Bitcoin Tumbles After PBOC Rumors Confirmed

Tyler Durden's picture




 

UPDATE: The earlier rumors have been confirmed: People’s Bank of China told more than 10 third-party payment service providers yesterday not to give clearing services to online Bitcoin exchanges, China Business News reports, citing a central bank meeting with the companies. This news is pressuring Bitcoin to $678 (on Mt.Gox) but more notably, BTC China rates imply a $588 equivalent price - down 57% from its highs. From a $100-plus premium, BTC China now trades $130 cheap to Mt.Gox as the 'arb' flips.

 

 

 

Talk from the PBOC (via Sina) that "the central bank directs: third party payment institutions shall not undertake business with Bitcoin hosted sites," appears to be responsible for the slump in the virtual currency once again. This expands the PBOC's earlier Bitcoin ban to other institutions. Bitcoin prices have dropped over 20% from their overnight highs - trading at around $715 now. Perhaps even more notable is the relationship between Bitcoin and the precious metals today with the early Bitcoin weakness corresponding almost perfectly to gold and silver strength (and again mid-morning in the US).

 

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Mon, 12/16/2013 - 16:45 | 4251607 wallstreetapost...
wallstreetaposteriori's picture

Que....fonestar's endless commentary.

Mon, 12/16/2013 - 16:51 | 4251634 whatsinaname
whatsinaname's picture

What does this article mean for Barrick gold ? Why would they be hedging now ? Apparently Thornton is an ex-Goldie.

http://www.bloomberg.com/news/2013-12-05/barrick-s-thornton-weighs-retur...

Mon, 12/16/2013 - 16:56 | 4251649 Pladizow
Pladizow's picture

The miners have historically hedged at the wrong times!

Negetive sentiment is always greatest at the bottom and must occur to switch trend!

Mon, 12/16/2013 - 16:55 | 4251662 outamyeffinway
outamyeffinway's picture

Well Barrick has a long history of collusion with the government so any hedging is probably being sold to the fed. Just speculatin'.

Mon, 12/16/2013 - 17:23 | 4251779 Dear Infinity
Dear Infinity's picture

I don't understand how they can't "dig it up" for less than $1200 an ounce now, when just a few years ago it was $500. 

Mon, 12/16/2013 - 17:51 | 4251891 Citxmech
Citxmech's picture

Those deposits have been exploited and new ones are more difficult.  Costs are up as well.

Basically, the same reasons you can't fill up your car for $20.00 any more, get an easy $200k home equity line of credit, or find any decent jobs out there.

Mon, 12/16/2013 - 18:12 | 4251961 CH1
CH1's picture

Oh no! Bitcoin is dead again!!!

LOL

Mon, 12/16/2013 - 19:42 | 4252233 old naughty
old naughty's picture

same as gold is (was) dead many times...

China long a few hundred tons; China short a few bitcoins; China kept mining gold...Can it be fools' parade?

Two sides of any trade. Who sold?

 

Mon, 12/16/2013 - 23:49 | 4252899 Four chan
Four chan's picture

china sees the threat to its efforts to overthrow the dollar, and thats good enough for me, im pro bitcoin.

 

good money, sound money, always pushes out bad.

Tue, 12/17/2013 - 00:36 | 4252996 silverserfer
silverserfer's picture

other way around there four chizzles

Tue, 12/17/2013 - 00:56 | 4253032 shitco.in
shitco.in's picture

As we learned the other day here on ZH.

http://en.wikipedia.org/wiki/Gresham%27s_law

 

But, what if... The "good" money was BTC and ended up backing the "bad" currency which was mostly used for transactions. 

Value can be stored in BTC, but would be converted to the preferred "bad" currency before transacting with it.  Annoying, yes.. but a safe way to store your wealth when it isn't being used. 

Tue, 12/17/2013 - 01:09 | 4253057 Harlequin001
Harlequin001's picture

Why would you possibly want to store your value in bitcoin if you aren't going to transact in it and not gold?

Tue, 12/17/2013 - 01:15 | 4253064 shitco.in
shitco.in's picture

We can transact in it, but it would (for the time being) be through an intermediary like BitPay.  No government is going to accept anything other than their currency for taxes any time soon. 

Once BTC reaches its full value (when 1 satoshi = the value of the smallest logical transactable value (maybe the value of a pack of gum or such)), then it will start to make sense to go full BTC. 

