Bitcoin Forum

Suppose you discovered bitcoin today and you had significant funds at your disposal.  How much would it cost for you to drive the price to $100 over a three month period?  What techniques would you employ?

-- to clarify --

Drive the price to 100 and change the value perception long enough to make your exit.

This doesn't make sense. Anybody having significant funds wouldn't want for BTC to go up unless the funds are significantly limited.  :D

But for the heck of it: Repeatedly do market orders on the smaller exchanges for the period always buying as much so that you would have payed the same on mtgox (which is usually higher without the strategy). If that isn't sufficient balance across all exchanges depending on the liquidity.

It'd only take a few months if you had the right funds. I'd just buy them all and hoard them for about 5 years, then dump them for like +900% profit

This is not an issue. When you've decided to allocate significant funds into BTC, the issue is not "driving the price up to 100". The issue is preventing it from shooting up to 100 before you're done with your allocation. BTC "market cap" is ridiculously low, and the free float is much lower still (one estimate is 25%, so just a bit north of USD 40 million). So, deploying even relatively insignificant amount like several million USD is very likely to disrupt the balance and push the price up by quite a bit.

Now, much more interesting question is: How do you actually deploy significant funds into BTC without pushing the price over 100?

Here is how. You move your funds to Mtgox slowly over time, in small portions not more than 50K USD each. You carefully stack your bids, keeping most of them way below the market to avoid influencing the everyday price discovery while taking advantage of petty market panics. You also keep the ask side artificially high with off-market walls to create an illusion of BTC abundance. From time to time you set up huge ask walls close to market to provoke the bears and small speculators into dumping their coins. You buy all the dumps without looking too eager. You damn the moron bulls who show off their bid walls too close to market and scare away the bears. With luck and patience, you'll be able to accumulate quite a bit of coins without too many people noticing what's going on. Your job is to prevent the market from realizing the scale of redistribution that is happening before your funds are fully deployed.

Oh yeah, and you do not even bother to drive the price up. The fundamentals of bitcoin adoption will do it for you in any case, making it a 10-bagger at the very minimum. You are quite sure about it, as you've done your fundamental analysis and due diligence beforehand. So, it does not matter much if it happens within 1 year or 10 years. Let the speculators be excited about "OMG, BTC is going to 17! no, it'll be even 17.5! and then I'll dump!".

Does the market behavior described above look familiar to people watching Mtgox for the last year or so, by any chance? Hmm, I wonder why is that...

Arvicco, it'd be fairly easy to get a large portion of the markets BTC before the prices were to shoot up. At most you'd be looking at a $5-$20 increase in the time you were buying all of them. Someone with significant funds, this wouldn't be a problem.


If I had 1,000,000 or 1,000,000,000. I'd be able to spend most of it on BTC in the first few months, buying them for over market price wouldn't drive it up because it'd only be one person doing it. If several people were to do it, it would sky rocket. I would say 75% of the way through your funds is when you'd really have a worry about prices rising and BTC becoming unavailable.

ROFL, why someone so bullish wears a bear avatar?

LOL

But you can always dream can't you?  :D

Jakers, I do not think your opinion is based on practical experience, sorry. You're making two unrealistic assumptions. First, it is that you're the ONLY guy on the market who wants to deploy millions of fiat into BTC. This obviously could not be the case.

Second, that all these piles of BTC that you see sitting on the ask side are ACTUALLY FOR SALE. If you watched the market action more carefully you'd notice that once the price action gets close to these "gobs of BTC for sale", they in most cases mysteriously disappear... The reason for this is evident to anyone who will read my post carefully and understand what is written there.

So, if you actually move a couple million USD into Mtgox and try just to buy up stuff using a simple strategy you suggest, the market will very shortly self-correct. The huge fake asks will disappear, your hidden competitors will come out in full force and the price will shoot up like there is no tomorrow in a short time frame, leaving you with almost no BTC. Incidentally, I believe this is exactly what will happen sooner or later when the dumb money start to rush into BTC following the current smart ones.

