Bitcoin Forum

Since the introduction of Chinese future market, I started to suspect the existence of bitcoin bots developed by those Chinese exchange companies. The unusual volume, the unusual bids/asks and the unusual collapses/rallies all point to this suspicion.

The intention of those bots are not merely to window-paint the trading volume. The true intention of those bot is to artificially increase the bid/ask spread and hence increase the profits they made. Usually, the selling activity of the bots should balance with the buying activity of them, because the goal is merely to manipulate the spread. However, selling activities may accidentally overweight buying activities, due to the incompetency of their codes or some other reasons, which will in turn trigger a flash collapse and vise versa.

Going forward, with the improvement of the bot algorithm, I believe fewer and fewer flash crash will be observed. And if there is any, it must be triggered by the collective forces of human rather than stupid bots.

Bots were said to be one of the reasons for the bull run in 2013.
When bots can be used to manipulate the market as a whole, why should they be content with manipulating the spread?

In 2013 Mt Gox was the dominant exchange and bots most likely had only to run on Mt Gox to influence the whole market. Today bots on one major exchange would most likely have to compete with bots on all the other major exchange.

You have to distinguish regular bots run by traders to automate their trading system and bots run by fraudulent exchange operators to manipulate the market with fake funds.
The former is no cause for concern, the latter is. In case of mtgox, willy & co there is even cause for suspicion that they were ultimately responsible for the "missing" funds.

When posting about bots you should make it clear which one you are referring to.

these buts is a disease for bitcoins, and must be treated and cured as fast as possible.

+1

The first case isn't a big deal, but the second is, but requires a bit more evidence than "boy that's a long bear market".

Re gox and willy. I'm not defending gox, the place was warped as hell, but I'm not sold on the evidence that willy was anything other than a buying bot for big volume orders spread out over time.

I don't think the current bear market is evidence for or against any theory when it comes to willy & co.
Actual proof won't come to light on it's own. The blog post has circumstantial evidence based on the api and only a criminal investigation could change that.

Considering Gox's and their former customers current situation I wonder why that hasn't happened yet. Perhaps it's just that even a criminal conviction won't necessarily get people their losses back. However if it was a simple 'oh no we were hacked' kind of fraud Mark K. & co might still have the private keys somewhere, and waiting for the right time to retire.
I don't think I'm the first to post that suspicion and that many other people have that suspicion, I mean it's possibility is fairly obvious.

and internal fund for trading volume (limited).
the flash-crash (less than 2 minutes) are an example of the research of "the limit" of an exchange (by a whale).

i love this.

free market.

Yeah !