BTC China Endgame??

[Azeh]

Re-post from Noob sub-forum now that I have posting privileges.

Hello All,

I live and work in China and bought Bitcoins through BTC China in October. On the way down I sold my coins.  I sent a few back to Coinbase on the last huge sell-off and arbed the market. In the process I cashed out my initial investment.

I currently have a nice chunk of fiat sitting on the BTC China exchange and I believe there is no way the government will allow any further funding from banks or 3rd parties to the exchanges, so my question is this:

What do you guys think will happen with the BTC China exchange?

My speculation:

When current BTC China users realize the market is not coming back in China many more will withdraw CNY from the exchange, the price will collapse to new lows as users get out of BTC and back into CNY.  Bitcoin becomes extremely cheap compared to other exchanges.  At this point I buy all I can and transfer out.

Please discuss your thoughts on this scenario.

Thanks

[N12]

A slow and complete exodus as both CNY and BTC flee the exchange. Although the price will probably continue to stay lower, it is unlikely to go too much lower than western exchanges because BTC could be sold by other means, so the Chinese won't just sell them for next to nothing.

The endgame is 0 CNY, 0 BTC and no trades.

[Azeh]

A slow and complete exodus as both CNY and BTC flee the exchange. Although the price will probably continue to stay lower, it is unlikely to go too much lower than western exchanges because BTC could be sold by other means, so the Chinese won't just sell them for next to nothing.

The endgame is 0 CNY, 0 BTC and no trades.

Agreed, volume is already drying up on BTC China and OkCoin.

True, however, if the Chinese prohibit CNY withdrawals (which I think will happen next), It will be very difficult for average users to sell their existing Bitcoins and cash out.

[jl2012]

A slow and complete exodus as both CNY and BTC flee the exchange. Although the price will probably continue to stay lower, it is unlikely to go too much lower than western exchanges because BTC could be sold by other means, so the Chinese won't just sell them for next to nothing.

The endgame is 0 CNY, 0 BTC and no trades.

Agreed, volume is already drying up on BTC China and OkCoin.

True, however, if the Chinese prohibit CNY withdrawals (which I think will happen next), It will be very difficult for average users to sell their existing Bitcoins and cash out.

They could sell bitcoin at BTC-E, cash out as USD code, and sell the code for CNY. I predict this as the future of bitcoin trading in China

[Azeh]

A slow and complete exodus as both CNY and BTC flee the exchange. Although the price will probably continue to stay lower, it is unlikely to go too much lower than western exchanges because BTC could be sold by other means, so the Chinese won't just sell them for next to nothing.

The endgame is 0 CNY, 0 BTC and no trades.

Agreed, volume is already drying up on BTC China and OkCoin.

True, however, if the Chinese prohibit CNY withdrawals (which I think will happen next), It will be very difficult for average users to sell their existing Bitcoins and cash out.

They could sell bitcoin at BTC-E, cash out as USD code, and sell the code for CNY. I predict this as the future of bitcoin trading in China

Interesting.  What do you mean sell out as USD code and then sell USD code for CNY?  Also, how would you then get the CNY back to China? I would think this would be a huge hassle and incur a lot of fees.  What would this do to the price of Bitcoin on Chinese exchanges?

You bring up an interesting point about future Bitcoin trading in China.  I really think it will effectively be pushed underground.

[Azeh]

Interesting.  What do you mean sell out as USD code and then sell USD code for CNY?  Also, how would you then get the CNY back to China? I would think this would be a huge hassle and incur a lot of fees.  What would this do to the price of Bitcoin on Chinese exchanges?

You bring up an interesting point about future Bitcoin trading in China.  I really think it will effectively be pushed underground.

Related to the above post:

I think it's wishful thinking to think China will recover.  I think it is game over in China.  I've been here 4 years now and have a decent idea the way the government operates. 

First, they seemed open and friendly to Bitcoin.  A tactic only, while behind the scenes they viewed it as a threat and tried to determine how to move against it.

Second, they released a vague and general statement through the PBOC banning financial institutions from involvement in Bitcoin, while still stating individuals are free to own it.  Again, on the surface appearing accepting of Bitcoin, but those that understand how government works here, reading between the lines as a warning shot to get the hell out.  My Chinese girlfriend actually read the press release and warned me in advance that Bitcoin was now being taken seriously by government.

Not long after, a secret meeting was held with payment processors to stop all funding of exchanges.  Again, moving in the direction of a complete Ban, but still leaving the door open for individuals to trade bitcoin and withdraw back to CNY.

Next step???  I believe they will set a time banning financial institutions from allowing CNY withdrawal.  The government is just corralling the herd.  Once this happens, a stampede to get money off chinese exchanges happens.  Price falls dramatically.

Result:  Bitcoin still legal to hold and trade just as the government initially had said.  However, essentially worthless for the average Chinese without a foreign bank account.

