Bitcoin Forum

It wouldn't be very smart to buy 10,000 BTC and then try to cause the price to fall in order to buy more at a lower price.

Depends really. It could be. People have done things like that often. Especially when there was less liquidity and the market was smaller. I don't know how effective such manipulation tactics are these days though.

Miners, stop selling privately.  Here is why it is not in your best interest:

-Miners typically need to sell their coin immediately as they have invested in equipment that expects a return

-There are deals for fixed liquidity privately. Where the miners can sell their coins outside the open market at a premium or at a guaranteed price range for a set period of time

-Those deals exist because there are market makers who profit immensely from pulling wool over the miners eyes

For example: the maker can buy 10,000 coins privately, which reduces the volume on the public order books. They can then “splash” the thinner books by selling 2000 coins; thereby bringing the price down. Now they can continue negotiating with miners stating that the market rate is $X - which is significantly lower than the market rate had the miners just sold on the open market. The makers are intentionally trying to keep volume off the open books so that they can keep the price low so that they can continue buying their coins low. Someone with $20,000,000 they want to invest in bitcoin would be able to acquire many more bitcoins by using the above methodology.

I don't claim I believe with certainty that this is going on, I am submitting that, if a large enough entity (or several) would plan to buy large amounts of coins, and have some patience, this would probably a scenario worth exploring. In terms of tax efficiency, waiting for the ETF would probably be the better choice, but in terms of price control, the method I described would in principle beat a fund that is, ultimately, positive feedback linked to the markets.

I disagree that miners would prevent this taking place. No disrespect to miners, they're the backbone of the network, but amateur miners seem to be not necessarily the most economically rational actors. Go look around in this forum how often the fall for the fallacy: 'It's sunk cost anyway, I'll let my outdated miners run as long as they produce coins', and how often more economically minded users need to tell them that the actual calculation needs to be based on total cost of future production of coins (mainly: energy costs) vs. number of coins bought at market for the same costs.

Larger mining operations are undoubtedly much more economically savvy, but I've argued over and over again that I believe that, with the increasing "professionalization" of Bitcoin and Bitcoin mining, short-term profit opportunity will probably outclass long-term speculative investment. In other words: large miners sell more than they hold, especially considering that we are currently nowhere near a new uncontested bull market (which means the ratio of sold vs. held coins can change if the market sentiment changes, and miners might hold more than they sell if they feel it's a sure thing price will go up.)

Finally, we have plenty of evidence that public market price as determined by on exchange trading is a major reference point for off exchange transactions (just one example: the SR coin auction, where every party that spoke on it refered to "the market price" as if it were the obvious metric). Binding a large mining operation to you in a mid to long-term contract, maybe even offering a premium (although, from hearsay, I've only heard of large holders being made sub market offers, off exchange), then using some fraction of the coins to strategically depress price, would seem like a very good strategy to me, and relatively risk free: if it works, market price stays low, and accumulation proceeds at a low cost. If it fails, and price refuses to be depressed, the account value of coins gained so far appreciates, which is a sweet little consolation price.

Arbitrage by miners could throw a spanner in the works of this mechanism, but profits would be comparably marginal: the goal of the accumulator is not to destroy the on-exchange price, just to keep a lid on it. For the arbitreur miner, the reward is small (sold his coins at market price, is able to buy them back slightly below perhaps), and more importantly: for the large operations, the initial problem would re-appear - what to do with a large amount of coins, when you in reality prefer to hold USD (by my assumption that professional mining operations are short-term opportunistic, and not long-term married to Bitcoin success).

It's a tragedy of the commons style scenario: presumably, miners would be better off selling directly on the exchanges, since the higher volume generated there would ultimately drive up price, but individually, they fear the risk of lower profits because of increased selling pressure on exchange, so they seek arrangements off exchange.

I'll say it one more time: The above is (motivated, I think) speculation. I make no claim this is necessarily happening. I only point out that I believe it is a possible, maybe even probable, mechanism taking place, accounting - at least partially - for the current stagnation period.

Depends really. It could be. People have done things like that often. Especially when there was less liquidity and the market was smaller. I don't know how effective such manipulation tactics are these days though.

-There are deals for fixed liquidity privately. Where the miners can sell their coins outside the open market at a premium or at a guaranteed price range for a set period of time

Care to provide any examples? I haven't heard of such "deals". Any proof that what you describe is in fact happening on any significant scale?

Miners that dump and dont save most of their gains will kill themselves when 1 btc is worth 10K.

Miners, stop selling privately.  Here is why it is not in your best interest:

-Miners typically need to sell their coin immediately as they have invested in equipment that expects a return

-There are deals for fixed liquidity privately. Where the miners can sell their coins outside the open market at a premium or at a guaranteed price range for a set period of time

-Those deals exist because there are market makers who profit immensely from pulling wool over the miners eyes

For example: the maker can buy 10,000 coins privately, which reduces the volume on the public order books. They can then “splash” the thinner books by selling 2000 coins; thereby bringing the price down. Now they can continue negotiating with miners stating that the market rate is $X - which is significantly lower than the market rate had the miners just sold on the open market. The makers are intentionally trying to keep volume off the open books so that they can keep the price low so that they can continue buying their coins low. Someone with $20,000,000 they want to invest in bitcoin would be able to acquire many more bitcoins by using the above methodology.

Miners that dump and dont save most of their gains will kill themselves when 1 btc is worth 10K.

I dont get what you are trying to say, isn't selling it one exchange and selling it private the same?

