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Author Topic: A word of caution to those who have bought recently  (Read 4529 times)
Nagato
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January 13, 2013, 04:49:49 PM
 #1

From June to Sep, the price nearly tripled without any significant fundamental news(unless i missed something).
Then pirate defaulted and there was a spike down to $7+, which was readily absorbed and price has slowly creeped back up to where it is now(14+).

Yes, i know Wordpress started accepting BTC recently and Bitcoin is going to be gaining exposure at CES. More businesses are accepting bitcoin, all well and good.
But a 300% gain(all before Wordpress and CES news) just smells fishy to me.

What i think:
A 300% price gain in 3+ months without any significant fundamental reason is the work of 1 large buyer.
1) Maybe this buyer heard of bitcoin, did his research and believes in it as much as we do and is trying to scoop them up while they are still a bargain and is in this for the long haul.
2) This large buyer is here to make a quick 200-300% gain. Ever since price has risen to 12+, all the buy orders that were $5 and below have slowly crept up into the $12+ range.
If you look below 12.90 in the market depth table, there is very little liquidity to hold the price. It's almost as if the the large buyer has suckered everyone into buying at $13+ and is slowly letting his coins go whilst keeping 1-2 big orders below market price to give the illussion that there is very strong demand.

Personally i was thinking it was scenario 1, but after watching the PA and the market depth today, its starting to look like the chances of it being scenario 2 is not remote. Also a rich banker or fund investor is unlikely to have the technical background to understand the details of Bitcoin and appreciate the genius of it's design or believe in it's security.

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BCB
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January 13, 2013, 04:56:17 PM
 #2

Interesting

Any evidence of this in the public trading records.

I also know there is a significant amount of otc transactions.

Luno
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January 13, 2013, 05:01:42 PM
 #3

Interesting

Any evidence of this in the public trading records.

I also know there is a significant amount of otc transactions.



Interesting, if you don't want to give exact figures, how large is OTC trade in percent of Gox volume in your opinion?


 
 
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waspoza
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January 13, 2013, 05:20:54 PM
 #4

The only reason for it is that the more and more ppl getting into bitcoin. Just see how many new users blockchain.info is getting: https://blockchain.info/charts/my-wallet-n-users Bitcoin subreddit is constantly getting more and more subscribers.

Also don't foget that amount of fiat money is practically infinite.
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January 13, 2013, 05:25:54 PM
 #5

Your story of one large buyer reminds me of a conspiracy theory. And as usual with conspiracy theories they are often false.

Also below 12.90 there might not be a lot of orders, but if the price drops lower I will add to my position, and there are probably more people who don't have orders in place, but will act the same.

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January 13, 2013, 05:33:22 PM
 #6

Again, im just speculating but seeing 9k orders from a single account at current prices points to someone spending 150k into Bitcoins only recently.

I may be totally wrong and am underestimating the exponential effect of Bitcoin popularity.

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January 13, 2013, 05:34:13 PM
 #7

The only reason for it is that the more and more ppl getting into bitcoin. Just see how many new users blockchain.info is getting: https://blockchain.info/charts/my-wallet-n-users Bitcoin subreddit is constantly getting more and more subscribers.

Also don't foget that amount of fiat money is practically infinite.

+1

I believe the recent media attention and the growth in user base supports this price increase and we'll continue to see it climb in 2013.  I am concerned about the effect that ASIC delivery or ASIC failure will have on the market.
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January 13, 2013, 05:39:18 PM
 #8

Interesting

Any evidence of this in the public trading records.

I also know there is a significant amount of otc transactions.



Interesting, if you don't want to give exact figures, how large is OTC trade in percent of Gox volume in your opinion?

I would have no idea how to extrapolate those figure however FastCash4Bitcoins has moved over 200,000 btc and counting and the other side of there business Bitcoinsdirect is often out of coin.  So there is not insignificant  volume there.

If I had to guess I would say at least  5000 coins move in any given week on bitcoin-otc

And I have see significant orders on localbitcoins.net.