[jl2012]

A slow and complete exodus as both CNY and BTC flee the exchange. Although the price will probably continue to stay lower, it is unlikely to go too much lower than western exchanges because BTC could be sold by other means, so the Chinese won't just sell them for next to nothing.

The endgame is 0 CNY, 0 BTC and no trades.

Agreed, volume is already drying up on BTC China and OkCoin.

True, however, if the Chinese prohibit CNY withdrawals (which I think will happen next), It will be very difficult for average users to sell their existing Bitcoins and cash out.

They could sell bitcoin at BTC-E, cash out as USD code, and sell the code for CNY. I predict this as the future of bitcoin trading in China

Interesting.  What do you mean sell out as USD code and then sell USD code for CNY?  Also, how would you then get the CNY back to China? I would think this would be a huge hassle and incur a lot of fees.  What would this do to the price of Bitcoin on Chinese exchanges?

You bring up an interesting point about future Bitcoin trading in China.  I really think it will effectively be pushed underground.

On BTC-E, one can withdraw his USD (or EUR and RUR) balance as a redeem code (with 0 fee). Whoever gets this redeem code can collect the USD. Therefore, a Chinese user who wants to sell their bitcoin could sell on BTC-E, and withdraw as USD redeem code, and sell the code to someone else within China for CNY through payment processor Alipay (zero fee or very very low fee). The whole thing is zero fee (except the 0.2% BTC-E transaction fee). It is better than direct OTC XBT/CNY exchange because the USD/CNY rate is much more stable.

[dancupid]

Bitcoins can be sent to any other exchange in the world and cashed out in other currencies.  It's not that expensive (same as Americans using Gox)

If it's harder to buy bitcoins in China, then bitcoins will be worth more in China.

(I live in China - I bought some more with the last money I had on btcChina and withdrew bitcoins - I didn't sell after the announcement, nor did I withdraw RMB)

[Azeh]

A slow and complete exodus as both CNY and BTC flee the exchange. Although the price will probably continue to stay lower, it is unlikely to go too much lower than western exchanges because BTC could be sold by other means, so the Chinese won't just sell them for next to nothing.

The endgame is 0 CNY, 0 BTC and no trades.

Agreed, volume is already drying up on BTC China and OkCoin.

True, however, if the Chinese prohibit CNY withdrawals (which I think will happen next), It will be very difficult for average users to sell their existing Bitcoins and cash out.

They could sell bitcoin at BTC-E, cash out as USD code, and sell the code for CNY. I predict this as the future of bitcoin trading in China

Interesting.  What do you mean sell out as USD code and then sell USD code for CNY?  Also, how would you then get the CNY back to China? I would think this would be a huge hassle and incur a lot of fees.  What would this do to the price of Bitcoin on Chinese exchanges?

You bring up an interesting point about future Bitcoin trading in China.  I really think it will effectively be pushed underground.

On BTC-E, one can withdraw his USD (or EUR and RUR) balance as a redeem code (with 0 fee). Whoever gets this redeem code can collect the USD. Therefore, a Chinese user who wants to sell their bitcoin could sell on BTC-E, and withdraw as USD redeem code, and sell the code to someone else within China for CNY through payment processor Alipay (zero fee or very very low fee). The whole thing is zero fee (except the 0.2% BTC-E transaction fee). It is better than direct OTC XBT/CNY exchange because the USD/CNY rate is much more stable.

Wow, I didn't know that.  Could be an option for me as well.  Thanks.

However, I highly doubt anyone except the die-hard BTC user would be doing this.  I think most folks that got involved in China during the run-up were just looking to speculate and make a quick and easy return on their money.  Maybe down the road, as Bitcoin gains in value and is more established in the world more Chinese would do this.

[esse83]

I didn't sell after the announcement, nor did I withdraw RMB

Why? You felt the news was neutral pricewise or that in time the price will skyrocket in China?

[gog1]

I'm quite surprised the gap between Chinese BTC prices and BTC prices elsewhere is rather low.  People must be finding a way of bypassing the capital control.

[Azeh]

Bitcoins can be sent to any other exchange in the world and cashed out in other currencies.  It's not that expensive (same as Americans using Gox)

If it's harder to buy bitcoins in China, then bitcoins will be worth more in China.

(I live in China - I bought some more with the last money I had on btcChina and withdrew bitcoins - I didn't sell after the announcement, nor did I withdraw RMB)

I understand that Bitcoins can be cashed out on other exchanges, but it's much easier for you and me with foreign bank accounts.  I really don't think typical Chinese are gonna go through the hassle, unless of course, the opportunity cost becomes too great.

Doesn't Gox have the opposite problem as exchanges in China.  Sure, I can cash out on my Chinese exchange, but how do I get money back on the exchange to buy Bitcoins.  Isn't that why current BTC-China rates are now lower than all other exchanges. You and I might have kept most of our money on the exchanges, however I'm certain many pulled their money off the exchanges and now have no way of refunding.   