It makes more sense to store value in BTC because we live in a digital age and many transactions are done over the internet.  Credit card fraud is everywhere, and credit cards were not invented for use on the internet.  When I say "but would be converted to the preferred "bad" currency before transacting with it" I am referring to the conversion that BitPay (or similar) does, converting BTC to USD in real time.

Of course it always makes sense to have gold and/or silver as a backup.

Tue, 12/17/2013 - 04:02 | 4253277 Harlequin001
Harlequin001's picture

'Value can be stored in BTC, but would be converted to the preferred "bad" currency before transacting with it.'

That's what you said. You haven't answered the question. Why store value in bitcoin as opposed to gold and silver if you are going to transact in paper or even digital 'other' money?

'It makes more sense to store value in BTC because we live in a digital age and many transactions are done over the internet. '

Many more transactions are not done over the internet so I would take issue with this statement as well. Gold still seems far better.

'Credit card fraud is everywhere, and credit cards were not invented for use on the internet.'

Credit cards are as good as anything else for transacting over the net, and just as traceable... Not convinced.

Tue, 12/17/2013 - 05:04 | 4253309 Manthong
Manthong's picture

..when all this crap is over, all I will have left is a few crummy pieces of silver and gold..

..bummer. 

Tue, 12/17/2013 - 06:59 | 4253365 GetZeeGold
GetZeeGold's picture

 

I blame Sir Isaac Newton really.

 

The year was 2013.....and we thought the price of nothing could go up forever.

 

On retrospect....maybe we should had at least converted it to fiat.

Tue, 12/17/2013 - 06:23 | 4253359 TheHound73
TheHound73's picture

I store value in BTC because I can.  I like to diversify and believe in the technology. I feel there is more upside potential to BTC than gold and I'm willing to gamble.  

Tue, 12/17/2013 - 07:38 | 4253422 GetZeeGold
GetZeeGold's picture

 

 

Dump the logic and go with your feelings.....beats throwing darts while wearing a blindfold.

Tue, 12/17/2013 - 07:57 | 4253437 Againstthelie
Againstthelie's picture

And the independency from governments and Central Banks is most impressing... :P

Tue, 12/17/2013 - 19:29 | 4255363 TheHound73
TheHound73's picture

At some point Bitcoin will just slough off the dictats of world superpowers.  In it's current early-adopter phase, some turbulence is to be expected.  I think it is holding it's own fairly well under these conditions.

Tue, 12/17/2013 - 09:15 | 4253564 Papasmurf
Papasmurf's picture

I invest in Easter beanie babies because I can.  I like to diversify so I also buy cabbage patch dolls.

Tue, 12/17/2013 - 11:58 | 4254055 NIHILIST CIPHER
NIHILIST CIPHER's picture

papasmurf            +1     Smurf that was too funny, I feel the same way about the bitcoin mentality.

Tue, 12/17/2013 - 19:30 | 4255254 TheHound73
TheHound73's picture

Go knock yourself out, kid, since you believe so strongly in bennie baby and cabbage patch doll tech.  Who am I to step in your way?

Tue, 12/17/2013 - 06:58 | 4253395 tvdog
tvdog's picture

You can store an unlimited amount of wealth on a thumb drive in bitcoin. Gold, on the other hand, is contraband in most places and will be confiscated at the border.

Tue, 12/17/2013 - 08:05 | 4253423 GetZeeGold
GetZeeGold's picture

 

 

 

Wealth on a thumb drive......yeah......that screams privacy.....until you plug it into a computer.

Tue, 12/17/2013 - 08:16 | 4253464 tvdog
tvdog's picture

Red herring.

And my 6-year degree is in mathematics - and I paid it off years ago - and the taxpayers paid for most of it - and college is a terrible investment unless you get into a top-tier institution - and it makes more sense economically to go to trade school and become a plumber ...

And what does this have to do with bitcoin again?

Tue, 12/17/2013 - 08:36 | 4253481 GetZeeGold
GetZeeGold's picture

 

 

We've got your IP......you're not anywhere close to a border.....but we still see you.

Would you like to know where you live?

Tue, 12/17/2013 - 08:20 | 4253467 RabbitChow
RabbitChow's picture

Gold is contraband in most places?  Really? 

The thumb drive won't store anything once the blockchain gets long enough.