I think your logic is somewhat flawed. First of all I kind of doubt that there are many miners contracting to sell 10k BTC considering that only 3.6k~ BTC are mined every day. Secondly these brokers are professionals at making markets, and since they have so much money invested in the bitcoin purchased they have a vested interest in trying to keep the price as stable as possible when they sell on the market to avoid being forced to sell at a loss.

I would personally argue that it is, however the OP seems to disagree.

If you trade privately then the person you sell to will either not purchase bitcoin on an exchange they otherwise would have bought to or will sell bitcoin that they would not have otherwise sold

Which results in the price you or I see being inaccurate, because activity is going on but it won't be reflected in the public price we're seeing on any open exchange. The OP's logic is accurate, whether it's actually happening is another story. I don't know enough about how many miners there are to know how realistic this scenario could be.

OP is exactly the reason why people deal off the exchanges.

All I hear is 'stop dealing to your advantage and buy over priced on exchanges so I can line my own pocket!'

"-Miners typically need to sell their coin immediately as they have invested in equipment that expects a return"

Can someone please clarify for me, in layman's terms, how the investment a miner makes to acquire a coin is any more at risk than the investment a trader makes to acquire a coin?   Once the coin is in your wallet, the relative return on that coin, once sold, is identical for both cases isn't it?

Miner:  Spent $10 on equipment costs, $90 on power and cooling, received one Bitcoin worth $100

Speculator:  Spent $90 on some exchange, $10 on fees,  received one Bitcoin worth $100

Why are these two individuals in any different situation once they have turned their non-coin assets into coin?  Up until the moment the coin landed in their wallet, their pre-coin assets could have performed wildly different to each other.  But once they have been converted to coin, they perform the same?  Or am I making the mistake of thinking miners do not see themselves as speculators but as something like 'manufacturers' and are thus not using disposable risk capital to set up their operations? 

"-Miners typically need to sell their coin immediately as they have invested in equipment that expects a return"

Can someone please clarify for me, in layman's terms, how the investment a miner makes to acquire a coin is any more at risk than the investment a trader makes to acquire a coin?   Once the coin is in your wallet, the relative return on that coin, once sold, is identical for both cases isn't it?

Miner:  Spent $10 on equipment costs, $90 on power and cooling, received one Bitcoin worth $100

Speculator:  Spent $90 on some exchange, $10 on fees,  received one Bitcoin worth $100

Why are these two individuals in any different situation once they have turned their non-coin assets into coin?  Up until the moment the coin landed in their wallet, their pre-coin assets could have performed wildly different to each other.  But once they have been converted to coin, they perform the same?  Or am I making the mistake of thinking miners do not see themselves as speculators but as something like 'manufacturers' and are thus not using disposable risk capital to set up their operations? 

Miners would like to continue mining and earn bitcoins. So their bills have to be paid out.

Miners would like to continue mining and earn bitcoins. So their bills have to be paid out.

Someone have a very big bill to pay and mining is some kind of investmet.

Miners would like to continue mining and earn bitcoins. So their bills have to be paid out.

So do traders, I still do not see how a trader and a miner are in fundamentally different circumstances. 
One buys bitcoins from an exchange in hopes of selling them for a profit. 
The other buys bitcoins through a combination of a mining equipment company and the electric company, in hopes of selling them for a profit. 

The responses I am getting so far seem to imply that miners live paycheck to paycheck (or bitcoin to bitcoin) and cannot afford to sit on even a single mined satoshi, but instead must immediately sell each one to pay their bills instead of waiting for a better price when a better price is likely to come.  Do traders not have bills to pay as well? Their investment capital didn't come from nowhere either, and has to be replaced as well.   

Also there are, what, like 60% of all mined bitcoins in the blockchain that have as of yet, no unspent outputs?  Wouldn't this seem to be, in large part, the result of miners who are clearly not selling coins they mine right away?  I don't think Satoshi and a few people who lost or forgot about their Bitcoin account for such a large figure.

OP is exactly the reason why people deal off the exchanges.

All I hear is 'stop dealing to your advantage and buy over priced on exchanges so I can line my own pocket!'

OP is exactly the reason why people deal off the exchanges.

All I hear is 'stop dealing to your advantage and buy over priced on exchanges so I can line my own pocket!'

Imagine you have to sell 10000 BTC... you are going to break the market if you do it in an exchange, if you do it subtletly with tons of small sells to not create a big wall, you'll take ages. So contacting some rich person privately is the best way.

"-Miners typically need to sell their coin immediately as they have invested in equipment that expects a return"

Can someone please clarify for me, in layman's terms, how the investment a miner makes to acquire a coin is any more at risk than the investment a trader makes to acquire a coin?   Once the coin is in your wallet, the relative return on that coin, once sold, is identical for both cases isn't it?

Miner:  Spent $10 on equipment costs, $90 on power and cooling, received one Bitcoin worth $100

Speculator:  Spent $90 on some exchange, $10 on fees,  received one Bitcoin worth $100

Why are these two individuals in any different situation once they have turned their non-coin assets into coin?  Up until the moment the coin landed in their wallet, their pre-coin assets could have performed wildly different to each other.  But once they have been converted to coin, they perform the same?  Or am I making the mistake of thinking miners do not see themselves as speculators but as something like 'manufacturers' and are thus not using disposable risk capital to set up their operations? 

You won't break bitcoin price if you sell privately
But you must buy bitcoin from exchanger to raise the price  ;D

But i don't want someone use that method to get a lot of profit  >:(


I think that's true
And some people thinking just like the OP


But, it's difficult to search rich person who want buy 10000 BTC privately  :(