Bitcoin Forum

Since BTCST is now closing, what does it mean for speculators?

https://bitcointalk.org/index.php?topic=101339.0

wow... link plz

Read OP of BS&T thread

https://bitcointalk.org/index.php?topic=50822.msg605957#msg605957

pirate did not mention at all the rising price of bitcoin which made it difficult for him to get returns.  That is probably the reason why he had to close shop.

Considering it doesn't appear he defaulted at this point... I would say little effect.

Hmm... if everyone gets paid back then there will be a lot of BTC in peoples accounts.  But will there be interest in converting it back to fiat?

Possibly he can't use the volume and so is taking it private again... We all said no legit business would pay these rates as opposed to getting a fiat loan.  Maybe he did just that!

It will have a huge effect because the rates Pirate was offering had a very large impact on overall interest rates. This in kinda like a bond market collapse. In the real world that usually results in a stock market bubble .....

Say, one has ~250K coins, and needs to return 300K during the next week.
Say one sells 100-150K coins right now in this highly elevated price.
Will there be enough panic to get the price back to say 8, where one can buy at least 200K coins?

No.

who's going to panic sell below 10?

we all know theirs a guy out their that wants to buy ALL the bitcoins

Really? I would think the opposite would happen (If stock market=bitcoin). More people will have btc in their wallets, so there will be more selling power now?

It depends a lot on whether or not he defaults. If its an orderly closing and everyone gets their moolah back, there might be a correction because of some profit taking. If instead he defaults and absconds with the moolah, BTCUSD should go up a bit as some percentage of the victims try to cover the lost BTC.

That's what I was thinking

Stock market is mostly GBLSE. I'm not sure how the fiat:BTC exchange rate is impacted, I was referring to the internals of the Bitcoin economy.

Well actually the guy might be willing to buy them if he cares more about his reputation than few (hundreds thousands) bucks. But, than again, he might be just waiting for a new yacht at that time...

If the withdrawl process is without drama, price will go up.  This will prove to many that bitcoin is used by more than just scammers.

So he lost 5000 bet?

There could literally be 1,000,000+ coins freed up next week because of this.  

Price will decline as those coins are cashed out on profit taking.  Think of all the people who leveraged up through buying as much BTC as they could with fiat in order to re-invest at 7% weekly.  Now that insane demand will be removed, and further, these individuals will be wanting to cash out after making huge returns.  

When he pays back within two weeks he will have won.


Sounds very plausible. Many won't cash out though (leveraged people)

If you believe he will repay you can make 10% on pass throughs. Panic selling is occurring there.

No.

The reason he made the bet was because he was planning to shutdown all along. He wins the bet as long as all funds owed are returned.

Heh.. did anyone do the actual math ?

Will be interesting to see when some people don't get paid on this one...

Place your bets...

http://betsofbitco.in/item?id=537

Pirate was essentially a bear play. It made a lot of sense when the price of BTC was falling at over 7% a week with respect to USD. What made Bitcoin Savings & Trust unsustainable in the end was not the interest rate but the rising BTC / USD exchange rate!

If Pirate completes the closure of Bitcoin Savings & Trust as he has indicated this will be a class act on his part. As far as the impact on the bitcoin market it self, what we are witnessing is a very large and deep pocketed bear gracefully leave the market in the face of the bulls. I will leave it up to the reader to form their own conclusions.

Panic selling incoming in 3..., 4...

The fact that he is announcing a closure says a lot. I can't see a Ponzi announcing that he is sending back all new deposits.

Either way, I think we will see a big drop in price. Many of those coins coming back will be sold. If they don't come back, bad press and the newcomers rallying will start second guessing. I'm trying to sell.

The fact that he does not dump the coins on before weekend is a pure gentleman's act.

Assuming he does pay everything back ...

All the investors who had depoits now have btc, they want to cash out, this will drive down price.

How much of the recent rise in price has been people bringing in money to invest in Pirate? Now that he is closing up shop, they will stop bring in money, this will also drive price down.

Since the price will stop rising, many miners/speculators will try to sell quickly to get the highest rate on their bitcoins, this will also cause the price to go down.

Dropping price will cause panic sells, this will also push down the price.

The sudden announcement from Pirate causes uncertainty in the market, this causes people to more cautiously invest, this allows the price to drop precipitiously.

All indicators are for downward movement, by my reconing.

been saying this for a while. 

so.. he does not have the money to pay out to everyone who wants it right now. shocking. not.
lets see how quickly he can "get the money back" from whatever he was doing.
i am going to bet this will get ugly as the week goes by and people do not have their btc.

