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Title: . Post by: 100x on March 30, 2013, 12:24:18 AM .
Title: Re: Market Manipulation Post by: yogi on March 30, 2013, 12:32:43 AM Yep, we definitely have had attempts at manipulation. There used to be huge bid and ask walls that would pop up all the time sending the price one way then the other. Eventually though everybody got wise and the walls stopped having an effect on the market.
Title: Re: Market Manipulation Post by: Elwar on March 30, 2013, 02:20:06 AM I am still of the strong opinion that Bitcoinica was manipulating the price.
I believe that they would watch for some particularly high shorts or longs that were set up on a margin. They would drive the price either way just enough to squeeze out the margin before returning, along with the rest of the market, to its previous price point. For example. Let us say that the price was $5. I put in a $1000 short at a 10:1 margin where I only have 50 cents of margin (not sure what the exact numbers would be) to work with. I watch as the price starts going down (I only put the short because I saw something to indicate it would likely go down). My payoff threshold (the price where I can start to make money at 10:1 is at $4.75. The price goes down to around $4.80, $4.75 on a slow market driven drop... then BAM...out of nowhere the price skyrockets...money is just flowing into the buy orders over and over it shoots up and up and up...it gets to $5.55 then stops. I have been short squeezed, then it all turns around. Sell orders fly in, it goes back down to the $4.70-$4.80 range... Bitcoinica now has $1,000 more of my money. The market is as it should be. And I am stuck wondering wtf just happened. We kept referring to these massive sling shots as "the manipulator". I believe in some discussions they even admitted to that as being part of their business plan. After Bitcoinica "got hacked", "the manipulator" disappeared. I had about 800 BTC when I started trading on Bitcoinica. About 3 of those wild swings clued me into what was going on even though everyone claimed I just did not understand how margins worked. I was convinced and took out about 260 of my 300 remaining BTC about a week before it was hacked. The money traded on MtGox is a sliver of the $1 billion Bitcoin market. A million dollars could move that $1 billion market to $2 billion or $.5 billion. We are still open to manipulation when price becomes the factor. |