Undercurrents: China's Policy Rollercoaster
In April 2013, international gold prices plummeted.
China's damas — that formidable demographic of middle-aged women who will queue for an hour at the supermarket for discounted eggs, crank their square-dancing speakers loud enough to shatter windows, and possess a bloodhound's instinct for anything on sale — scooped up 300 tons of gold in ten days. Gold traders on Wall Street stared at the buy-order data on their screens and let out a collective "What?" Western media even coined an English word for them: dama.
But the damas' attention soon wandered.
Something more thrilling than gold had appeared. In January 2013, it was worth just $13. By April, it had surged past $200. It was called Bitcoin. Its gains were ten times fiercer than gold's, and you could buy it on your phone.
For a group of people capable of sweeping up 300 tons of gold in ten days, the learning curve for this new asset was nothing.
From Zero to Ninety Percent
What happened next outpaced everyone's expectations.
At the start of 2013, China's share of global Bitcoin trading volume was negligible. By year's end, that figure exceeded 90 percent.
Ninety percent. Out of every ten Bitcoin trades on Earth, nine took place in China.
How did that number come about? Three factors, stacked on top of one another.
First, CCTV covered it. CCTV-2's Economic Information Broadcast ran multiple segments on Bitcoin in the first half of the year, with a neutral-to-positive tone. In China, a CCTV report on something has roughly the same effect as stamping it with an "officially approved" seal — though CCTV itself never said any such thing. The news traveled from television to Weibo, from Weibo to WeChat Moments, from WeChat Moments to the wet market. The end of the transmission chain wasn't a programmer — it was your mother.
Second, China's exchanges played a ruthless card: zero trading fees. BTCChina, Huobi, OKCoin — all three major exchanges charged nothing. To overseas exchanges, this was borderline insane. But in the competitive logic of the Chinese internet, free is the default. Zero fees attracted a tidal wave of short-term traders, artificially inflating volume by several multiples — though it also genuinely built up liquidity.
Third, the aftershock of Cyprus. That Mediterranean banking crisis in March had pushed up global Bitcoin demand, and China's exchanges happened to offer the most convenient, cheapest on-ramp.
By November 2013, the price of Bitcoin blew past $1,000.
A year earlier, $13. Now, $1,000. A 77x return.
That kind of gain gave everyone — from Wall Street analysts to wet-market damas — a gnawing anxiety that the train was leaving the station without them. The term FOMO (Fear of Missing Out) hadn't gone mainstream yet, but the psychological state it describes was spreading across a population of 1.3 billion.
December 5th
On the afternoon of December 5, 2013, the first snow of winter in Beijing had not yet fully melted.
The People's Bank of China, together with the Ministry of Industry and Information Technology, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the China Insurance Regulatory Commission — five government agencies — issued the Notice on Preventing Bitcoin Risks.
Stripped to plain language, the notice said three things: first, Bitcoin is not a currency; second, banks and payment companies are forbidden from touching Bitcoin; third, individuals can buy and sell Bitcoin on their own, but at their own risk.
The news hit the market faster than the snow could melt.
On BTCChina's trading page, the price began to fall. Not the slow, grinding kind of decline — a vertical, cliff-edge, someone-just-flipped-the-table kind of drop. $1,200. $1,000. $800. $600.
Someone posted on a forum: "Have we hit the bottom?"
No.
Twenty-four hours later, the price hovered around $400.
From $1,200 to $400. In one day. Two-thirds of the value, gone.
BTCChina's servers began buckling within half an hour of the notice. Everyone logged on at once. Everyone was selling. Buy orders? Almost none. The order book was a wall of red.
If you had entered the market at $1,000 in late November, by the evening of December 5th your money had shrunk to a third. If you had used leverage — some exchanges offered 5x, even 10x — you might already have been wiped out.
The Silent Café
On the evening of December 5th, there was a Bitcoin-themed café near Zhongguancun in Beijing. A few months earlier, the place had been packed daily, the chatter about prices louder than the espresso machine.
That night, the café was quiet.
A few people sat staring at their phone screens, saying nothing. The numbers on the screens were still ticking downward. Someone stood up, paid the bill, and left. Then another.
By late night, only the owner and two or three regulars remained. The air-conditioning hummed from its vent, coffee cups went cold, and no one asked for a refill. The real-time Bitcoin price display on the wall glowed like a green-lit tombstone.
Six months ago, this had been the trendiest startup gathering spot in Beijing. Now it looked like a party that had just ended — streamers still on the floor, but everyone had gone.
Nowhere to Run
The aftermath of the notice ran deeper than the notice itself.
On December 16th, the central bank sent more specific enforcement requirements to all banks: no opening accounts, no transfers, no clearing services for Bitcoin exchanges. By March 2014, third-party payment companies were cut off too. Layer by layer, every connection between Bitcoin exchanges and the traditional financial system was severed.
Like a tree whose water supply had been cut. The leaves were still there, but they were beginning to wither.
Huobi's Li Lin began studying overseas markets. OKCoin's Xu Mingxing started preparing for internationalization. Some engineers began sending résumés to blockchain companies in Silicon Valley. This wasn't a panicked flight — it was a calculated assessment followed by a deliberate choice.
The best and brightest of China's Bitcoin industry began to flow outward. To Singapore, to San Francisco, to Zug. They carried more than passports and suitcases — they carried technical expertise and industry knowledge. Years later, when you see Chinese faces everywhere in the global blockchain industry, don't be surprised. The seeds were sown right here, right now.
And China — the China that once accounted for ninety percent of global Bitcoin trading volume — began to shrink on the world's digital currency map. That trend would only accelerate in the years ahead. In 2017, the exchanges would be shut down. In 2021, mining would be banned. But those are stories for another time. December 5th was merely the first cut.
Looking back, China's Bitcoin story of 2013 reads like a compressed drama. From obscurity at the start of the year, to nationwide frenzy by mid-year, to the screeching policy brake at year's end — all packed into 365 days.
There are no villains in this play. The regulators worried about financial risk, and their worries were not without merit — a trading environment of zero fees, high leverage, and zero KYC was indeed a ticking time bomb. The exchanges wanted to do business. Retail investors wanted to make money. The damas wanted to take a shot. Everyone was acting according to their own logic.
The question was never who was right or wrong. It was this: could a global technology beyond the control of any single government survive in a system that places the highest premium on financial control?
The answer 2013 gave was: not entirely. But it wasn't completely stamped out either. The notice had said "individuals may freely buy and sell." That crack — thin as a hair — kept Bitcoin's last breath alive in China.
It needed that crack. Because on the other side of the Pacific, in Tokyo, Mt. Gox's servers were throwing off more and more alarm signals. After global trading volume shifted away from China, it surged toward that platform barely held together by Karpelès.
The next disaster was already waiting in line.
Yang Linke, founder of BTCChina, later recalled December 5th: his customer service lines were jammed within five minutes of the notice's release and kept ringing until three in the morning. The operators repeated the same sentence over and over: "Personal trading is legal. Please don't panic." But every voice on the other end of the line was panicking.