Unless your initial assumption is wrong. In that case, people will own 100Ks of BTC less than they thought.

yes, that would be the brutal thing.  Leverage all your fiat to buy high yielding BTC......aaaaaand it's gone.  That would remove a lot of buyers from ever coming back. 

and possibly live under a bridge  :D

Like they always say, "Don't invest more than you are prepared to lose"

I have no direct exsposure to Pirate, anybody else clean of this mess with me?

You see it right now: We are going down, because people want to cash out in fears of BS&T default scenarios. Price will continue to plummet till Monday, if no good news till then even further. Also, More bitcoin on the market mean, more selling activity after lenders are payed back. Prepare for 8$ next week.

Me as well.  I would have loved to have rode the gravy train if it ends up paying out......but 7% just seemed too fishy. 

Pirate knows his announcement is going to drop the price drastically... and his assets are in fiat. Drop the market, buy it back as people freak out, refund on Monday with the BTC you purchased... profit.

+1

I have thought this through 100x times.......and it is almost perfect.  We will see. 

Who's "he", just curious?

The shut-down is not surprising, as there are signs of withdrawals but few signs of deposits.

At the end of the month, you will know who won.


BTW, from timing comparisons, this crash would've happened shortly anyway. BS&T should only have been a minor factor.

he is only half as clever as he thinks he is.
i predict some people are not getting their money back. he messed up in some fashion.

As long as he can manage to pay everyone back, then that's fine with me. I hope we are all laughing about this in a few weeks, and the market returns back to something resembling stability.

the market is gonna crash as lot of people who took loans and filled the pirate fund would be selling out.....

The market will crash a bit (already is), but it'll rebound again too.  And I'll be buying in the meantime.  ;)

This is pretty clever. He sets up a seemingly obvious scam which probably very few people sends money to, takes huge bets that it will default, and then closes the fund and wins the bets.

Am on board....buy  ,  BUYYYYYYYYYY .............. :-*   :-*

We are going back to the single digits baby!

took loans and filled the pirate fund ??

*facepalm*

I honestly don't know. I for one am neither buying nor selling until the whole BS&T ordeal has played out.

I thought we'd get a bigger bubble. Actually we might see that yet.

So many people are going to start buying soon.  This is an insane buying opportunity.

The price went to $15 because of real demand.  You can see it in the charts-- we've had quite a few record volume days.  This too shall pass.

Truer words never spoken: http://en.wikipedia.org/wiki/This_too_shall_pass

Wow....press release 2 days ago on PPT's.....

Bitlane complains about withdraw.....

Pirate shits his pants....

Ponzi revealed.......well we will find out soon enough for sure now won't we.....

As I have said....mark my works "someone will get burned in all of these PPTs"

 :D

Never went near it. Learned my (bitter) lessons years ago when e-gold was king.

The 5000BTC bet is tiny compared to the coins he took in (500,000+) and interest he paid out (tens of thousands of BTC/week)

Classic ponzi, with a  classic ponzi closing statement. I doubt anyone who hasn't already pulled their money out will get much, if anything, back. As for the effect, I expect some panic from people being upset about being scammed, and the overall negative view of this whole thing by everyone else, but I don't think it will affect the overall economy/price much.

BTW, this exact same thing happened on SecondLife with a Ginko Bank investment thing, too. Same deal with return rates, closing statement about money locked up in other assets, and eventually, after many excuses, complete collapse/closing of the "bank."

Why post the same thing on every thread?

Roger, no exposure at all. BTC by itself has been exceeding 7% a week, why take the risk of being scammed?

Why does it matter?

How much BTC do you have invested with Pirate or a PPT? ::) ::) ::)

Is it really?  I would have guessed there would be these possibilities:

1. See ya!  (if you can find me)

2. Due to market conditions I lost X% of your principal (recognize I NEVER said it was without risk).  So your payout will be commensurate.

His closing post contains a promise to pay in full plus interest (ok its not totally cleanly said, but regardless).  Could that be used against him legally... as opposed to email #2.

The professionalism here actually surprised me.  I always assumed that the Vegas meeting with his cronies was to orchestrate the closeout and getaway plans.  Some things can only be done face 2 face.  If we find it is a ponzi, this posting is a fascinating insight into these people's psychology.

If this price drop was another short pirate orchestration....then that´s absolutely genius

Because it is redundant and pointless to post the same thing everywhere.  I increased my exposure today after the announcement by paying out the remaining lenders in my passthrough from my personal funds.

