disruptive market idea

[franky1]

we all know the normal way markets work. having an order book that starts at a price and allows for prices to go down to zero..

but has anyone ever thought of making an exchange/market that actually allows for change

where the lowest bottomline available order does not have to be zero..

heres the idea
imagine a asset price starts at $10 and bottom starts at 0
if the price goes down. bottom is still 0..obviously
but if there is a new high of say $10.20. the new bottom becomes $0.20
if the price goes down. the new bottom does not change and stays at $0.20.
but the new bottom does not go up unless there is a new high

basically an exchange that has a moving bottom based on the ATH
my demo is not specific to be a bottom $10 under a ATH
it can be be 1% of ATH or even 0.1%.. the parameter is not important
not limiting it to crypt exchanges. but also any asset. auction.

imagine art.
if one piece of art from an artist sells for $1k. the minimum bid becomes say 10% meaning never again will any painted be bidding for less than $100 for that artist.
if the third painting goes for $5k. no painting or resells of old painting ever be at a starting bid below $500
and so on

so economics guys discuss the pros and cons of a 'moving bottom' market
i have a few idea's for both myself but lets hear from you.

whats good or bad about markets having a moving bottom and why has it not been done before

[Hydrogen]

During the 2008 economic crisis, there were US bank stocks I vaguely remember crashing down to around $0.03.

After the TARP bank bailout was passed those same bank stocks rebounded to $3.00 within a few weeks. $0.03 to $3.00 off expectations of bank bankruptcy to a big rebound from too big to fail bailouts.

How could a static floor based on ATHs affect these types of scenarios. Free market advocates might label it slightly uptrend biased. They might argue that free markets are the best method of fairly and accurately pricing assets and that the process should not be biased or regulated in favor of one direction or the other.

For myself, I think its an interesting idea. To implement it, there may need to be a reserve allowing the company would be able to buy back all outstanding shares at the floor price. To guarantee a minimum sum of capital value that is redeemable.

Example if tesla's minimum floor value was $0.20. And they had 200,000 outstanding shares. They might have a reserve of $20,000 to guarantee they could buyback all outstanding shares at $0.20 to guarantee stock holders a minimum worth.

The added protection could be priced into P/E valuation which could result in assets being traded higher. There are lots of innovative ideas floating around. A few years ago they were pushing for bi yearly stock reporting terms for US stocks rather than quarterly. Claiming that the emphasis on 3 month cycles was too short. For those who believe longer reporting cycles might be better for growing businesses.

[bitmover]

so economics guys discuss the pros and cons of a 'moving bottom' market
i have a few idea's for both myself but lets hear from you.

whats good or bad about markets having a moving bottom and why has it not been done before

I think that ideally those orders from the book should not be manipulated like that.

Every order (bottom or top) should be ideally be backed by real money by someone.

If there is a 1000 usd buy order at 0.20, someone is willing to buy 1000 only at that price  , not at 0.21

It is like a contract. Someone is behind that order
I think your idea is manipulate that bottom orders. But someone must pay for them.

There is a risk in making a buy order at 0.20, even if ath Is at 10:
1 - your money will be stuck there, maybe for months or forever.
2- the price may hit 0.10 and you lose 50%.

I think the order book should as free as possi ble

[Darker45]

I'd rather not impose value on anything unless there is an interest from potential buyers. In other words, if the interest from potential buyers have gone to zero, there is no way any asset will retain a value more than zero.

If an asset's value is falling down, it could mean there is abundant supply and/or dwindling demand. In which case, if I am a seller, I'd make my own competitive price so that my order will get filled first. The only way to do it is to lower the price. That cannot be done if there is an imposed bottom price. That takes away fundamental freedom in the market.

Moreover, my rudimentary sense of logic suggests that if you are imposing a bottom price, whatever it is, if it is the bottom price, it will be equivalent to zero. If an asset has already fallen to its bottom value, say, $0.50, that means there is no buyer anymore. Meaning to say, even if your asset still has value as there is an imposed bottom, for as long as there is no interest in it, it is worthless, therefore, zero.

[odolvlobo]

...but has anyone ever thought of making an exchange/market that actually allows for change
where the lowest bottomline available order does not have to be zero...

It won't work. Suppose the minimum price is $1.00, but the most anyone will pay is $0.95. Trading stops. End. Of. Story.

[cryptoperkele]

Markets work because of liquidity. Some artificial price cap by moving limit orders would just eventually kill it and no one would want to provide that liquidity anyway. It's a zero sum game and you can't cheat it without making it an instant ponzi. You can have a bull market, but bear markets after that are natural part of the cycle.

