China may have realized that it cannot stifle bitcoin.. and china has a mixed set of motives including a desire to have some kind of investment vehicle separate from the dollar... .. so China is likely torn about bitcoin and about whether they like it or hate it... maybe they are frienemies with bitcoin?
From what Iknow, Chinese residents cannot pay for goods or services using bitcoin; banks and other financial institutions cannot deal with bitcoin; bitcoins cannot be sold by e-commerce sites; and e-payment services cannot be used to pay for bitcoin. So what is left?
Lots of things are left - including: Storage of value, exportation of capital from country and speculation. Surely, those other aspects would be helpful for bitcoin in china, but they are NOT going to kill bitcoin in china. Also, do you really believe that chinese people are good at following rules? Surely, they can be good at following some rules, but they are also good at finding work arounds. I put my money on the work arounds.
I believe there are other cointries which have taken similar measures; Russia and India, perhaps? (A thread was started in this forum to build a list the legal status of bitcoin in each coutry, but it never got beyond the first draft.) Some countries (like the US) have not banned crypto-coins explicitly, but their existing regulations alerady prevent some of those uses.
If crypto currencies will only be used for clandestine commerce between peers, under risk of legal penalties, they will have failed in their goal.
bitcoin is likely to be used whether with the cooperation of governments or NOT.
I agree with you that bitcoin could become very marginalized if there were outright and extensive attacks - however, there may also be backlash and wider scoff law type issues.. such as drug trafficking and porn that are illegal but happen despite laws.
Yes, if there was extensive attack then maybe bitcoin could return to $10 or less per BTC.... the reduction of value does NOT automatically imply that BTC has been stifled to death... but just more underground in its uses.