Not everyone reads every thread. Getting the word out there isn't a bad thing unless you are trying to hide something and stay under the radar.

Good for you. Glad you are honest....can't say the same for pirate.

If pirate did indeed sell, and it rebounds back to 15 he is screwed, big time.

I would the underlying uptrend is still valid. This correction is actually a positive sign, because is throttles the rally a bit. This way we can even go higher then we ever would before. This is a great buying opportunity.
Maybe wait for Monday,
if good news from Pirate: Wait for second panic sell and aim for where 100k BTC can drop price to (probably in the 8th $s)
If bad news (no or "delayed" refunding): BUY

Anyone know how big those dumps were? It is my guess that Pirate announced the closing and started the dump trend, in hopes to cause a mass panic sell followed by a large rebuying. Looks like it didn't work very well if that's the case.

Now that BS&T is shutting down, we might get to know what the hell pirateat40 was doing with all that money...

where is the logic in this? he could have also been buying as the price crawled back up.

My logic is this (whether flawed or not.)  pirate was asking for more bitcoins.  pirate would only ask for more bitcoins if he needed more to remain profitable.  If he has USD and bought as the price was going up he would have bought for a loss (since his strategy is to short bitcoins).  He needs to bring the price down so he can buy more bitcoins and return the bitcoins to his investors.  But if his attempt of creating a panic sell fails then he won't be able to buy more coins back without a loss.

The funny thing is:

If he can actually return all his debts next week (and we should know by Monday) price goes down because 200k-500k BTC are back in the hands of investors and the only way they can take from there is being converted back to USD. Maybe not all of them but at least some 10%.
If he defaults/runs off/gets hacked (lol), bitcoin price goes up, because those funds will be held some time before they are dumped on the market by whom ever (probably pirate) some month/years in the future. Meanwhile they are not available on the market for supply. Duped investors may want to restock on BTC and pirate may even try to buy more BTC in order to serve some of his liabilities.

So if they get their BTC back they will run to cash, but if they don't they'll buy up BTC... makes perfect sense ::).

This actually make a lot of sense; however I very much doubt pirateat40 will pay everyone back on Monday as he said in his thread that the closure of BST will take about a week https://bitcointalk.org/index.php?topic=50822.msg605957#msg605957 (https://bitcointalk.org/index.php?topic=50822.msg605957#msg605957)


It is not unreasonable to expect that some of his lenders will decide to take some profits; however there also remains the possibility that pirateat40 is counting on this profit taking in order to buy BTC to pay the rest of his lenders off so there is a chance also of a short squeeze developing later in the week. In short a high degree of volatility. In the unlikely event of a default it would be short term bullish since some profit taking by pirateat40's lenders has already been discounted by the market.  

Not to me... if you just lost a ton of Bitcoin it is more likely to become an emotional decision, not a rational one.  You won't buy back your coins, you'll quit the scene and pretend to your family and friends that bitcoin never happened.

Note the sarcasm eyes.

This ignores those who sold emotionally in anticipation of profit taking by pirateat40's lenders. The market today spoke volumes.

Pirate reality A: He is ponzi.
Pirate reality B: He caused this crash by selling btcst holdings, anticipating further crash and then buying back btcst holdings, and returning funds at profit.
Pirate reality C: He simply dissolved btcst and other btc holders sold to cause this crash.

If (further) panic selling occurs: Price will fall to 10 area. If he doesn't return funds within week, then (A) is confirmed and price will actually rise slightly as btcst losers will grudgingly dig into pockets to rebuild some bitcoin savings (gamblers gonna gamble). Counterbalanced by a bit of selling from safe btc players with low/zero btcst exposure who expect lessened btc demand with loss of bitcoin's #1 investment, and general loss of confidence. Price will stay in high singles or low doubles for a bit, then resume rise on heels of overall strength/SR growth/dev stability. If he does return funds, then (C) is likely true, we will see a hesitant rise from general relief that btcst was legitimate, counterbalanced by profit taking.

If price rebounds and ONLY THEN does he begin to return funds then (B) is likely true, and we will see a slight decrease in price as profit taking occurs, counterbalanced by relief that btcst was actually legitimate this whole time. Pirate profits, everyone wins except those who sold into his trap.

If price rebounds from present point (12.5ish), and he doesn't return funds, (A) is confirmed and we see rapid buy-up as btcst losers panic buy and btcst abstainers see that bitcoin is so strong that the dissolution of its #1 investment opportunity isn't enough to cause sustained crash. If he does return full funds, then (C) is true, rapid buy-up occurs for same reasons as above, but counterbalanced by profit taking. If he returns partial funds, then we know (B) is true, and the result is a buy-up with slight profit taking counterbalance.

