of China and we work closely with them to ensure that we are operating in accordance with the laws and regulations of China. As the longest running exchange in the world, we have always adhered to strict AML/KYC policies and continue to be compliant with all current regulations in China. The press release put forth from the PBOC today outlines that there is significant volatility in bitcoin trading, and also quoted from a notice released in 2013 saying that bitcoin is a virtual good and doesn’t have legal tender status. All of our users should be aware of the current policies on virtual goods as well as the risks involved in trading in volatile markets."

Now, what is the truth behind all this veiled explanations? What did really happen? The truth is as simple as that: the owners of BTCC, OKCoin and Huobi selled enourmous amount of bitcoin for yuan to satisfy the dictatorship of PBOC. This lead to an avalanche type of effect on the price of bictoin. I found it particular disturbing that the idea of decentralized cryptocoin is compromised by the owners of the biggest exchanges. Let's protect our freedom and fight back! Get out of any chinese exchanges, sell yuans and buy cryptocoins. Let's show we are stronger!

[Jet Cash]

I thought the recent rise in the price of Bitcoin was due to Chinese capital restructuring for tax purposes as we enter a new year of world uncertainty. The recent drop is probably just a natural reversion to its economic value as the capital flight reduced.

[Mike Man]

What I don't understand is why there would be this, perceived, capital outflow. What would cause that?

[p_linz]

You have to explain your conclusion more.
Why would selling bitcoin for yuan satisfy the PBOC? Why/How would the idea of decentralized cryptocoins be compromised by this?

[Xester]

The central bank of China has announced to the public that they must be careful on investing on bitcoins due to volatility. It has made a big impact on the Chinese people that also has contributed to the dump of bitcoins. And another thing China puts limit to the capacity of chinese people to transfer dollars outside of China from 50k$ to 10K$ annually. To regain the dollar loses possibly China has sold huge volumes of bitcoin to refill their treasury.
Soon another hammering will happen when China launches their fiat digital currency on September.

[Mike Man]

I still don't understand why the Chinese people would feel so hell bent urged to ship their wealth offshore. Doesn't it buy more in China?

[Shiroslullaby]

I thought the recent rise in the price of Bitcoin was due to Chinese capital restructuring for tax purposes as we enter a new year of world uncertainty. The recent drop is probably just a natural reversion to its economic value as the capital flight reduced.

I think this is the most correct analysis.
Government intervention into interest rates and rebuying of currency caused the Chinese RMB (Yuan) to increase in value and give investors reason to keep their money in fiat currency.
Bitcoin was overheated due to a sharp rise in price and many people saw a chance make a profit by dumping coins.

The next few months will be interesting as Donald Trump takes office.
Depending on trade policies and the price of US and Chinese currency, the price of Bitcoin could definitely be affected.

[malekbaba]

It was obvious that there will be a correction of BTC price. Every crypto currency goes through this route. If price goes up according to prediction or not, price declines after sharp rise. It is quite normal in case of any crypto and BTC is nothing but a crypto. Sometimes it is plain gambling. I do not know other causes. May be the OP is fully aware of the news. I still do not think it is a good time to buy BTC

[VeneVici]

It was obvious that there will be a correction of BTC price. Every crypto currency goes through this route. If price goes up according to prediction or not, price declines after sharp rise. It is quite normal in case of any crypto and BTC is nothing but a crypto. Sometimes it is plain gambling. I do not know other causes. May be the OP is fully aware of the news. I still do not think it is a good time to buy BTC

Look at the Chinese Yen's charts, and compare it to Bitcoin. The Yen rose up so Bitcoin's price had to go in a freefall. It's been just a bubble, like 2013. The good thing is that the price will now probably remain at a stable 700-1000$ price for the next few quarters: Q1, Q2 and Q3. I think the big bubble will come up in the following winter, so Q4 2017. I'm looking at the news and events very carefully, and things aren't looking good in the future months.

[franky1]

the PBOC do not care about bitcoin exchanges.

remember this simple truth

for every bitcoin buyer is a bitcoin seller.. ergo for every yuan trader is another yuan trader.
Yuan doesn't disappear/get burned. it just passes hands.

it doesn't disappear in a bottomless pit of paper money. it sits in chinese banks. staying in chinese banks circulation

ultimately nothing changes for the yuan apart from which account holder is holding the yuan.

the threat is not bitcoin trading using bank accounts. the threat has nothing to do with bitcoin exchanges.
the real threat is where
bank notes (as paper) are cheaper than toilet paper. where people begin wiping their ass and flushing/destroying bank notes.
bank notes (as paper) are cheaper than home fireplace wood. where people begin burning bank notes to stay warm

literally destroying currency and taking it out of circulation.
that is a scenario unrelated to bitcoin.


also
the banks by law(regulation) cannot buy bitcoin.. so if you think the banks bought bitcoin simply to crash the market. then you are foolish.

