from Hacker News

Bitcoin Falls 20% on PBOC Rumors, Chinese Exchanges Reinstate Fees

by CrunchyJams on 12/17/13, 3:22 PM with 68 comments

  • by tokenadult on 12/17/13, 4:53 PM

    The last time I posted a news story about a Bitcoin sell-off, most participants here didn't believe me, because the sell-off wasn't apparent in the ticker they follow.[1] Now I keep a closer eye on that ticker, to see how much lag there is in trading after market-changing news is announced. Bitcoin is still very volatile, and it's not clear who can succeed in timing the market. "Markets can remain irrational a lot longer than you and I can remain solvent"[2] is still good investment advice.

    [1] http://bitcointicker.co/

    [2] https://en.wikiquote.org/wiki/John_Maynard_Keynes#Attributed

  • by btbuildem on 12/17/13, 5:32 PM

    I've read a pretty lucid (for a change) analysis of this over at /r/bitcoinmarkets

    The gist of it was that BTCChina's long game was to kill all competition (by being first, and zero fees), wait for the surge of new users to taper off (market saturation?), and start charging a fee once they've monopolized the market.

    The OP further speculated that they must've interpreted the change of regulatory climate as disastrous, expect a major exodus, and have implemented trading fees to get at least some profit off the activity.

  • by _fs on 12/17/13, 5:09 PM

    "Bitcoin falls 20% in a day...." In other words, business as usual.

  • by deepinsand on 12/17/13, 5:09 PM

    I assume you'll see other countries' follow China's lead. There's no reason for a government not to.

    I fear this might be dire to the Bitcoin economy. Skirting wealth flight laws WAS Bitcoin's killer feature. All of the other Bitcoin use cases I know of are incremental in nature (ie, 2.5% savings on e-commerce transactions).

    The open question is if enough of a hype-market was built to keep the other use cases alive. In the case of e-commerce, I assume a rational merchant only accepted Bitcoin because of 1) viral marketing channel 2) speculative hoarding.

    The speculation MIGHT work out if the underlying Bitcoin economy was powered by the transaction volume and value of international wealth movement. Running forward it'll be from e-commerce and store of wealth, and I'm skeptical if that'll be enough.

  • by DigitalJack on 12/17/13, 4:42 PM

    Sometimes a precipitous event happens and we can say that event was for certain the cause of something going up or down on price.

    Most of the time I think there are just too many variables to so confidently point to one as the cause.

    So when I hear on the radio that the Dow went down because of xyz I just chuckle. If we were really so good at pinpointing cause and effect in the markets, the people doing so would shut up and make money.

  • by drcode on 12/17/13, 4:07 PM

    The confusing thing to me is why the price of a bitcoin went DOWN on btcChina (compared to other exchanges) MtGox, which has had a long history of problems with bank transfers, actually carries a btc price premium (because fiat currency on MtGox isn't very liquid, you have to pay more fiat to buy a bitcoin there) so this whole situation is just confusing.

    I think the most likely reason why BTCChina prices have reached parity with other exchanges is simply that the recent selloff has actually temporarily improved RMB liquidity in BTCChina accounts, since folks are stashing RMBs in their BTCChina accounts as they wait to jump back into the market.

    ...so despite the new Chinese government rules that should lower RMB liquidity, the markets seem to say that BTCChina RMB liquidity is actually pretty good for the time being.

  • by snake_plissken on 12/17/13, 10:06 PM

    Can someone confirm or better explain how Mt Gox's relatively longer amount of time to process USD withdrawal requests is causing there to be a premium over other exchanges quoted USD/BTC?

    This is how I understand it: people already have dollar denominated accounts with Mt Gox, either by selling BTC on Mt Gox or depositing money there. They want to get these dollars out, but since it takes so long for Mt Gox to process these transactions and complete the requests, people are buying BTC on Mt Gox and transferring them to other exchanges that can process the withdrawals in a quicker fashion. This is in exchange for a discount on the USD/BTC rate they will get, i.e. they will lose the premium offered by Mt Gox so that a dollar denominated withdrawal request will happen more quickly on another exchange. The net result is a higher demand for Mt Gox BTC offers, and the premium results.

  • by kolev on 12/18/13, 12:31 AM

    It amuses me when people say: "This isn't actually bad news." and, yet, Bitcoin drops 20-30-40% in just hours. Imagine what really bads news can do to it then! I secretly hope all investors and especially the amateurs who are professional only at panicking to leave the market so that we can focus on Bitcoin as a payment technology and not an investment tool. Let's be honest - most people are greedy. Most of us, too. Let's not mix greed with technology evangelism! Many will lose their hard-earned reputation by making baseless statements that Bitcoin will be tens of thousands soon while secretly hoping that somehow their small message will reach the wide audience and everybody will start buying!

  • by foobarqux on 12/17/13, 6:11 PM

    All the people who believed BTC was immune to government intervention are getting hit by a dose of reality.

  • by Tycho on 12/17/13, 6:31 PM

    If you were determined to make Bitcoin crash, how would you set about it?

  • by pepijndevos on 12/17/13, 6:03 PM

    I've wondered... if the price of a BTC differs from one currency/exchange to the next, what stops you from buying at the cheap and selling at the expensive one?

  • by quaffapint on 12/17/13, 9:01 PM

    It was pretty much guaranteed to fall since I just bought some right before that. Next time I plan on buying any, I'll let you know, so you can plan accordingly.

  • by pmorici on 12/17/13, 5:06 PM

    It's my understanding that this was all the result of someone who managed to post a fake message on the Chinese equivalent of Twitter. The problem with all the news out of China about Bitcoin is that it isn't in English so unless you speak the language it is hard to evaluate it's truthiness and instead are forced to rely on second hand sources.

    http://www.btc38.com/btc/btc_market/476.html