A Chinese look at the situation in China

[Dalmar]

Interesting stuff, keep up informing us.

[MatTheCat]

In furtherance to the OP's description of the Chinese governments methodology of 'advising' of their intent and 'leaving' it up to groups and individuals to cooperate with their intentions, I read the following recent article, containing a rather telling quote from a Chinese Bitcoin speculator:

“We’re reading the tea leaves,” says Shanghai Bitcoin entrepreneur Jack Wang. “But it looks like they’re going to squeeze the exchanges until they’re not able to operate.”

http://www.forbes.com/sites/kashmirhill/2014/01/06/china-bites-into-bitcoin/

China is still by far the biggest Bitcoin trading nation. Huobi and OKcoin who have implemented 'work-arounds' to the transaction bans have overtaken BTC38 who have decided to fully comply with the 'intent' of the Chinese government. If China does finally put its foot down in a way that allows no work-arounds such as vouchers or private bank transfers, then how anyone can delude themselves that Bitcoin won't suffer a brutal correction as a consequence, is beyond me. Of course, it is a big 'if' indeed and may never fully come to pass.

I have been bearish since the last crash rationalising my coldness on Bitcoin with this China thing still needing to be played out but events have proven that my attitude has forced me to miss out on almost 100% profits to date (I did actually have heavy buy-ins triggered at ~$540). I have traded the rise here and there, turning a small slice of profit as things have went, give or take the odd stint if idiotic profit raping panic selling. The thing that is knawing at me, is do I buy in now all the same in the hope that the whole China thing will somehow be gleaned over, and that Bitcoin can look forward to its otherwise admittedly bright looking future, or do I do the thing that common sense seems to be yelling at me and stay the fuck out until China is done and dusted.

The Chinese have previous in regulating a virtual currency that came to be traded on commodity markets alongside Gold, out of existence.

[Nagle]

One thing I find fascinating is the idea that the govt has the best interests of China as a whole in mind.  To an American like me, that seems too unbelievable to be true.  We are used to our govt using power to help themselves and their cronies at the expense of the people.  A libertarian like me believes everyone in govt is screwing the majority to help the few.  Democrats believe the Republicans are screwing the majority to help their few friends, and Democrats vice versa.  Either way, most Americans think they're being screwed.  It seems strange that people in the Chinese govt place loyalty above profit.

He is speaking of loyalty to China's leadership. The leadership of China tolerates little internal dissent. They are also very careful to prevent anyone from forming a center of power that doesn't have to be loyal to the leadership. For example, the managers of the larger state owned companies are moved from one company to another every few years. This prevents them from acting like owners. And remember what happened to Bo Xilai.

Recommended reading: "How Asia Works".

[zhangweiwu]

Interesting stuff, keep up informing us.

You guys certainly encouraged me by acknowledging the information is useful and fills the gap, and by tipping me. However the last sleepless night has costed my health, weakened me, and I was in fever the days following. Can't expect frequent posts from me.

One thing I find fascinating is the idea that the govt has the best interests of China as a whole in mind.

He is speaking of loyalty to China's leadership.

Nagle is correct. Living in China and never been to an English speaking country, I thought by saying loyalty everyone already knows what it means. This word Loyalty was turning into a negative word in China (meaning: defend position in a coterie by hurting everyone outside, think of Mafia for example) and I (mistakenly) took it that the rest of the world think so too. A lesson for me to watch for culture shock.

Thank you very much for taking the time to explain some fairly complex structures of Chinese market. This is an interesting view which helps me fill in a lot of details. I'm also interested in what kind of people are currently interested in Bitcoin, like T.Stuart was asking?

I will answer that in a separate post. It is a topic of its own, and a bit lengthy. But I may fail it, for I am no longer rich in my time.

[zhangweiwu]

I have been bearish since the last crash rationalising my coldness on Bitcoin with this China thing still needing to be played out but events have proven that my attitude has forced me to miss out on almost 100% profits to date (I did actually have heavy buy-ins triggered at ~$540). I have traded the rise here and there, turning a small slice of profit as things have went, give or take the odd stint if idiotic profit raping panic selling. The thing that is knawing at me, is do I buy in now all the same in the hope that the whole China thing will somehow be gleaned over, and that Bitcoin can look forward to its otherwise admittedly bright looking future, or do I do the thing that common sense seems to be yelling at me and stay the fuck out until China is done and dusted.

I am not so sure. I feel that in China the gloomy outlook has been built in the current price and those who would quit has done so. As I do scrapping, I always keep half of my hand in coins and half in cash, thus if it really go down I would still leverage the opportunity.

[Lloydie]

I have been bearish since the last crash rationalising my coldness on Bitcoin with this China thing still needing to be played out but events have proven that my attitude has forced me to miss out on almost 100% profits to date (I did actually have heavy buy-ins triggered at ~$540). I have traded the rise here and there, turning a small slice of profit as things have went, give or take the odd stint if idiotic profit raping panic selling. The thing that is knawing at me, is do I buy in now all the same in the hope that the whole China thing will somehow be gleaned over, and that Bitcoin can look forward to its otherwise admittedly bright looking future, or do I do the thing that common sense seems to be yelling at me and stay the fuck out until China is done and dusted.