General problem however, is that if he is legitimate, why stop? Some people have suggested that recent price run-up has made his secret operations unprofitable, but what possible operation benefits from low bitcoin price? I have always held the position that it is just as likely that pirate is running a ponzi as he is running a very profitable money laundering business, positions that would certainly explain his secrecy. However, now that he has stopped, it makes me think it more likely it was just a well orchestrated ponzi, because I cannot think of a reason why he would stop otherwise.

Thoughts?

If he did that he's a liar because he said he's closing and that's why it'll take a week to wrap up.

I suspect a combination of B and C

Does anyone know which happened first, massive sell-off or BTCST closing announcement?

Announcement. I posted this thread to speculation about 5 minutes before the massive dumps occurred. I say that not to take credit but because I am certain of the timeline.

I sold after the news ~15 $. Many others did too perhaps, or just paniced.

So don't think it was pirate selling, unless he just joined the panic.. (Which would be stupid as he could have caused it instead)

100% after the news.. someone linked the original pirate announcement thread in btc-e chat and as I was reading it the price was still at 15 for at least another 10mins or so before starting to drop

It was. I wish I could have had all my bitcoins confirm at Gox in time, because my plan was the same.

As I stated above, I suspected the immediate affect would be a drop in price. I had an order sitting at MtGox for $10.65, the price dropped to $10.60. While I just got my trade in, and it looks like I was really smart, it was mostly just luck on my part. I had no way of guessing exactly where the price would drop to, but I am happy I got my trade in. Big moves are still possible, so we will just have to see where things go from here.

Well, gosh, now that bitcoinica is gone and pirate's shutting down his operation, where are we all going to centralize our decentralized currency?

Price goes up, Price goes down...

You can't explain that!  :P

mtgox

Were there really that many people keeping their coins with pirate? I figures most people thought his BS&L was considered either a scam or too risky, and most BTC owners stayed away?

~400k, give or take a lot

btw proudhon time to change your avatar to something like this:  ;D

http://www.dota2club.com/wp-content/uploads/2012/08/Ursa-guide.jpg

Why did you guys sell on news of this announcement? If anything, I would expect this news to make the price go up. The only scenarios I can come up with are that you thought pirate was going to do massive selling in order to run off with USD instead of bitcoin - (which doesn't make much sense to me. If so, why bother announcing? Why run off with USD?) - or because you think all the demand for buying BTC is coming from people who wanted to invest with him/with PPTs? 

# of people and locations willing to accept USD no questions asked > the same for bitcoin

Because some people think the investors might sell (If they get btc back) because possibly the only reason they bought the bitcoins was to make huge amounts of interest from his scheme.

Ok...I appreciate the reply...I just don't understand the basis for that. Why would they need to immediately cash out to USD? A lot of people are sitting on 0% interest BTC investments. Even if you're not getting interest from Pirate, it's still going up against the dollar - even in the face of this drop we're still way up. I just don't know why it would be a given that people would want to immediately dump after getting their funds back.

Profit?   ???

Again - why is there an assumption that you have to realize your gains instantly to profit? There's more reason to believe you'll profit more by staying in.

Or are you saying all these guys who invested in a HYIP are bears? That just doesn't make much sense to me.

I guess it made sense to someone, from that dump, if that's truly the reason.

eveyone knows that the BTC rate went to high too fast. The general uptrend might be ok, but eveyone expects corrections. Thus, the actual content of the announcement isn't substancial. Any news of some significance to BTC which isn't outright positive could trigger a correction.

Mtgox.   ;D

The price of BTC went up at exactly the speed it needed to in order to fulfill the market orders which were placed. So your "everyone" obviously can't include all the people who bought. It also can't really include any (rational) people who didn't sell.

In order for this news to be considered an indicator of a downturn, I'm assuming people have some scenario in mind which would lead to that downturn. I'm just asking what it is, as my best guesses still don't seem very likely.

Because I knew everyone else would sell. Markets are silly like that.

+1 for being honest.

Jokes aside, you should know that every $2 increment, there will be a correction.
After bitcoin passed $12 because of the bug on MtGox and there's no correction at all, a "correction" at $15 is suitable.
Also, $15 is half of $30's bubble.
If enough people think the same things, a "correction" will happen.

