Bitcoin Forum

Did Margin Trading Crash the Price of Bitcoin?

But while there were many theories as to what news events could have caused bitcoin’s value to fall into such a steep decline, some market observers believe that this most recent movement may have been caused not by external factors, but by the actions of bitcoin traders.

This theory, perhaps most notably posed by Raffael Danielli, posits that out-of-control margin trading caused a flash crash in at least one major bitcoin exchange market, a development that had a cascading effect across the larger bitcoin market.


http://www.coindesk.com/margin-trading-crash-price-bitcoin/


Bitfinex: cascading margin calls resulting in flash crash

Today Bitcoin prices took a dive as margin traders on one of the largest exchange Bitfinex got their orders liquidated. For many close market observers and more sophisticated traders this did not come as a surprise. In fact, long positions have been building up continuously over the last couple of months in anticipation of a new bubble in Bitcoin prices and reached as high as $30m in outstanding swap positions on Bitfinex.

http://www.matlabtrading.net/main/2014/08/14/bitfinex-margin-call-cascade-algorithm-explained/


interesting to see that there occur such events even in our little bitcoin world...but maybe bitcoin world is maturing  :) ? good or bad?


-LiteCoinGuy-

Isn't it always caused by bitcoin traders? The news might be from external sources but its the panic sellers and buyers that cause the crashes.

Well the btc price is somewhere stuck in the 500 USD level mark.

Sites like OKCoin and BTC-e don't have clear answers on the margins.

ethereum liquidate their presales bitcoins

nope, the coins are untouched.

Bitstamp change its bank!

Can you give an opinion or reference the experts how to order bitcoin prices back to normal.
then we can spread the info to the forums or other bitcoin group

nobody cared about that. i doubt that this is the answer.

Check Chinese exchanges selling unbacked btc, I think you'll find your answer there. In my opinion that is what is driving the price down. It's like a lot of forged money is around and sure it will drive the price down, since there is more then should be.

The person writing this article doesn't know what a "flash crash" is. I doubt the accuracy of the article.

Price is also a bit controlled by large master trading accounts, and the waves dont hold for long , they are mostly short term.
I believe the manipulation wont be able to go much longer. Also its funny just how much large exchanges have controll over the price, just by their decision to keep their trading profits in bitcoin, or selling them for fiat instantly..

Relax. It's all just a little bit of history repeating. See for yourself:

https://i.imgur.com/FnJShDU.png

Margin trading on Bitfinex is certainly the most likely cause for the recent decline. I hope Bitcoin doesn't go the way of wall street full of highly leveraged trading and high frequency algorithms.

I fear that it will. Greed and a highly unregulated market are a dangerous mix. It would be a shame to see btc ruined this way.

The difference is bitcoin is global, tradable by anyone with a computer or even DUMB cell phone. It doesn't really matter here, it doesn't cause major economic damage the way derivatives trading does.

I think panic selling by people on Chinese exchanges realizing that their bitcoin in their account is not backed by anything would cause a much larger drop in price. Look at what happened on Gox when it was clear that they did not have BTC to back their trading positions; the price fell as low as ~150/BTC when other exchanges were trading ~700-800/btc. If this was panic selling like this then we would see a much larger drop (IMO) and there would be a much larger divergence in the prices on various exchanges.

How about we call it Summer Effect?