I am not so sure. I feel that in China the gloomy outlook has been built in the current price and those who would quit has done so. As I do scrapping, I always keep half of my hand in coins and half in cash, thus if it really go down I would still leverage the opportunity.

You are a very smart man but I mostly admire your patience in waiting for a dip. I tried to wait but I can't stop buying.

[zhangweiwu]

You are a very smart man but I mostly admire your patience in waiting for a dip. I tried to wait but I can't stop buying.

It (can't stopy buying) perhaps is not unwise. We will see. At the moment panic sell risks higher than panic buy. "Buy in panic, sell in peace" may still be a good strategy.

[MatTheCat]

I am not so sure. I feel that in China the gloomy outlook has been built in the current price and those who would quit has done so. As I do scrapping, I always keep half of my hand in coins and half in cash, thus if it really go down I would still leverage the opportunity.

This might be generally true but it can never be absolutely true.

Even if 80% of Bitcoin holders in China intend to hold their coins post Jan 2014, there will still be 20% that need to cash out.

This would still trigger a significant sell-off event.

[disclaimer201]

Latest regulation simply means China will be left out of a billion dollar market. At least until the party changes their attitude. Perhaps they will once they realize they are hurting the Chinese national economy.

Bitcoin price and economy will continue to rise everywhere else if 'the party' likes it or not.

[traderCJ]

Bobby Lee sounds pretty optimistic.

http://www.reddit.com/r/Bitcoin/comments/1up06f/fyi_update_email_from_btc_china_today/

[MatTheCat]

Bobby Lee sounds pretty optimistic.

http://www.reddit.com/r/Bitcoin/comments/1up06f/fyi_update_email_from_btc_china_today/

If this is how things are allowed to stand after the 31st Jan, then it changes everything.

[bitbrasil]

Bobby Lee sounds pretty optimistic.

http://www.reddit.com/r/Bitcoin/comments/1up06f/fyi_update_email_from_btc_china_today/

Interesting he doesn't mention anything about the government regulations(ban)

[outofservice]

Thank you very much for your post.

It is very interesting to read what you say about regulation and royalty.

It is also great to hear your predictions, which give a balanced view of possibilities and steer away from simplistic black and white proposals.

The general gut feeling I have been having about the evolution of Bitcoin in China is along the lines you describe.

"China crash influnced global market once. However the global market won't always follow."

There are signs already that BTC China is lagging behind Bitstamp and Gox. My gut feeling is that many people here are now coming to terms with the idea of China not leading the market.

You propose a couple of ideas as outcomes:

"1. Firmly believing that the government have control, China maintains low price and become a bitccoin export country, and receive moderate media coverage. Bitcoin is thus allowed to live.

2. The spikes in global market calls again the passion in China. And when our spirite of gambling is lit up, anoher spike in China and warm media coverage in China will lead a harsher ban from the government, probably force bitcoin into black market."

I am not sure how long proposal 1 could hold. The excitement over Bitcoin is increasing and there are consistent signs that it is just beginning to break into the mainstream in areas such as e-commerce, investments, finance, etc. There are of course diverse opinions but it seems certain that there will be increased investment in the short to mid term at least, which should have the predictable effect on prices. It could well be the case that the Chinese spirit is lit up by this, as you say!  

In which case a possible scenario where Bitcoin could become a black market commodity in China could play out.

In any case could you give us an idea of the Bitcoin community in China? Is it very diverse? Many tech-types? Big investors? A plaything of the elite? Sorry if this sounds like a stupid question but it would be interesting to know your opinion about what kind of people hold Bitcoin now, and also about what kind of people would continue to hold Bitcoin if scenario 2 plays out.

Thanks again.

In any case could you give us an idea of the Bitcoin community in China? Is it very diverse? Many tech-types? Big investors? A plaything of the elite?

Interesting, good questions. I'd like to know also.

[MatTheCat]

Interesting he doesn't mention anything about the government regulations(ban)

Well, that would be negative, wouldn't it.

If you were a major share-holder in a company, would you want a CEO that went about blurting out negative statements?

[mellowyellow]

Just wanted to say thank you for taking the time to write the post. It's very difficult for us in the west to understand the psyche of the average Chinese person, perhaps it's the same the other way around?

Underneath the btc phenomenon there is another social shift quietly happening, the ordinary people of the east and west are getting to know each other, and that can only be a good thing.

[ErisDiscordia]

Thanks a lot for this perspective!

I've traveled through China for a month, but I feel like I don't understand its people any better after that trip than before 

[bambou]

Thanks for that objective summary! Part of my family is Chinese and I think you just nailed the whole point regarding their politics.

[nicolaennio]

thanks

[BitchicksHusband]

Here's a seemingly well-researched article on Wired that pretty much confirms a lot of the speculation on this thread:

http://www.wired.com/wiredenterprise/2014/01/huobi/

[xephyr]

Here's a seemingly well-researched article on Wired that pretty much confirms a lot of the speculation on this thread:

http://www.wired.com/wiredenterprise/2014/01/huobi/

Thanks for this. While I appreciate OP's sentiment, his words are sometimes opaque and true meaning hard to fathom.