Tue, 12/17/2013 - 08:26 | 4253477 GetZeeGold
GetZeeGold's picture

 

 

Gold is contraband in most places?

 

Just let him go.....he's rolling.

Tue, 12/17/2013 - 06:06 | 4253346 tvdog
tvdog's picture

.

Tue, 12/17/2013 - 08:02 | 4253440 sessinpo
sessinpo's picture

CH1    "Oh no! Bitcoin is dead again!!! LOL"

 

Comment"

LOL is right. Wouldn't it be funny if the Chinese Gov were buying bitcoins to manipulate the current holders. LOL

Mon, 12/16/2013 - 18:19 | 4251981 Bay of Pigs
Bay of Pigs's picture

Oil and overall energy costs are way up over the last decade. So are transportation costs and mining supplies (big rigs, drilling equipment, tires, etc...).

In other words, inflation numbers have been distorted and understated by a significant amount when it comes to all in costs of mining gold (and silver).

Mon, 12/16/2013 - 18:27 | 4252012 DoChenRollingBearing
DoChenRollingBearing's picture

Yes, well said Bay.

Mon, 12/16/2013 - 18:36 | 4252043 fonestar
fonestar's picture

Bitcoin has had an amazing run these past few months.  I'm still calling for five and six figure Bitcoin as more and more people around the globe begin to realize that central banks and the governments they own are in an intractable position.

Mon, 12/16/2013 - 21:49 | 4252560 Herd Redirectio...
Herd Redirection Committee's picture

$638, can I get $638?  No?

https://btc-e.com/

PPC, NVC, LTC all dumping!  Who coulda know'd!

Mon, 12/16/2013 - 23:33 | 4252847 TruthHammer
TruthHammer's picture

Posted this in the dark web article, bu why not here too, enjoy

 

@fonestar

while shilling for Bitcoin takes a lot of time, I can't help but ask why you continue to apparently believe the fallacy that

"crypto-currency" or "virtual currency"  EQUALS Bitcoin.

Bitcoin is AN example of those things, they are not it.  You straw man the idea that virtual/crypto-currencies are here to stay, which is true, and then fallaciously follow up with Bitcoin is here to stay.

 

The single claim I have seen you or anyone make as to why this should be the case, is "first adopter" status, and that is a VERY weak reason to not turn paper profits into real ones by cashing out.  If the powers that be, (as you supposedly think you are opposing with BTC), choose to create an officially sanctioned, properly supported, fully-convertible "crypto-currency" that is equivalent to legal tender, their USCoin would wipe BTC out in a day.

Don't fool yourself to think privacy, anonymity, fighting fiat, or any other nonsesnse would stop it.  What people are chasing with BTC is easy money, that's why shoeshine boys are telling me about how their buddy set up a mining rig, and why LTC et al see growth as people chase the next e-Coin with a lower entry margin.

BTC is 50% penny stock, and 50% commodity (virtual commodity) and 0% currency.  It can and will be vaporized, either by a far more convertible official alternative, or by advancing technology leading to its undoing.  It will never reach "a million dollars" and it is completely driven by speculators and controlled by the 20%ers.

Feel free to shill some FUD in response, I'm all ears, and you've just been....refer to ID-name ;)

 

Mon, 12/16/2013 - 23:55 | 4252917 smlbizman
smlbizman's picture

fone...i give u credit...you showed up...most wouldnt....

Tue, 12/17/2013 - 02:48 | 4253191 TheHound73
TheHound73's picture

Too busy buying ;)  ...added 10% to BTC stacks.

Tue, 12/17/2013 - 07:31 | 4253411 GetZeeGold
GetZeeGold's picture

 

 

 

amazing run these past few months.

 

Kinda like throwing a match on a pile of gunpowder......wait till the smoke clears and let's find out what's left.

Tue, 12/17/2013 - 19:31 | 4253417 TheHound73
TheHound73's picture

Aye, actually the price is right back where it was 10 days ago -- the last time China's Central Bank opened it's big fat mouth.  Also consider, over these past 10 days 36,000 bitcoins were freshly minted.  Also, you gotta pay to play, arm-chair quaterbacking from the sidelines is free, though.

