5 ms·

Bitcoin value dives after China banks ban

28 points by molecule 13y ago

ChrisClark 13y ago
"the virtual currency that has soared in recent months and made fortunes for some, plunged" Yes, the virtual currency that soared from $100 to $1200 has plunged down to $1000.
- _ak 13y ago
  If there's one thing we learned in the last few months is how volatile BTC is. Reports of such "crashes" are really non-news.
  - MichaelApproved 13y ago
    For financial assets, the term "crash" has typically meant a drop of 20%. This would apply to the recent bitcoin decline from $1,200+ to sub $1,000. Edit: 10% drop is considered a "correction". 20% drop is usually a bear market.
    - sentenza 13y ago
      These fluctuations, however, show that Bitcoin cannot fulfill one of the central functions of currency: Exchange for goods. How many of these multi-dozen-percent downward fluctuations will it take before those storeowners and shops that take bitcoin stop doing so or start maintaining an insane markup on Bitcoin prices?
      - ChrisClark 13y ago
        That's the thing. Bitcoin needs to grow a LOT more before it can start becoming stable.
      - ok_craig 13y ago
        I just bought a $1000 plane ticket a few days ago for bitcoin. Seems like that's fulfilling the role of a currency. You should know that you don't actually have to hold bitcoin to accept it as a payment method. Services like Coinbase let you instantly exchange it to cash if you use their merchant tools, so the merchant is actually exposed to zero risk.
        sentenza 13y ago
        Ah, that explains it. It would be interesting to know what mechanisms Coinbase et al use to avoid balance sheet fallout by sudden downward fluctuations.
        YourCupOTea 13y ago
        They would have to employ some sort of currency risk hedge. http://en.wikipedia.org/wiki/Foreign_exchange_hedge http://en.wikipedia.org/wiki/Foreign_exchange_hedge
        jonknee 13y ago
        Easier said than done when you don't have an actual currency to hedge against and the complete lack of a functioning options market.
- anon4 13y ago
  I was hoping it had plunged to like 1$.
javindo 13y ago
Quite poor financial reporting from AJ to be honest. BTC is highly volatile but it has generally stuck around $1,000 for the past couple of weeks, the upward spike to $1,200 was just one of many fluctuations which has once again levelled off at $1,000. China telling large banks they can't handle BTC will not have any impact on the currency because everyone buying/selling BTC in China weren't using the banks anyway. The "dive" was potentially a slight overreaction to the news from China but it's also a fairly uninteresting fluctuation in a highly volatile resource.
- bilbo0s 13y ago
  If you don't mind me asking... how are average people in China buying bitcoins without the use of a bank??? How do they get the cash to the seller of the bitcoin I guess is my question? Do they walk into a brick and mortar "bitcoin store" and make a deposit (with cash)... and then they can trade from that "bitcoin store"? (Provided they accept all the risk). Is there some other user friendly way this happens that doesn't require the use of cards that flow through financial institutions? Or is the trade really complex currently and relegated to just "people in the know" so to speak? Just trying to get an idea of how these new rules would affect the average Chinese.
  - 300bps 13y ago
    In the U.S., I use: https://localbitcoins.com/ https://localbitcoins.com/ I imagine they use that or something similar.
    - TrevorJ 13y ago
      This wouldn't explain how Bitcoin gets into China in the first place though.
      - Myrth 13y ago
        1. someone in China downloads bitcoin client or opens online wallet, and someone from another country sends them bitcoins for service or anther reason. 2. mining.
deleted 13y ago
[deleted]
Fuxy 13y ago
Lol I wouldn't call a £100 drop a dive for bitcoin. Honestly i expected more but it's already recovering it was more like a minor bump in the road.
- Aloisius 13y ago
  Uh. FTFA: > Prices on BTC China, the country's biggest Bitcoin trading platform -- which had stood at more than 7,000 yuan (around $1,100) each -- plunged by more than a third to an intra-day low of 4,523.12 yuan. A 33% reduction in value is a dive. It may be constrained to the yuan, to China, to the particular exchange or just the crazy fluctuations of bitcoin, but it is still a dive no matter how you slice it.
  - ye 13y ago
    That's in China though, due to the new laws. Everywhere else the dive was much smaller, and it's already recovering.
- bradleyland 13y ago
  Working in amounts doesn't tell the whole story. Volatility is easier to understand when expressed in percentages. Have a look at the charts on bitcoinwisdom.com: http://bitcoinwisdom.com/markets/bitstamp/btcusd http://bitcoinwisdom.com/markets/bitstamp/btcusd Explore various intervals (time period). Even at the 1d interval, there are 15% swings. Is this bad, given the qualifier that "it is Bitcoin" after all? That depends on what you expect Bitcoin to be. If you expect to use it as a currency, then yes, it's very bad. If you earned your Bitcoins yesterday, and you have to pay a bill today, then that kind of swing is a big problem. You could end up taking a 15% haircut. If you expect to use it as a speculative investment, then you've got a lot of opportunities for trading. Both of these are fine, but they're opposing goals. Most economists agree that you want stability in a currency; that is the currency should act as an accounting measure only. It is a means of storing value at as close to NET zero gain/loss as possible, with it's real value being the ability to transact goods indirectly. I'm not sure what values Bitcoin endeavors to hold, but if we're using duck typing, it looks a lot more like a speculative investment than a currency.
booop 13y ago
Premature reporting by aljazeera. There was an even bigger dive a few days ago but it shot back up after hitting 840.
- theboywho 13y ago
  There was an even bigger dive a few weeks ago to 300, news channels just didn't have a story, and I'm sure if Snoop Dogg said bitcoin was useless back then, they would have used that... "Bitcoin dive after Snoop Dogg loses faith in the currency..."
- ep103 13y ago
  bitcoin has moved between 850 and 1226 TWICE this week. Yesterday, and last Sunday. I know, because my coinbase didn't come through till last Tuesday.
ye 13y ago
And it bounced right back.
iluvuspartacus 13y ago
What most reporting is missing is that the early adopters are cashing out because it is now worthwhile to do so. And the prices keep jumping right back up, due to the late adopters. Whenever you see a huge crash in a short period of time and a quick gain, expect it to recover. If you see a prolonged slow decline, it's time to abandon ship... Oh to buy a bunch at 2009 prices...
leeoniya 13y ago
leeoniya's law of bitcoin headlines: "Any statement about bitcoin's value is outdated by the time it's published."
- orthecreedence 13y ago
  This is true of any market. By the time it hits newsstands, the change has happened. That's why you read charts, not headlines, when trading (if you want to make money, that is).
Pxtl 13y ago
Bitcoins are seriously worth a thousand dollars now? Now I feel stupid for spending my coin on Humble Bundles.
pionar 13y ago
Are BTC "values" not just hypothetical right now? Does anyone really do heavy trading in BTC-USD?