even if banks were able to do this, guess what.. they are doing nothing more then handing funds they have to other people for themselves to lose out on.
banks want profits, they want trickle UP economics, not trickle down economics.
yes banks offer loans to pretend they are doing trickle down.. but they ask for 10x% back so its trickle up eventually.


also
banks know that dumping the price of another currency does not destroy it, it advertises it as a "discount day" of that outside currency, driving more people towards it while its cheaper.
yes inexperienced traders already holding the outside currency cry and panic. but experienced traders love the opportunity to double down and average out their holdings. experienced traders not yet holding love the opportunity to buy in cheap.


summary
all the PBOC were doing is stating a standard consumer risk memo that investments are risky and people can lose aswell as profit

this price drop has nothing to do with PBOC doing funny things maliciously. it is more than likely the exchange owner themselves taking advantage of the new AllTimeHigh a few days ago, to cash out to pay their bills.

[alani123]

If People's Bank of China wanted to hammer bitcoin they could've done so much earlier but it's questionable if such an attempt would have had any impact in bitcoin's functionality as the Chinese users are probably already tech savy enough to keep using cryptocurrencies. The probable effect would have been the de-legitimization of bitcoin centered businesses but then again, this would have been much easier for a central bank.

I think that the outcome of the recent rally was much simpler than the narrative talking about China wants to portray it. Massive profit taking took place and whales crashed the market. Such sell orders aren't organic and likely come from big players or even outright market mnipulators.

[densuj]

Hmmm.... I think it is part of strategy investment into bitcoins or for grow their economic, they always have plan for making profit from bitcoins and related with it.
I don't know actually their plan but it is like dumping bitcoins until there are no value,
at least bitcoin's price going down and cheap then they buy back again bitcoins.

But it is just my opinion and speculation, I am waiting what next doing.

[mk3000]

Of course central banks are going to do these kind of things against bitcoin. it's just a veiled attempt at controlling it. Sadly, bitcoin can be manipulated this easily but not for very long.

[BillyBobZorton]

the PBOC do not care about bitcoin exchanges.

remember this simple truth

for every bitcoin buyer is a bitcoin seller.. ergo for every yuan trader is another yuan trader.
Yuan doesn't disappear/get burned. it just passes hands.

it doesn't disappear in a bottomless pit of paper money. it sits in chinese banks. staying in chinese banks circulation

ultimately nothing changes for the yuan apart from which account holder is holding the yuan.

the threat is not bitcoin trading using bank accounts. the threat has nothing to do with bitcoin exchanges.
the real threat is where
bank notes (as paper) are cheaper than toilet paper. where people begin wiping their ass and flushing/destroying bank notes.
bank notes (as paper) are cheaper than home fireplace wood. where people begin burning bank notes to stay warm

literally destroying currency and taking it out of circulation.
that is a scenario unrelated to bitcoin.


also
the banks by law(regulation) cannot buy bitcoin.. so if you think the banks bought bitcoin simply to crash the market. then you are foolish.

even if banks were able to do this, guess what.. they are doing nothing more then handing funds they have to other people for themselves to lose out on.
banks want profits, they want trickle UP economics, not trickle down economics.
yes banks offer loans to pretend they are doing trickle down.. but they ask for 10x% back so its trickle up eventually.


also
banks know that dumping the price of another currency does not destroy it, it advertises it as a "discount day" of that outside currency, driving more people towards it while its cheaper.
yes inexperienced traders already holding the outside currency cry and panic. but experienced traders love the opportunity to double down and average out their holdings. experienced traders not yet holding love the opportunity to buy in cheap.


summary
all the PBOC were doing is stating a standard consumer risk memo that investments are risky and people can lose aswell as profit

this price drop has nothing to do with PBOC doing funny things maliciously. it is more than likely the exchange owner themselves taking advantage of the new AllTimeHigh a few days ago, to cash out to pay their bills.

But there were all kind of rumors when the correction happened. I heard on reddit that China was banning bitcoin, I also heard that Coinbase was hacked... a couple other more as well. And like you said all PBOC did was warm users of the volatility, and this caused the rumors and caused the crash, ironic isn't it. And no matter what, the price was growing too fast anyway and needed a correction, now the correction already happened and we will go back to 1k but slower.

[aso118]

What is the truth behind all this veiled explanations? What did really happen? The truth is as simple as that: the owners of BTCC, OKCoin and Huobi selled enourmous amount of bitcoin for yuan to satisfy the dictatorship of PBOC. This lead to an avalanche type of effect on the price of bictoin. I found it particular disturbing that the idea of decentralized cryptocoin is compromised by the owners of the biggest exchanges. Let's protect our freedom and fight back! Get out of any chinese exchanges, sell yuans and buy cryptocoins. Let's show we are stronger!

All this is pure speculation. Exchanges don't have to sell bitcoins for the price to drop. The statement by PBOC would have been sufficient to spook some investors and initiate a correction in the price. And please remember, we are still way ahead of where we started.