Tue, 12/17/2013 - 00:09 | 4252946 Metal Minded
Metal Minded's picture

don't criticize
What you can't understand
Your sons and your daughters
Are beyond your command
Your old road is
Rapidly agin'
Please get out of the new one
If you can't lend your hand
For the times they are a-changin

Tue, 12/17/2013 - 07:12 | 4253397 tvdog
tvdog's picture

If the powers that be, (as you supposedly think you are opposing with BTC), choose to create an officially sanctioned, properly supported, fully-convertible "crypto-currency" that is equivalent to legal tender, their USCoin would wipe BTC out in a day.

Nonsense. People are looking for a way to AVOID being ripped off by the "powers that be." Only a bankster could be so delusional as to believe that the "official" status of a currency adds value. No - creation of "value" through legislative fiat is nothing but a fraud. Producers create value, not governments or banksters.

Edit: just to add - the reason that you stack gold is because YOU don't think that the treasury secretary's signature on a green piece of paper confers value.

Tue, 12/17/2013 - 09:20 | 4253574 TruthHammer
TruthHammer's picture

Nonsense. People are looking for a way to AVOID being ripped off by the "powers that be." Only a bankster could be so delusional as to believe that the "official" status of a currency adds value. No - creation of "value" through legislative fiat is nothing but a fraud. Producers create value, not governments or banksters.

The people buying BTC for that reason are 0.00000000000001% of the BTC owners and are irrelevant to its ultimate outcomeThe reason an official one would have "value" (which is not what i said), is because it could be accepted and used everywhere and would offer a way for people to move "in and out" of it easily. 

 

Edit: just to add - the reason that you stack gold is because YOU don't think that the treasury secretary's signature on a green piece of paper confers value.

 

I am not saying anything in defense of fiat or the FED.  My point is that the 0.000000000000001% of people buying BTC on principle are irrelevant to its "value" in terms of its exchange rate for USD, and irrelevant to the ultimate outcome and fate.

Also, that anyone who has made millions or even thousands on BTC already, and is too stupid to cash out and take the free money, is greedy and foolish beyond belief. fonestars FUD (of 'future' profits) pimping of BTC is gibberish.

Tue, 12/17/2013 - 21:13 | 4255416 TheHound73
TheHound73's picture

Source? If pulling this out of your ass I'll expect that reference in APA citation style.

0.00000000000001% of all humans on earth is literally 1 butt hair of 1 human.

Mon, 12/16/2013 - 22:48 | 4252716 chemystical
chemystical's picture

"I'm still calling for five and six figure Bitcon."

Yes, we're well aware of that.  Now, can I ask an honest question and get an honest answer instead of the knee-jerk down arrow?

More than once you've posted that you sold some Btc at ~ $200 USD/Btc in order to pay some bills.  Subsequent to the huge rise in Nov you've told us that you've bought more. 

You sold at ~ $200 and bought those same Btc back for ~$800 to $1200.  Were you far less bullsh and optimistic when you sold, or do you have less courage in your convictions than you'd like everyone else to have?  If you're convinced in as little as a 4 digit Btc then why not borrow at even a Shylockish 20% APR to pay your bills instead of paying 2400% APR to feed your Btc 'habit?  Certainly outlooks change, and we change with them, but your published outlook has never wavered here or at other sites (while simultaneously your investments have).

Regards

Tue, 12/17/2013 - 10:45 | 4253850 fonestar
fonestar's picture

I never said I was less bullish when I sold.  I had some unexpected debts.  I have always been psychotically bullish on Bitcoin.  Just buy as much as I can, when I can and go crazy.

Tue, 12/17/2013 - 00:34 | 4252986 ElvisDog
ElvisDog's picture

I'm still calling for five and six figure Bitcoin

Wait a minute. A week ago you were calling for six figure bitcoin. Now you're calling for "five and six figure" bitcoin. Losing confidence are we? Next week will it be "four or five figure" bitcoin???

Tue, 12/17/2013 - 00:40 | 4252999 Bay of Pigs
Bay of Pigs's picture

He called for seven figures not long ago too. Yes, $1M a coin.

Tue, 12/17/2013 - 02:08 | 4253129 fonestar
fonestar's picture

...and I am still calling that.  I am not sure when Bitcoin goes past five figures and then six and seven.  Perhaps another few years but I think five figure Bitcoin is doable in 12 - 24 months.

Tue, 12/17/2013 - 02:47 | 4253189 Rock On Roger
Rock On Roger's picture

.00001

 

Stack On

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