Bitcoin Forum

It seems that since the wild swings of the weekend, that the price of Bitcoin has stabilized right below $20. For several days now, there's been barely any swinging at all, but it also looks to me like there's been pretty high volume.

So, my question is: could it be that someone with a lot of Bitcoin and an interest in seeing relatively stable prices (at least for right now) be running a trading script that is acting like a "shock absorber" on the market, placing bids and asks that effectively dampen the price effects of the relatively smaller trading power of speculators?

Yes

Possibly.

Of course!

First it was artificially inflated to the $30's then someone artificially caused panic all the way to $10 and now that same guy is artificially keeping it stable, i think his full name is The Market.

If you look at 5 day charts with low intervals (5-15mins), throughout both may and many other months you'll see exactly the same pattern:

Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>Rally>Correction>stabilization>slowdecline>panic>

....AND THEN WHAT HAPPENS?!

But why would someone want to spend all that money to stabalize the market?

How long would they keep doing it for?

The currency has very little value to it for trading/buying goods. With all the miners keep dumping there bitcoins in the market to recover costs, especially when they realize that the price will not rise higher than $20, how long will people continue to buy at $20.

I surely would not spend more than $8 dollars as an investment into this currency.

The price has stabilized because the speculators bailed (after they've played the market with pump and dump). What you see now is just an intertia from eirlier, it will come down ... significantly! Probably to a few dollars bitcoin. If no more speculators with a lot of money come of course to execute another pump and dump ;)

I will be rooting for the prices to increase long term and hopefully continue to build the buy and hold crowd

It's not a single variable question... With the rising and falling with such large volume one can make significant cash if they have the ability to force the market to do this, I've never seen it this deep before so it's getting harder and harder but it might still be possible.  Not to mention the large amount of dark pool trading that may occur without impacting the public market.

One wants to stablize the price to help gain confidence after a rocky time and *hopefully* get people interested in the market they just need something to push them over the limit. That is when you throw the price down so they decide to buy in so a new influx of cash can be had. I wish I had the bank and I would do it myself.

I believe it's human psychology at work. We all saw these wild swings and who hasn't thought, what if I sold at $30 and bought at $10? I'd be a genius!

So we all went home and decided we'd work on taking advantage of volatility. I created a spreadsheet that would keep me 70%/30% invested in Bitcoins and USD and decided I would use it to trigger rebalancing of the portfolio and what do you know? There haven't been any price swings to rebalance against!

It's maddening I tell you. Perhaps this is the time to convince merchants to start accepting Bitcoin. There are new safeguards against volatility. Tell me I'm wrong.

I heard people are getting paid to stabilize the price. The way it works is that you put up some money to buy coins below and certain price and sell above a certain price. You get paid the difference between the price you buy and sell at. You lose if you pick the wrong price to stabilize at. If you pick too high you lose all your dollars, if you pick too low you lose all your coins. More positions are open, bring your own capital.

Only thing to take into account is the trade fees, so you can't choose both prices too close together.

Yes, there are bots on mtgox that are programmed to buy at 19 and sell at 20. Since trade volume is low, the bots can stabilize the price.

Its a good thing!

To keep a large sell order at $20 to help build demand for the BTC, once demand starts to really peak, build your stepping stones so you can sell on the rise of the market. Then dump a large portion at the peak, and watch it ride your stepping stones back down. Then buy back in at the lower exchange rate if you want and repeat the process.

NO AND THEN!  ;)