Baidu and China Telecom Stop Accepting Bitcoin, Price Slumps Again
The bitcoin price has continued to drop overnight on major bitcoin exchanges. The price on exchanges included in the Bitcoin Price Index all currently sit below $700, with the BPI overall having dropped almost 20% …
Context & Ripple Effects
This lands mid-slide: bitcoin had run up roughly 89-fold on a surge of Chinese retail interest, enough by early December 2013 to draw regulator attention, while the network itself was reported under strain from growing usage and a Twitter-promoted pump-and-dump scheme was making the rounds. Two of China's largest consumer-facing platforms — search giant Baidu and state telecom China Telecom — have now confirmed they will stop accepting bitcoin as payment.
The market response was immediate: exchanges in the CoinDesk Bitcoin Price Index fell almost 20% overnight, with every constituent sitting below $700. The story's reach is notable — pickups spanned the Wall Street Journal, Bloomberg, Los Angeles Times, Business Insider, AllThingsD, Huffington Post, SlashGear and Bitcoin Magazine, marking this as the moment merchant acceptance in China became front-page news rather than crypto-press news.
First-order effects
- Chinese customers lose the ability to pay Baidu and China Telecom in bitcoin, removing two high-profile proof points for the 'bitcoin as payment rail' thesis at exactly the moment prices are falling.
- Holders take an immediate mark-to-market hit: BPI constituents drop nearly 20% overnight to below $700, extending the correction that began after the December rally.
Second-order effects
- Other merchants weighing bitcoin acceptance now have a named precedent for stepping back, shifting the burden of proof onto exchanges and payment processors to show real transaction demand rather than speculative flow.
- Chinese exchanges, already under scrutiny following the price run-up that triggered regulatory interest, face intensified attention as the asset's domestic use case narrows toward trading.
Third-order effects
- If merchant exits continue, bitcoin's role in China splits decisively between speculative trading and actual commerce — testing the analyst argument circulating earlier in December that the currency only succeeds if legitimate transaction volume ramps up.
- A pattern of regulators responding to parabolic retail speculation with restrictions would make Chinese policy, not merchant adoption, the primary driver of bitcoin's price path — a dynamic each subsequent flare-up would reinforce.
The trend: China's response to bitcoin's 2013 speculation-driven run-up is recasting the asset from an emerging merchant payment method into a regulated, exchange-traded commodity whose price follows policy signals.