Of course, read the title. This is asking what it would take, and my numbers were just estimates, I really have no clue the exact amount of BTC:USD ratio that there is right now. So obviously, what I mentioned would shoot the prices up, as you just stated yourself  ;D. I would however, invest money like you said, and I wouldn't mind if other people jumped in, because after all, that is what I wanted to do in the first place (title of the thread).

Oh yeah, right. Yes, all it takes for the price to shoot to 100 is about 2 million USD and one not-so-bright investor following straightforward BUY-BUY-BUY strategy that Jakers described for a couple of days.

Lol what the hell, that was the whole point of the thread -.-....doesn't matter if it's stupid or not. I think I've won because I provided the fastest way to drive BTC to $100 :D

I'd never do that with my money, it's a lot easier to just hire minions to do the work for you :P

Indeed you won... I just hope that YOUR funds earmarked for BTC are fully deployed by now. ;)

There are currently 65614.1 Bitcoins for sale on MtGox priced under $100. If you place an immediate order to buy all the Bitcoins available on MtGox priced below $100, and then bought .1 BTC of the $100 Bitcoins, the "last trading price" would be $100. The amount of money this would currently take is $1,087,817.82. Since you would be buying almost all the Bitcoins currently for sale in this exchange, you could maintain the $100 price cheaply, at least for the hour it would take other sellers to send more Bitcoins in.

You can do the same thing on a low volume exchange for much cheaper.

edit: it looks like MtGox doesn't correctly calculate the true price to buy xxxx BTC; the answer is currently $1,695,122 USD to buy to $100.
http://we.lovebitco.in/img/buyto100.png

WOW!. Wish my Gox was as big as yours!

Nice to see someone with a little experience on the forum. 

That's what the kiddos don't realize.  The marketcap is so low it is ridiculous.  I noticed the tactics you refer to over the last two months.  I actually think you could make a 20 bagger for about 5MM very easily.  That's not just driving the price there, but keeping it there.

With most stocks, you are limited by the fundamentals of the underlying security.  With bitcoin, your fundamentals are based on making a new store of value and currency.  It's almost limitless and the primary driver is exposure and the belief that it is going to happen.   If you drive the price up buying, you will create that exposure.  It's a self-fulfilling prophecy! 







Hey-- Nice ti

Have fun with the calculator: http://bitcoincharts.com/markets/mtgoxUSD_depth.html

 :D

That didn't work out too well last time did it?
It only needs a few fat finger trades to ruin it, sure $100 can happen in a flinch - the question is if it will rise further on its own. Nobody wants to overpay for an asset, no matter how good (you think) the fundamentals may sound.

You mean when we fell from $30?  Just wait, we will be making new highs very soon. 

You should buy back your BTC now.

You didn't get into my argument ;)

So you really have $1.3M in Gox???? I wonder what would happen if you simply click "BUY BITCOINS".........

By the way, this:
is wrong, because you never know how many bitcoins are sitting on gox but not on the order book

Let's say you're a manager of a big tech fund looking to allocate into a new asset. It's back in 2001 and Apple just released its first iPod. You're knowledgeable enough to assess the technology and its economic implications and smart enough to see the potential of the product and the company. Your run your models and it looks all good.

The stock is out of favor though, trading at about 7.70 USD. It went through a violent bubble just a year ago, reaching 35 bucks before crushing to single digits. Not many people appreciate it, and some doubt that the company will even survive.

Do you know for sure this dog of a stock will become a 100-bagger in the next 10 years? Not really, but your models, fundamental analysis and intuition all agree that it is grossly undervalued.

Once you decided to invest, do you aggressively bid the stock up, trying to impose you vision of AAPL valuation on the market? Not really, you patiently accumulate trying not to overpay and hope that you have enough time to form your position before market reevaluates the stock.

