Bitcoin Forum

I was just thinking that 7% of all Bitcoins were stolen, lost, or whatever, from Mt Gox.  I wonder if that would be enough for price manipulation.   I'm just thinking that their might be more than then monetary value in having that much coin.  I have more thoughts one the matter, but lets see if anyone is interested in this conversation first.

Any person who has around 3-5K BTC, could crash the market or make it go higher.

The process is pretty simple, you make it go higher, just set a Buy Wall.

The other day a 1000 BTC sell crashed the price down into the $100-$200 range (not on its own, once they made the big sell, many other peoples positions started force liquidating).

2k bitcoins would spook the market for perhaps a couple of hours...

If a normal person with a tiny fraction of bitcoins, not even 1% of the total amount, wishes for the price to go up, do you really think the people with 7% of the total would want the price to go down?

Maybe they would like to drive the price down temporarily just so they can buy even more, but in the end they'd like high prices just as much as everyone else.

The Bitcoin market is very illiquid, so a relatively small dump of 1k-2k Bitcoins at the same time will likely cause a severe flash crash. It kinda depends if and/or how fast demands jumps in on a lower price though. Very hard to make exact predictions, but I think it's a lot easier to dump than to pump at this point.

It's fairly commonplace for prices to swing somewhat dramatically (maybe upwards of 15-20%) with just over 1k BTC. With 7% of the coins, you do some incredible manipulation. Part of me feels that if that much was dumped in a flash sell, the volume would crash BTC for a long time. But on the other hand, there are a whole bunch of people who have gone all in with BTC so there could be a fair amount of resilience to it.

But to be honest, I feel like it'd most likely be a case of diminishing returns: 1k can cause a 15-20% shock, but it might take 10k to cause double the shock (i.e. 30-40%). And then you have all of the factors like news in a given day and that sort of thing.

It isn't so much the number of bitcoins as the amount of dollars.

Bitcoin market cap is 8 Billion, but the "liquid" (read: non-lost, not stored off line [read: waiting to be lost]) market is much much smaller.

JP Morgan had to pay a fine of $12 Billion for sub-prime mortgages.
Today, the Fed purchases 1 to 1.25 Billion in the current QE asset purchase program.

With One to Two Million dollars, you could control the price for a while. But you can't sell Bitcoin short (not yet anyway) and that is the problem for would be manipulators.
As for manipulating the price higher, just ask the Hunt Brothers how that silver thing worked out for them....

In any market, there are always sellers (Someone always needs the money)
The question how to drive sustained buying, because without that, even small amounts of selling can prove significant

I was online when this happened...i think it took 4 or 5 sell orders of 1k btc, and then another sell order of 2k btc to drop it that low.   The buy orders that flooded in picked the price right back up though. 

I believe a more relevant question: how long can they manipulate the price for... without derivatives? Gold/Silver owners, anyone? :)

i recently made a post (https://bitcointalk.org/index.php?topic=508236.msg5616740#msg5616740) in the speculation subforum, drawing from the efficient market hypothesis and concepts from game theory, that argues that in most cases direct market manipulation would be costly, not profitable.

conclusion quoted below, but read the full post for the argument.


--arepo

This also depends on the buy support at any given time...  If there are no buy orders, then a smaller sell off can flash crash the market (which would only last a few minutes), but you would still be able to buy back in cheaper than you sold.   

I have seen sell offs of only a couple hundred BTC really shift the market (although for a very brief moment)