BTC-e irregularity

[hgmichna]

The BTCUSD rate of BTC-e used to be a couple of $$ below that of the major exchanges, like Bitfinex, Bitstamp, ANXBTC.

My explanation for that difference used to be that BTC-e has relatively high fees, so arbitrage kicks in only when the difference is larger than the fee. The explanation why the difference existed in the first place was that more bitcoins were sold and more dollars flowed out of BTC-e than the other way around, therefore the bitcoin price was low, i.e. the price of the other major exchanges minus the fee minus some epsilon, so the arbitrage bots can make a small profit.

However, for a couple of weeks that behavior has changed to the exact opposite. BTC-e bitcoins are now a couple of $$ above the other exchanges.

One possible explanation is that recent irregularities, like the problems with US$ withdrawals, forced or scared people to buy bitcoins in order to transfer their savings out of BTC-e to safer places or at least to places with functioning fiat withdrawals.

Because I am easily scared (memories of Mt.Gox), I have now done exactly that too, and while I was working on it, the BTC-e web site disappeared entirely. That scared me even more, and I seriously thought I had lost my remaining balance, so when the web site came back, I emptied my account completely and withdrew all bitcoins.

What do you think? Is it true that people are buying bitcoins to transfer them out, thus driving the price to its upper limit? Are they justified in doing that or are they just cowards? What do you know about BTC-e?

[spud21]

I think your guess that people are buying overpriced Bitcoins to transfer them out is correct.

When Bitstamp got hacked it went offline and as soon as it came back online there was a stampede of people buying Bitcoins so they could make withdrawals as fast as possible. It briefly pumped the price up across all exchanges by about £30. After the first few hours the price started to drop back down.

I had money on there and considered paying for overpriced Bitcoins to make a fast withdrawal, but decided against it. At the time people said there would be a run on the exchange because every customer would withdraw all their money and the exchange lacked the funds to cover it. Luckily for me others also chose to leave their funds on Bitstamp and there was no run.

In the situation you are in I would say it's a gamble to leave your money on the exchange, but those who do might get lucky and avoid taking a haircut to get a fast withdrawal. However, if they get unlucky they lose everything.

[PuertoLibre]

I honestly, do not like the "signs" and just to be safe I would pull out.

It's not a scare tactic, just find what you can convert to that is more or less stable and keep it in that coin until you think the signs are prognosticating a better picture.

[PuertoLibre]

Like Gox, it is better to be safe and not sorry.

Edit: I am personally waiting till Litecoin or Bitcoin is low enough that I can pull out the rest from BTC-e.
The retarded thing about this situation is there is going to be a ton of people doing that very same thing.
Which just makes things all that much harder to deal with.

[PuertoLibre]

Another alternative we could collectively employ is simply converting to Bitcoin or "whatever altcoin" and then move it to another exchange.
So you'd only lose the fees from transferring and then maybe two conversions.

It's either that or wait a while to "buy out" in coins at some point in the future.

Edit: I have been doing a bit of math, and if there are less bitcoins on the exchange in question (BTC-e) then the value for each Bitcoin would be higher than normal. Which is what the OP pointed out. So it may be an indicator that Bitcoins are being pulled out at (possibly) an abnormal rate? I dunno. Just a possibility.

If that were so, the USD price per coin should continue to rise over the next week. Effectively making people prisoners while holding USD?

[hgmichna]

… So it may be an indicator that Bitcoins are being pulled out at (possibly) an abnormal rate? I dunno. Just a possibility.

If that were so, the USD price per coin should continue to rise over the next week. Effectively making people prisoners while holding USD?

As long as arbitrage works, the price cannot rise above the common price plus BTC-e fees (0.2%) plus a bit for arbitrage profit. But they said that USD payouts are delayed, so those who arbitrated via USD may have stopped.

This should leave the others, arbitrating through other fiat channels that still work well, if any.

Perhaps we can judge the degree of panic simply by the price. If it deviates by more than, say, 0.5% to 1% from the other exchanges, something must be seriously wrong, at least with the fiat transfers.

I got worried when I saw the price difference reversal (BTC-e bitcoins suddenly becoming more expensive than those on the other exchanges). In any case we can conclude that arbitrage does not work as tightly on BTC-e as it does between some other big exchanges, like Bitfinex, Bitstamp, and ANX. The prices of those exchanges differ only by a small fraction of a dollar from one another. BTC-e is the outlier.

I must admit that BTC-e has always, with only very brief interruptions, worked well. Unfortunately they are so secretive that we cannot find out whether they run a fractional reserve or Ponzi operation. But exactly that secrecy and anonymity is one of their advantages.

[PuertoLibre]

I wonder how the other exchanges feel about BTC-e's price being higher than theirs. Surely that has to be creating quite the backflow of funds?

So far the price is going lower, which indicates that USD is being moved out of the exchange and/or Bitcoins are flowing into BTC-e.
Are there alternatives to pulling out USD from BTC-e without using their web interface?
I assume if you are a bigger player with more than 1000 BTC you'd likely know the back-end system to moving currency outside the normal channels. (all speculation)

If that were the case there should be some kind of developing sign that will make it clear in the short term.

As of this writing, these are the ask and bids.

[WhatTheGox]

The BTCUSD rate of BTC-e used to be a couple of $$ below that of the major exchanges, like Bitfinex, Bitstamp, ANXBTC.

My explanation for that difference used to be that BTC-e has relatively high fees, so arbitrage kicks in only when the difference is larger than the fee. The explanation why the difference existed in the first place was that more bitcoins were sold and more dollars flowed out of BTC-e than the other way around, therefore the bitcoin price was low, i.e. the price of the other major exchanges minus the fee minus some epsilon, so the arbitrage bots can make a small profit.

However, for a couple of weeks that behavior has changed to the exact opposite. BTC-e bitcoins are now a couple of $$ above the other exchanges.

One possible explanation is that recent irregularities, like the problems with US$ withdrawals, forced or scared people to buy bitcoins in order to transfer their savings out of BTC-e to safer places or at least to places with functioning fiat withdrawals.

Because I am easily scared (memories of Mt.Gox), I have now done exactly that too, and while I was working on it, the BTC-e web site disappeared entirely. That scared me even more, and I seriously thought I had lost my remaining balance, so when the web site came back, I emptied my account completely and withdrew all bitcoins.

What do you think? Is it true that people are buying bitcoins to transfer them out, thus driving the price to its upper limit? Are they justified in doing that or are they just cowards? What do you know about BTC-e?

The thing is you dont know whats going on @ BTC-e but from my experience they always processed my withdraws of which i made many when i was arbing.   They could be holding the price up for some kind of arb reason or to attract more deposits.  The price could drop below the other market leaders any moments and again be below finex for months.   Pretty crazy, makes you want to deposit and sell.