if i remember the december china crash correctly, the reversal wasnt based on some "positive news that puts an end to the china fud", its just kinda happened.
AFAIK the reversal from ~Dec/19 to ~Jan/6 has an obvious explantion: Huobi concluded that they could still operate via bank accounts instead of the big 3rd party processor (Alibaba?), and their clients gradually migrated to that medium. In fact their volume increased after Dec/16, perhaps because OKCoin and BTC-China clients moved in.
OKCoin's volume dropped by 90% after Dec/19, but apparently they "fixed" their CNY channels around Jan/2 and recovered to some extent.
BTC-China's volume crashed much harder after Dec/19. They did not want to (or were uanble to) use banks,and tried some voucher-based system instead. As a result, their volume never recovered from the post-crash lows.
The survival of the exchanges restored some of the demand for BTC in China, even it now it was mostly for speculative trading; and increased demand (and availability of money) pushed the price up again, in a slow raly that endedaround Jan/02.
Anyway, to me it is obvious that the Western exchanges are NOT reacting to Chinese FUD or news. It is the CHINESE traders who react to them; and, since October, the Western markets are just dragged along, like four poodles tied to seven huskies. Western traders should not care about PBoC decrees, just as the Chinese don't care about SecondMarket or the US tax rules.
Indeed it is hard to tell what the Western market would do if it was not tied to the Chinese one. At some times when the Chinese volume was lowest, I think I saw signs that the Western exchanges wanted UP. However, I have not verified that systematically. It may be that, without China, the Western exchanges would just stay put, with buys and asks just staring at each other from opposite sides of a wide spread.
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