[davis196]

No market price should be regulated by forces,that are outside the market.
Having a minimal market price distorts the market.The labor market is distorted by the minimum wage.
That's why unemployment exists,at least that's what the liberal economists say.
Having fixed or controlled prices is something that never worked.
The market price should be determined only by supply,demand and competition.

[Kakmakr]

we all know the normal way markets work. having an order book that starts at a price and allows for prices to go down to zero..

but has anyone ever thought of making an exchange/market that actually allows for change

where the lowest bottomline available order does not have to be zero..

heres the idea
imagine a asset price starts at $10 and bottom starts at 0
if the price goes down. bottom is still 0..obviously
but if there is a new high of say $10.20. the new bottom becomes $0.20
if the price goes down. the new bottom does not change and stays at $0.20.
but the new bottom does not go up unless there is a new high

basically an exchange that has a moving bottom based on the ATH
my demo is not specific to be a bottom $10 under a ATH
it can be be 1% of ATH or even 0.1%.. the parameter is not important
not limiting it to crypt exchanges. but also any asset. auction.

imagine art.
if one piece of art from an artist sells for $1k. the minimum bid becomes say 10% meaning never again will any painted be bidding for less than $100 for that artist.
if the third painting goes for $5k. no painting or resells of old painting ever be at a starting bid below $500
and so on

so economics guys discuss the pros and cons of a 'moving bottom' market
i have a few idea's for both myself but lets hear from you.

whats good or bad about markets having a moving bottom and why has it not been done before

#franky1 .... no market should be forced to accept a minimum price that are predetermined by the platform that provides for that market. Yes, auctions does that, because the seller wants a minimum price for the item, but Crypto currencies should only work on supply and demand.

Let's take some of these shitcoins that are sold.... let's say a shitcoin (pump n dump) gets identified ....people lose interest in that coin and the price must go down to zero.

Market prices should not be manipulated by centralized exchange platforms, because they are not the people who should predetermine the price of coins.

[Ryker1]

Well, first things first --I just want to confirm what type of exchange are you referring to. Is it a stock market, cryptocurrencies, or a diversified one?
If it is a stock, I don’t think this principle would apply. This will perhaps become a manipulation unless the exchange will be the one who would capitalize just to make sure that other stocks will keep their values until someone will trust their stocks and buy them. But in my own opinion, that is very much risky. If the stock does not perform well, there is a big possibility that the company behind the stocks could mismanage the finance they get from buyers of their stocks and will end up users not trusting those stocks and the strategy will not be effective.

[johnwhitestar]

we all know the normal way markets work. having an order book that starts at a price and allows for prices to go down to zero..

but has anyone ever thought of making an exchange/market that actually allows for change

where the lowest bottomline available order does not have to be zero..

heres the idea
imagine a asset price starts at $10 and bottom starts at 0
if the price goes down. bottom is still 0..obviously
but if there is a new high of say $10.20. the new bottom becomes $0.20
if the price goes down. the new bottom does not change and stays at $0.20.
but the new bottom does not go up unless there is a new high

basically an exchange that has a moving bottom based on the ATH
my demo is not specific to be a bottom $10 under a ATH
it can be be 1% of ATH or even 0.1%.. the parameter is not important
not limiting it to crypt exchanges. but also any asset. auction.

imagine art.
if one piece of art from an artist sells for $1k. the minimum bid becomes say 10% meaning never again will any painted be bidding for less than $100 for that artist.
if the third painting goes for $5k. no painting or resells of old painting ever be at a starting bid below $500
and so on

so economics guys discuss the pros and cons of a 'moving bottom' market
i have a few idea's for both myself but lets hear from you.

whats good or bad about markets having a moving bottom and why has it not been done before

I think it's an interesting idea, I'd be curious to know a bit more on how you are imagining it.

Of course in order to keep the bottom price in the described manner one would need to make available the funds to support that bottom price

But maybe it can be done by some kind of redistribution of the funds for instance a high trading fee that guaranties that bottom price, or you have a better idea?

[paxmao]

Any market manipulation and limit setting is bound to create flawed and inefficient markets. These are usually destroyed by the competition of fair and effective markets with adequate price discovery mechanisms. I do not see why anyone would like to participate in a market such as the one you are describing, since it does not allow them to choose the price to pay or the price at which they are wishing to exchange.

There have been quite a few experiments like that, including rent controls and the like.. it tends not to work in the long term.

[hugeblack]

To implement the concept of a moving bottom, you need a party that intervenes in the market, which makes the entire market lose its attractiveness and may turn into a more central point than the stock market.
There are many stocks that are closed to trading if there is a change of more than 10%, which means that the bottom is controlled, but the second party must control ATHs.

It can be resorted to in cases of economic disasters, but as I mentioned earlier, it is central and needs intervention from a third party to stabilize the value of the bottom.