Again what percentage of gox volume I have no idea.  
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January 13, 2013, 05:40:30 PM
 #9

Why is there always this urge to attribute price movements to "one large buyer" or "the manipulator" etc?  Roll Eyes

I feel like there is a psychological need to attribute things to single people... maybe this is why so many believe in god, and in a king or president to control things?
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January 13, 2013, 05:44:35 PM
 #10

Why is there always this urge to attribute price movements to "one large buyer" or "the manipulator" etc?  Roll Eyes

I feel like there is a psychological need to attribute things to single people... maybe this is why so many believe in god, and in a king or president to control things?

Because the volume and market cap could certainly allow a single large buyer or a consortium of sophisticated traders, to manipulate the btc market very easily.

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January 13, 2013, 05:53:19 PM
 #11

Why is there always this urge to attribute price movements to "one large buyer" or "the manipulator" etc?  Roll Eyes

I feel like there is a psychological need to attribute things to single people... maybe this is why so many believe in god, and in a king or president to control things?

Because the volume and market cap could certainly allow a single large buyer or a consortium of sophisticated traders, to manipulate the btc market very easily.



Even worse, its a schizophrenic manipulator who does stuff like BUY 10k BTC to raise the price up to 14.31 and about an hour or so later sells it down below 14!  And then buys little bits back up to 14.20...

I'm sure there's a simpler explanation to this story... Smiley
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January 13, 2013, 05:57:44 PM
 #12

Actually the HUGE buy and then HUGE sell came within two or so minutes of each other. So yeah, the 'manipulator' may have needed to buy a bunch of btc just so he could use it to push the price down, and didn't care about the trading fee.
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January 13, 2013, 05:59:00 PM
 #13

I'm sure there's a simpler explanation to this story... Smiley
This might be some kind of tactics, to "test" the price level … probably in the past this trick worked a few times, then you can profit. But right now I don't see it. Also, no weekend-dip, afai-can-see.
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January 13, 2013, 06:18:02 PM
 #14

I think the spike of new users the Blockchain.info wallet has gotten since December hasn't shown it's full impact yet. Bitcoin has a steep learning curve so I think people will typically trust it only after a few months of experimenting with it. Once these new users start moving bigger amounts it will put a firm support under the price IMO.

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January 13, 2013, 06:21:44 PM
 #15


I may be totally wrong and am underestimating the exponential effect of Bitcoin popularity.

This. Just look at bitpays numbers to see how much its growing

Bro, do you even blockchain?
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January 13, 2013, 06:30:51 PM
 #16

As it is even harder to speculate on the intent of a possible speculator, Best pratice is to hedge in a ratio that you feel comfortable with. You know you struck a balance when you feel equally bad about your asks and your bids.


 
 
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January 13, 2013, 06:39:19 PM
 #17

Same old story - where is 'The Manipulator' thread?

Together with - imagine that a millionaire  learns about bitcoin and decides to try it out with his pocket money
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January 13, 2013, 07:05:07 PM
 #18


I may be totally wrong and am underestimating the exponential effect of Bitcoin popularity.

This. Just look at bitpays numbers to see how much its growing

This thread reminds me of the "cautionary warnings" when the price went from 3-4$ (the 2nd time.)

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January 13, 2013, 07:24:31 PM
 #19

Quote
A 300% price gain in 3+ months without any significant fundamental reason is the work of 1 large buyer.

can easily be changed to:
Quote
A 1000% price gain in 9+ months without any significant fundamental reason is the work of 1 large buyer.


good judgment comes from experience, and experience comes from bad judgment
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January 13, 2013, 07:55:44 PM
 #20

Why is there always this urge to attribute price movements to "one large buyer" or "the manipulator" etc?  Roll Eyes

I feel like there is a psychological need to attribute things to single people... maybe this is why so many believe in god, and in a king or president to control things?

There actually is. Look up Rene Girard.

Is he the guy we can attribute everything to?

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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