I'm fairly certain that China has reacted to a misunderstood message to the news about exchanges and that the Chinese government only wants to stop the shonky ICO's from happening.

That's a good thing. It was a good move but could have been delivered at a better time. Or maybe not. Maybe it was best dropped when BTC was soaring to make minimal impact. The exchanges would be aware of problems already if it was true.

The Chinese government is very smart and have ethics and wouldn't bother with a pump and dump. They just invest some money into it and gain from tax generated from it also.

Cryptocurrency is a technological innovation and China likes to innovate. Also it's big money for them. Both in the business it supports and in the tax raised from the profits.

I think when the dust settles and the Chinese people realize this is the case and that even when China regulates Cryptocurrency that trading BTC is fine then they will buy back in at a fast rate.

Anyhow Chinese can put their cryptos into paper wallets and use a vpn and even a decentralized exchange to trade so the Government don't want to force it underground.

I expect China to start buying back into BTC within the next week.