28 points by molecule 13y ago

"the virtual currency that has soared in recent months and made fortunes for some, plunged" Yes, the virtual currency that soared from $100 to $1200 has plunged down to $1000.

_ak 13y ago
If there's one thing we learned in the last few months is how volatile BTC is. Reports of such "crashes" are really non-news.
- MichaelApproved 13y ago
  For financial assets, the term "crash" has typically meant a drop of 20%. This would apply to the recent bitcoin decline from $1,200+ to sub $1,000. Edit: 10% drop is considered a "correction". 20% drop is usually a bear market.
  - sentenza 13y ago
    These fluctuations, however, show that Bitcoin cannot fulfill one of the central functions of currency: Exchange for goods. How many of these multi-dozen-percent downward fluctuations will it take before those storeowners and shops that take bitcoin stop doing so or start maintaining an insane markup on Bitcoin prices?
    - ChrisClark 13y ago
      That's the thing. Bitcoin needs to grow a LOT more before it can start becoming stable.
    - ok_craig 13y ago
      I just bought a $1000 plane ticket a few days ago for bitcoin. Seems like that's fulfilling the role of a currency. You should know that you don't actually have to hold bitcoin to accept it as a payment method. Services like Coinbase let you instantly exchange it to cash if you use their merchant tools, so the merchant is actually exposed to zero risk.
      - sentenza 13y ago
        Ah, that explains it. It would be interesting to know what mechanisms Coinbase et al use to avoid balance sheet fallout by sudden downward fluctuations.
        YourCupOTea 13y ago
        They would have to employ some sort of currency risk hedge. http://en.wikipedia.org/wiki/Foreign_exchange_hedge http://en.wikipedia.org/wiki/Foreign_exchange_hedge
        jonknee 13y ago
        Easier said than done when you don't have an actual currency to hedge against and the complete lack of a functioning options market.
anon4 13y ago
I was hoping it had plunged to like 1$.

javindo 13y ago

Quite poor financial reporting from AJ to be honest. BTC is highly volatile but it has generally stuck around $1,000 for the past couple of weeks, the upward spike to $1,200 was just one of many fluctuations which has once again levelled off at $1,000. China telling large banks they can't handle BTC will not have any impact on the currency because everyone buying/selling BTC in China weren't using the banks anyway. The "dive" was potentially a slight overreaction to the news from China but it's also a fairly uninteresting fluctuation in a highly volatile resource.

