Bitcoin Forum

If a btc exchange was richhhh..... couldn't it stabilize the price of bitcoins by buying some when there is a sudden excess of them on the market and releasing them slowly when there wasn't?

If it was rich and wanted to become poor.

It's a much better business to let users transfer money between themselves and keep 1%.

An exchange doesn't exist to speculate, it exists to make money off of those speculating.     I don't want my exchange to be taking the other side of any trades.  An exchange should not be exposed to exchange rate risk, for its customer's sake.

A party with a lot of money could leave funds at an exchange to try to stabilize the exchange rate.   But that's capital intensive, and there are costs to carrying the capital.  [Edit: And why would this "rich party" care to do this?]

The exchange rate had just more than doubled from a few months ago.  This wasn't even a 20% pullback.   Bitcoin used to see that level of volatility every other weekend, so it is just a matter of letting the market discover the price.  Merchants who use a payment processor to convert to cash weren't affected by this.  But obviously a volatile exchange rate isn't good.

When more methods for shorting bitcoins are made available then the exchange rate should level out a bit.  There are a couple that I know of being built or are in limited (invite-only) trial currently.

One manipulator is enough.  They're called The Fed.