Last night was a rough night for Bitcoin speculators and bag holders. Over the last 24 hours, the spot price of a Bitcoin has fallen from the peak of $750 USD/BTC to a valley of $455 USD/BTC before rebounding to around $600 USD/BTC.

Gox 24 HR STD – 2013-12-18 at 9.32.12 AM

All this movement is on confirmation of the rumor Mike Wheatley reported yesterday: that China is beginning to enact regulations on the trade of Bitcoin in a manner that imitates currency.

So the question that’s lingering on the Johnny-come-lately Bitcoin analysts’ lips: Is Bitcoin over?

In short, no.

A quick glance at the data shows that, relative to the history of Bitcoin, this is a minor correction.

Two year Log Chart, MTGox Spot Price, as of 12-18-2013.

Here, I’ve plotted the Gox spot price for Bitcoin on a logarithmic scale chart. In it, you can see that the path the spot price is taking is relatively predictable, and that the bubbles are getting less dramatic. It’s not hard to draw lines across the peaks and valleys and make reasonable guesses on where things are going.

I’m not here to make specific predictions about the spot price; there are a lot of factors to consider. China has taken an adversarial stance to Bitcoin now with regard to money-changing, but has admitted that they’re willing to allow it to exist as a commodity store of value. It’s a matter of time before the power players in China react to these new regulations and investment in Bitcoin is allowed again, and it remains to be seen how the Chinese BTC community will react to this. I don’t have a crystal ball, so I won’t even attempt to make prognostications about the hows and whens of these factors.

So, assuming the worst and that China sells every last BTC, what do the “bag holders” have to look forward to?

As Joseph Chen-Yu Wang talked about last week, it wasn’t all of China that was investing in BTC; only a very small subset of the population was getting involved at this point.

“Even so, geeks are the primary buyers. So far, it’s not the type of thing that random people will buy; it’s not very mainstream. However, it has taken the Chinese geek community by storm and there are a lot of geeks in China. As with a lot of Chinese things, the fraction of people in China who are geeks is small, but a small fraction times a billion is a lot of people.”

Where else in the world can we expect there to be a highly connect, savvy and dense population to take up adoption of Bitcoin? How about India; it’s been reported in mainstream outlets that Bitcoin is gaining in popularity there, and several new BTC exchanges are being developed for the region.

As one Redditor on r/bitcoin noted yesterday, standard practice in India is to charge customers for deposits.

“I went to a bank in Mumbai (State Bank of India) with my mom and grandfather running an errand. After waiting in line for 1.5 hours we made deposit. The person charged us a 100 Rupee “deposit fee”. It simply blew my mind.”

In general, India has a modern developing economy that relies on high tech; smartphones are pervasive. Still, India hasn’t modernized their banking practices. Long lines for in-person transactions are common, and online transactions are difficult. Like most fiat currencies, in times of crisis (or not), the government of India over-prints their currency, making the Rupee susceptible to inflation (the Guardian said recently that the Rupee was in “freefall”).

Even more interestingly, India reportedly has a very large remittance market, which makes Bitcoin a very attractive alternative to the hassle and fees typically associated with traditional wire services and practices.

India has a financially conservative culture, from what I’m told, though, so adoption of Bitcoin as an investment vehicle is less likely than adoption of Bitcoin as an easy means to store and transfer value. This means that the “India-bump” most certainly won’t be as noticeable as the China-bump, but it’ll be a healthier, long term graft onto the BTC ecosystem (less speculative, more utilitarian).

This is just one scenario moving forward in the near future; just one place where Bitcoin is gaining traction. Bitcoin is gaining much more traction in Europe, where several countries and financial superpowers have already or are in the process of officially recognizing BTC as a currency (Denmark, Switzerland, and others).

Regulation will always bring turbulence to new markets. Fortunately, most countries, including America, are adopting a “wait-and-see” approach to see how Bitcoin develops, largely viewing it as a positive. Given the nature of the beast, this will lead to increased stability as the ecosystem grows and more utilitarian usage as time goes by.

Editor’s Note: For more Dr. Bitcoin, watch here, and read here and here.