Quote from: cypherdoc on May 27, 2012, 04:42:05 PM

so lets try and game theory this a bit more as to why this buying is occurring.

options:

1. chinese are buying btc's so they can move their yuan out of china into a different fiat currency.
2. chinese are enthusiastic about btc and are buying as an investment.

knowns:

1. Chinese students laugh at Geithner
2. world stock markets have had record volatility this month with more consecutive days of stock selling, 12 out of 13, since 1974. it appears we're repeating 2008 all over again.
3. Chinese economy is rolling over-numerous reports on Zerohedge about electricity consumption decreasing, loan growth slumping, commodity buying waning.
4. gold is down 19% from the top. silver is down 43%. miners are down 56%.

i think the balance of evidence points to #2. chinese students have understood and mocked the USD for years now. they would be the first to understand and favor btc. even the average chinese citizen has a better understanding of tech and money than the average American. sorry guys, but true.

its possible #1 could be happening as buying a rising USD might make sense. i know i've moved alot to USD cash but also alot to Bitcoin. but given the chinese skepticism about the USD in that article by students, it seems less likely.

even if they are buying btc's for #1, its still bullish for Bitcoin b/c it is being used as a remittance vehicle. this is what we've been saying all along.

Chinese citizens tend to save much more than Americans. as we know, CB's worldwide have been cruel to savers in terms of miniscule interest rates. they may think it makes sense to diversify out of fiat. since the yuan is pegged to the USD, it too is rising as the USD rises. this will decrease exports and i would argue the whole growth story has been a function of primarily Fed easing leading to a torrent of foreign debt based investment into yuan related investments. this is now going into reverse.

why not buy gold/silver instead? in general, the last 6 months btc has gone up relative to gold which has gone down. look at the dramatic statistics i've provided.

if the miracle China growth bubble is waning or in fact over, it would make much more sense that chinese would want to move their yuan out of China. the easiest way to do this is via btc rather than buy metal which has to stay local and could be confiscated by a communist regime.

Chinese also love to gamble. Bitcoin has much more potential than other investments.

as i said earlier, the lockstep movements of the gox and china charts suggest that the connection of btcchina to the outside world is relatively seamless w/o huge arbitrage opportunities having existed. one might "expect" the goxusd price to move up in lockstep as well altho this is certainly not guaranteed. in fact, a great arbitrage opportunity does now exist; and if #2 is true, means that chinese will somehow find a way to exchange yuan for usd's and buy the "cheap" btc at gox.

stock markets declining in May is a big warning sign that the trend has changed from reflation to deflation. yuan is a peripheral currency to the world reserve USD and if you believe the primary trend has changed, as i do, then diversification of one's money is a logical move.

feel free to disagree or add anything i've missed.

I think #2 makes sense- if they are buying higher than the mtgox $ price then it wouldn't make sense just to transfer these bitcoins to mtgox and then convert them to dollars - the people buying are keeping these bitcoins.