 From http://iheartwallstreet.com/2012/03/22/why-didnt-you-sell/

http://iheartwallstreet.com/wp-content/uploads/2012/03/buy-buy-sell-sell.jpg

From what I watch and read from the chat and forum, people that hold big amount of BTC (2k - 20k) are a bit reluctant to dump, as it'll hurt their investment.
But for normal people that hold small - medium amount of BTC (10 - 500 BTC), they don't have any problem dumping it to the market now to get fiat, now that BTST is closing and bitcoin is trending down.

Since there's no more incentive to get 28% profit per month, people will stop buying bitcoin in large amount.
At some point people will learn to cut loses and dump anyway when we reach "that price" level.
I've seen 10k ask order moved and eat most of buy order that's in the way a few hours ago.

The real dump party will start when pirate is giving back everyone's coin.
At least 10-25% coin that they get will get dumped just in case bitcoin get down further.

I don't think the price manipulation is over yet...surely not before pirate pays out his lenders.
As you said price will drop after he pays out but we may see another spike before he does.

I had a really good laugh reading through this. ;D

Exactly. But, many people don't mind dabbling in a little daytrading every now and again (especially in times like this) with a certain percentage of their bitcoin holdings. I like having USD and bitcoins, so it's kind of a win-win for me as long as I get to keep most of my coins in the end. Whatever USD I'm left with will either sit and wait to buy back in or it will go towards my IRL loans. The goal is to come out with more bitcoins in the end, but in the meantime I will keep earning and spending USD.

You're obviously very naive to trading. The belief that everyone else is going to sell, regardless of the reason, is very often the only reason anybody sells. Or even the belief that everyone else believes everyone else is going to sell. Likewise for buying. Either that or you bought at $15+ and you're panicking in denial mode. This cartoon sums it up pretty well.

http://bunny1980.files.wordpress.com/2011/07/buy-buy-sell-sell.jpg

The general trend is upward anyway.

how long did bitcoin savings and trust operate?

From November 04, 2011, 06:14:09 AM to today, around 9 months.
Chart courtesy of Joric & ruski.

https://i.imgur.com/oeEpU.jpg

I know why he doesnt have time for investing anymore...pirate had a baby  :D

Exactly.
So the actual contents of the news is irrelevant. People tend to attach far to much meaning to the market movements.
There is a general trend structure, and any suitable trigger event sets those acummulated forces to move.

Wow - what an asshole response. You're obviously very poor at basic reading comprehension. I'm very well aware of the lemming behavior phenomenon. What I asked was why anyone would assume other people are going to sell on this news. Apparently no one has a more likely explanation than what I gave. "The market is silly like that" - right.

My position doesn't change based on this horseshit - don't make me laugh. I was all in long before the price was even half what it is now and I've been mining for 18 months. I've never sold a single btc for USD and am holding very long. I'm sure there will be many more bumps in the road after this one.

PS&T has less than 400,000 (based on interest payments).  And no, the coins will not be freed.  The coins, or what he had left, were sold seconds after the announcement, and will have to be bought back before he can release them.

This, along with the announcement, triggered a landslide.  Or you may call it a bubble burst.  Which is fortunate for Pirate, bacause he can now buy back the coins at half price, and have a chance to pay back what he owes.  If he makes it, he will profit thousands of BTC in bets against his own default.

Very clever, and not what anyone expected.

Some of the coins may be sold again when released by Pirate, but not that much I think.  Pirate may hope for it, and pay out at a slow pace to get cheap coins from old customers selling in panic.

All we have seen so far was a speculatory crash... the real crash is coming. It's not so much of a crash as it is a major inflationary event.

I have to say, this "event" pirate created had me wishing I kept my nut in my gox account. I saw (as many others did) coming with almost 30 minutes to sell... but I couldn't get the network confirmations fast enough. It had already dropped to $10ish by the time I was able to sell... I held off for the temporary recovery, and manage to play the fluctuations well. To date I have regained the USD value of my holdings. Had I kept my BTC in my GOX account... I would have doubled my USD. Oh well... I expect to double or triple my BTC by the end of this. Long term, that's far more significant.

http://betsofbitco.in/item?id=500

Hey, credit where credit is due: https://bitcointalk.org/index.php?topic=94516.0 (https://bitcointalk.org/index.php?topic=94516.0) :)

Granted, I didn't realize that just crashing the market might be enough to pull it off. Depends on how much has been transferred into the fund and when those transfers were, but maybe even just doubling his money could make a big difference. After all, it takes 10 weeks of compounding at 7% to double.

Or he's actually figured out how to get those returns...