What good is it to you if you're bidding the price up aggressively? Can you create a temporary price bubble? Quite possibly, if you possess enough funds. Will it influence other people's view of the stock? Very little, they have their own vision that evolves at their own pace. So, once you stop pumping the stock it will slide right back down where the current market consensus is. So, there is no benefit to you in it, as you cannot exit your position easily - it's just to big. You can only exit at market consensus price or even at a discount.

If you are right about the stock fundamentals and its long-term valuation, the market consensus will evolve over time and the price will appreciate long-term, regardless of temporary ups and downs, bubbles and crashes. You'll get your 100-bagger or whatever your luck is. If you are wrong, no amount of price pumping can possibly do you any good.

exactly.

I like you, alone because annette786 misquoted you to create the false impression that she shares your opinion.  :D

Too bad this forum doesn't have any score mechanism, you would have big upvote from me.  :)

I don't think she did. I totally agree with her that BTC is currently grossly undervalued based on fundamentals and should appreciate quite considerably. I just happen to think that aggressively bidding price up achieves very little in terms of changing the long-term market consensus which evolves at its own pace. More importantly, it achieves little for me as an investor, unless I just plan to pump and dump the asset.

To be honest I have no idea if BTC is undervalued or not or by what magnitude.
But that's not the topic of the discussion is it?

Oh crap I can already see that responding to this thread was a mistake. What's it with you new signups anyway, you two sound awfully sure of yourself to be authentic.

Correct.  Bitcoin is a Veblen good, like gold, with a recursive virtuous cycle based on its own price.  The higher the price goes (as long as the moves are slow and steady), the more people will believe in it, the more they will buy it, and the more the price will rise.  Marginal demand is potentially infinite.

http://en.wikipedia.org/wiki/Veblen_good

As to how to create a sustainable mania in any market, surreptitiously: human beings are like rats.  They won't trust big sudden changes, but they will believe with religious zeal and become very confident if a trend is confirmed consistently, day after day, with no significant negative feedback.  So the best way to manipulate a market to the upside (assuming you've got the funds in reserve) isn't to spend money pushing for new highs, but to lend constant support on corrections so they never develop into anything too long or major.  For instance, using this approach, the US Fed has created a 30 year UST bond bull market with a captive brainwashed audience which, rat-like, keeps pushing the "buy" lever, unable to conceive that on the 15649th push the spring will release a sharp blade that will slice them in half.

Arvicco, what's your profit in sharing the strategy? If your goal is to make the bears keep price low, what's the point in spreading bullish thoughts across the forums?
Just curious...  ::)

+1 Great Post

Once you mostly formed your position, what's the point in keeping your view secret? The market consensus does need to evolve, intelligent forum discussions may help this process.

Great thread...people should listen to Arvicco.  If you believe in the long term fundamentals and want to accumulate, you don't want to push the price up too quickly...as it passes $15, $20, $30, etc, you want to give people that want to sell at those levels the time they need to sell at those levels.  To get to a level of $100 and sustain that price, you have to clear out everyone willing to sell at less than $100.  You can't do that if you push the price to $100 too quickly.

One other possible strategy is to create a series of mini runs and panics designed to shake out the people that don't have conviction...you don't want them hanging around as you approach $100 or it won't be a sustainable price.

To answer the original question, I bet it would take far less than $1 million to get the price to $100...if you started to manipulate the price higher, many of those bids below $100 will lift.  But it would kiss $100 briefly then retrace hard.

I always tell people to only buy what you're willing to lose...if everyone did that, then why would anyone sell for less than what they paid?  If no one sells for less than what they paid, you'll have a sustainable appreciation in the price.  It is the very definition of capital formation.

I suppose you exaggerate a bit about infinite demand. There are ways to quantify final demand, for example here:

http://cs702.wordpress.com/2011/05/29/on-the-potential-adoption-and-price-appreciation-of-bitcoin-in-the-long-run/


It is indeed possible to fake scarcity, artificially back a bogus "safe haven asset" and create a sustainable mania. If you have unlimited funds, you can even sustain this mania for 30+ years as US Fed did. But all such manias end badly sooner or later, as you seem to understand quite well.