bilbo0s 13y ago
If you don't mind me asking... how are average people in China buying bitcoins without the use of a bank??? How do they get the cash to the seller of the bitcoin I guess is my question? Do they walk into a brick and mortar "bitcoin store" and make a deposit (with cash)... and then they can trade from that "bitcoin store"? (Provided they accept all the risk). Is there some other user friendly way this happens that doesn't require the use of cards that flow through financial institutions? Or is the trade really complex currently and relegated to just "people in the know" so to speak? Just trying to get an idea of how these new rules would affect the average Chinese.
- 300bps 13y ago
  In the U.S., I use: https://localbitcoins.com/ https://localbitcoins.com/ I imagine they use that or something similar.
  - TrevorJ 13y ago
    This wouldn't explain how Bitcoin gets into China in the first place though.
    - Myrth 13y ago
      1. someone in China downloads bitcoin client or opens online wallet, and someone from another country sends them bitcoins for service or anther reason. 2. mining.

deleted 13y ago

[deleted]

Fuxy 13y ago

Lol I wouldn't call a £100 drop a dive for bitcoin. Honestly i expected more but it's already recovering it was more like a minor bump in the road.

Aloisius 13y ago
Uh. FTFA: > Prices on BTC China, the country's biggest Bitcoin trading platform -- which had stood at more than 7,000 yuan (around $1,100) each -- plunged by more than a third to an intra-day low of 4,523.12 yuan. A 33% reduction in value is a dive. It may be constrained to the yuan, to China, to the particular exchange or just the crazy fluctuations of bitcoin, but it is still a dive no matter how you slice it.
- ye 13y ago
  That's in China though, due to the new laws. Everywhere else the dive was much smaller, and it's already recovering.
bradleyland 13y ago
Working in amounts doesn't tell the whole story. Volatility is easier to understand when expressed in percentages. Have a look at the charts on bitcoinwisdom.com: http://bitcoinwisdom.com/markets/bitstamp/btcusd http://bitcoinwisdom.com/markets/bitstamp/btcusd Explore various intervals (time period). Even at the 1d interval, there are 15% swings. Is this bad, given the qualifier that "it is Bitcoin" after all? That depends on what you expect Bitcoin to be. If you expect to use it as a currency, then yes, it's very bad. If you earned your Bitcoins yesterday, and you have to pay a bill today, then that kind of swing is a big problem. You could end up taking a 15% haircut. If you expect to use it as a speculative investment, then you've got a lot of opportunities for trading. Both of these are fine, but they're opposing goals. Most economists agree that you want stability in a currency; that is the currency should act as an accounting measure only. It is a means of storing value at as close to NET zero gain/loss as possible, with it's real value being the ability to transact goods indirectly. I'm not sure what values Bitcoin endeavors to hold, but if we're using duck typing, it looks a lot more like a speculative investment than a currency.

booop 13y ago

Premature reporting by aljazeera. There was an even bigger dive a few days ago but it shot back up after hitting 840.

theboywho 13y ago
There was an even bigger dive a few weeks ago to 300, news channels just didn't have a story, and I'm sure if Snoop Dogg said bitcoin was useless back then, they would have used that... "Bitcoin dive after Snoop Dogg loses faith in the currency..."
ep103 13y ago
bitcoin has moved between 850 and 1226 TWICE this week. Yesterday, and last Sunday. I know, because my coinbase didn't come through till last Tuesday.

ye 13y ago

And it bounced right back.

iluvuspartacus 13y ago

What most reporting is missing is that the early adopters are cashing out because it is now worthwhile to do so. And the prices keep jumping right back up, due to the late adopters. Whenever you see a huge crash in a short period of time and a quick gain, expect it to recover. If you see a prolonged slow decline, it's time to abandon ship... Oh to buy a bunch at 2009 prices...

leeoniya 13y ago

leeoniya's law of bitcoin headlines: "Any statement about bitcoin's value is outdated by the time it's published."

orthecreedence 13y ago
This is true of any market. By the time it hits newsstands, the change has happened. That's why you read charts, not headlines, when trading (if you want to make money, that is).

Pxtl 13y ago

Bitcoins are seriously worth a thousand dollars now? Now I feel stupid for spending my coin on Humble Bundles.

pionar 13y ago

Are BTC "values" not just hypothetical right now? Does anyone really do heavy trading in BTC-USD?