Ironically, their actions caused more panic of the Chinese people and more capital flight. It was only a matter of time until they physically closed and arrested operators of unregulated exchanges. The SEC in USA has also expressed that they wish to regulate exchanges. Regulation is not a bad thing. It protects people from frauds. More than 95% of ICOs are terrible ideas that seek to take your money for nothing.
Bitcoin is an asset, not a currency. Its does not make it a good store of value compared to other assets (not talking about gold ). It is also not a good way to transfer money without fees due to the transaction times and . If Bitcoin were a company no one should invest in it because the technology that runs it is open source. Any government or company that wants to make secure transactions or contracts can start their own blockchain. There is no value in Bitcoin , but there is value in blockchain.
SEC > https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_coinofferings
China's attempt to control capital has been on going for a while.
2016 China Capital flight > http://www.chinalawblog.com/2016/03/getting-money-out-of-china-the-reality-has-changed.html
localbitcoins spike after China clamps down > https://qz.com/915316/chinas-bitcoin-traders-are-finding-new-ways-to-trade-after-an-official-clampdown/
Zerohedge summary of China's ban on Bitcoin > http://www.zerohedge.com/news/2017-09-14/bitcoin-crashes-chinese-trading-second-largest-exchange-halt-all-trading
BTCChina shutdown message > https://m.weibo.cn/status/4151955570459465?sudaref=www.zerohedge.com&retcode=6102
Bitcoin is creating a entirely new financial system starting from zero. Overly ambitious? Absolutely. However as you can see from the 100s of altcoins that already exist, simply making your own 'bitcoin' doesn't mean you instantly succeed against the real bitcoin. This banker talking point that there is no value in bitcoin but there is value in blockchain is utter nonsense and shows a fundamental misunderstanding of the technology. The two are the same thing. They are the symbiotic relationship of security and value.
The bitcoin blockchain is secured because Bitcoin the token has value. Bitcoin has value because its blockchain is secured.
Without the value of Bitcoin currency, miners have no incentive to mine the coin. Without proof of work the ledger can not be secured. Bitcoin is designed in such a way that the cost of attacking the network or bitcoin itself will ALWAYS cost more than what bitcoin is worth. That is why it can be not only open source, but completely public and open directly connected to the internet.
People who talk about 'blockchain' having value and want to go off and make a private 'blockchain' that runs in some private intranet as a settlement layer are selling snake oil. They will need to protect this network by denying access like every other information security system on planet. Ask Equifax how easy that is. Bitcoin is secure because it is public.
There seems to be lots of ego on the line for guys who desperately need to be right. The guys who are super smart and need ways to rationalize their beliefs. Some of these guys want to bet on the old world. Bet on the old billionaire guys who run the world and created the rules the whole system is based on. Some of these guys want to bet on technology. This will be one of the most spectacular power struggles the world has ever seen.
In my opinion this bubble was fueld by the closure of the BTCe exchange. All their Tethers were moved to other exchanges to drive up the price. The day of the closure the bull begann. They gave users the chance to withdraw 55% of their coins on the highest price but users had to wait 72h to recieve their money. Tomorrow they will reopen. So this was the biggest BTC scam ever.
The only money going into cryptos has been day traders gambling and people buying BTC and ETH for ICOs.
Outside of that I'm convinced the average American or any long term sensible investor wants any part of this, which validates your theory and graph.
Also disagree that the average American, or any sensible person in this world for that matter, would not be interested in a blockchain-based, globally useable currency in the future, which could potentially free them from the shackles of the FED, the ECB and others. What exactly do we need them for? Ah right, because we have nothing akin to the gold standard anymore and they need to "regulate", so this house of cards, that is our current monetary system, which the financial sector and others have profited massively, does not fall apart completely.
People aren't just buying into a fad. People are investing because they see a libertarian ideal behind it. Bitcoin represents freedom, albeit it is technologically not the best solution atm.