An asset with real safe heaven characteristics (like gold), on the other hand, does not need any artificial backstops to hold its value long-term. Quite the opposite, it can even keep its value despite artificial suppression of price that most likely happened for many years.

My opinion is that bitcoin as an asset is closer in its characteristics to gold rather than UST paper. As such, it does not really need price pumping or artificial backstops to appreciate as its adoption grows.

Here's an answer to the question:  $800M.

This is the difference in market cap between a price of $20 and $100.  I'm pretty sure this is in the right ballpark.  However there is no guarantee of a profit if someone pushed the price up to $100.  You'd see the price go right back down when it came time to sell.

There are plenty of reasons to sell while up or down even if you are (or were) 'willing to lose'. You might get fired, prefer a new car or get cancer etc.

Yep, ultimately nothing is infinite, but hyperbole just sounds so much more exciting :).  The angle I was going for is that since BTC carry no holding costs, adding one more BTC to one's wallet will always be a welcome event with no conceivable drawbacks (unlike gold, which requires storage or fees).  Hence the greed dynamic with BTC, although not infinite, is potentially even stronger than with gold, so I think the optimistic case for Bitcoin as a store of value results in a higher number than the one referenced in the (quite good) blog post you link to.


Agree completely.  I started buying Bitcoin heavily once it finally sunk into my brain that it was basically digital gold.  The bull market in BTC will continue for as long as governments wage war against freedom and privacy, i.e. for as far as the eye can see.  There will be big volatility, corrections, and scary moments along the way, but I consider BTC more of an insurance than a speculative vehicle, so I won't be selling a single Satoshi unless the macro political outlook reverses 180 degrees.

It just got more expensive to buy almost the same amount of Bitcoins up to $100: $2,698,613. Lesson: if you want to accumulate Bitcoins in a bull market, do it fast in one order; you can't sneak little orders by the sellers, they will keep on bumping up their prices.

BTW, my previous screenshot is a perfectly executed hoax, nobody has $1.3M ready to buy Bitcoins - you can crash now, market.

Lol!!! buy now or never... no matter how many $ you have.

Sorry to disappoint on the perfect execution, but you got the number formatting wrong. :P

Interesting, thanks for this post. I too see it as insurance. I worry little about the eminent collapse of the U.S. dollar. While such an event would have major global economic implications, with bitcoin I need not be afraid for my own financial security.

I don't think it was that well executed since you haven't got any replies worth mentioning.  :D
And since this is BTC and somebody wanted to brag he'd simply sign a message for the wallet.

I think this thread is worth reviving. ;)

@OP: Feeling good now? Told you there is no need to call for manipulation, the market will come to appreciate the qualities of Bitcoin in its due time. Curious to see that this time is coming rather sooner than later...

Despite recent price spike and all the 'bubble talk' notwithstanding, I happen to think that this asset is still grossly under-appreciated. USD 1 billion 'market cap' is within a valuation range of 3rd tier technology companies such as Netgear, Evernote or Liquidity Services. And this is only if you consider BTC a 'non-traditional startup', mostly valuable for the talent of people working for it and its partners network. Which is only a small part of the story, Bitcoin's desruptive nature, its potential to revolutionize or make obsolete a whole set of industries not even starting to be reflected here.

The people calling it a bubble, especially top of the bubble... well, I hope they can live with being ridiculed for this very call for the rest of their lives.

Yes I am!  It only took a little over 2 months.   




Manipulation is a nebulous concept when it comes to bitcoin.  I definitely think many of the weak hands have sold to the heavier hands.  We've had a lot of volume.  How many heavy hands ran the market, it is hard to say. 

I actually still have most of my coin and will do so unless something fundamentally changes.   I came to the realization that fiat currencies derive trust from government backing, and bitcoin derives trust from utility and scarcity. Utility and scarcity are much more powerful as a currency facilitator, so bitcoin might actually have a chance.

I agree with your marketcap comments.  $10B would be a good starting place for a bludgeoning currency.

Maybe some hedgies can get us to $10B in six months. ;)