I guess my point has to do with the Chinese exchanges.  Your assuming Bitcoins are scarce in China.  In the future I agree, but right now there is a surplus of coins on Chinese exchanges and no way to get funds to buy them.  One more shake of the tree by the PBOC and more are gonna unload and cash out.

[Odalv]

Bitcoins can be sent to any other exchange in the world and cashed out in other currencies.  It's not that expensive (same as Americans using Gox)

If it's harder to buy bitcoins in China, then bitcoins will be worth more in China.

(I live in China - I bought some more with the last money I had on btcChina and withdrew bitcoins - I didn't sell after the announcement, nor did I withdraw RMB)

I understand that Bitcoins can be cashed out on other exchanges, but it's much easier for you and me with foreign bank accounts.  I really don't think typical Chinese are gonna go through the hassle, unless of course, the opportunity cost becomes too great.

Doesn't Gox have the opposite problem as exchanges in China.  Sure, I can cash out on my Chinese exchange, but how do I get money back on the exchange to buy Bitcoins.  Isn't that why current BTC-China rates are now lower than all other exchanges. You and I might have kept most of our money on the exchanges, however I'm certain many pulled their money off the exchanges and now have no way of refunding.   

I guess my point has to do with the Chinese exchanges.  Your assuming Bitcoins are scarce in China.  In the future I agree, but right now there is a surplus of coins on Chinese exchanges and no way to get funds to buy them.  One more shake of the tree by the PBOC and more are gonna unload and cash out.

what about localbitcoin ?

[Azeh]

I'm quite surprised the gap between Chinese BTC prices and BTC prices elsewhere is rather low.  People must be finding a way of bypassing the capital control.

Good point. Word is Chinese are still able to re-charge CNY on a couple of minor exchanges (huobi and btc38).  

It certainly isn't gonna last too long as the government seems to be pretty serious about going after BTC.  Watched the recent interview of Bobby Lee.  Substantial change in his demeanor since the Stanford talk, and he seemed quite agitated.  I think he knows the what's happening but is powerless to do anything.  

[Azeh]

what about localbitcoin ?

I haven't tried localbitcoin, but I'm sure that will become an option down the road.  But as far as massive centralized exchanges go, I think that little experiment in China is over.

[zeroday]

I don't understand why Chinese guys want to sell bitcoins and get CNY.
The smartest move would be spending all remaining on exchange CNY to buy cheap bitcoins. This will be the best investment in their life.
I bet the owner of BTCchina has already grabbed as much as possible BTC and has become the part of bitcoin elite.

Even if you need to convert some of bitcoins in CNY, you can just go to Hong Kong, sell BTC for USD and then convert it into CNY.

[Azeh]

I don't understand why Chinese guys want to sell bitcoins and get CNY.
The smartest move would be spending all remaining on exchange CNY to buy cheap bitcoins. This will be the best investment in their life.
I bet the owner of BTCchina has already grabbed as much as possible BTC and has become the part of bitcoin elite.

Even if you need to convert some of bitcoins in CNY, you can just go to Hong Kong, sell BTC for USD and then convert it into CNY.

Because most (not all) Chinese are drones and will do what ever big daddy government tells them to do.  Any kind of problem and the next answer out of everyone's mouth is how will the government handle it.  Also, most here don't really think about the inflationary nature of CNY fiat, at least not to the degree we do in the West.

[cr1776]

Exactly.  It doesn't take a lot, in percentage terms, of Chinese people who have some extra money to put them in bitcoin to protect themselves from the currency controls, inflation, seizures etc. to make a large difference in price.

At worst they can eventually cash out overseas and have an escape valve if it comes to it.

I don't understand why Chinese guys want to sell bitcoins and get CNY.
The smartest move would be spending all remaining on exchange CNY to buy cheap bitcoins. This will be the best investment in their life.
I bet the owner of BTCchina has already grabbed as much as possible BTC and has become the part of bitcoin elite.

Even if you need to convert some of bitcoins in CNY, you can just go to Hong Kong, sell BTC for USD and then convert it into CNY.

[GigaCoin]

Case for BTCChina shutdown is very real

[Melbustus]

I don't understand why Chinese guys want to sell bitcoins and get CNY.
The smartest move would be spending all remaining on exchange CNY to buy cheap bitcoins. This will be the best investment in their life.
I bet the owner of BTCchina has already grabbed as much as possible BTC and has become the part of bitcoin elite.

Even if you need to convert some of bitcoins in CNY, you can just go to Hong Kong, sell BTC for USD and then convert it into CNY.

Yeah, that seems obvious. Bitcoins just became more scarce in China. For those that understand the nature of rising global demand for them, it's a no-brainer to convert all remaining CNY to bitcoin, send the bitcoin to cold-storage, and forget about it for a while. Especially for a citizenry under heavy capitol controls without any obvious non-overbought place to put investment capital, I would think taking this final near-term opportunity to snag bitcoin would be the obvious play.