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Author Topic: A word of caution to those who have bought recently  (Read 4531 times)
DeathAndTaxes
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Gerald Davis


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January 13, 2013, 08:01:27 PM
 #21

The off exchange market is much larger than many people realize.   Someone looking to buy or sell a large quantity (>1000 BTC) will find that due to lack of slippage an OTC transaction with a trusted counterparty makes more sense.  Generally when someone is looking to buy 10K BTC or more they get to know the other party so I have spent considerable time emailing and talking with potential clients.  There is a growing interest from non-traditional money (i.e. those people who have no interest in mining, or a certain darknet marketplace).  While I never ask "how much do you make?" or "what is your net worth?" you get an feel for someone finances on how they deal with money.  In FC4B we have clients who are freaking out because a $400 ACH is a day late.  We have also had direct buyers be willing to post six figure wires a couple days early because it was easier for them to get it done that day.  The later aren't people building mining rigs in their garage. 

We (Tangible Cryptography LLC) sell about 10K BTC a week in direct off exchange sales.  Our highest volume week was closer to triple that.  I have learned indirectly through clients that there are about three or four other entities which can handle transactions in the >1000 BTC range.  So what is total OTC volume (to include other direct sellers like BitInstant)?  It is hard to guess but I wouldn't be surprised if it is more than 40K to 60K BTC per week.
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January 13, 2013, 08:19:54 PM
 #22

The off exchange market is much larger than many people realize.   Someone looking to buy or sell a large quantity (>1000 BTC) will find that due to lack of slippage an OTC transaction with a trusted counterparty makes more sense.  Generally when someone is looking to buy 10K BTC or more they get to know the other party so I have spent considerable time emailing and talking with potential clients.  There is a growing interest from non-traditional money (i.e. those people who have no interest in mining, or a certain darknet marketplace).  While I never ask "how much do you make?" or "what is your net worth?" you get an feel for someone finances on how they deal with money.  In FC4B we have clients who are freaking out because a $400 ACH is a day late.  We have also had direct buyers be willing to post six figure wires a couple days early because it was easier for them to get it done that day.  The later aren't people building mining rigs in their garage. 

We (Tangible Cryptography LLC) sell about 10K BTC a week in direct off exchange sales.  Our highest volume week was closer to triple that.  I have learned indirectly through clients that there are about three or four other entities which can handle transactions in the >1000 BTC range.  So what is total OTC volume (to include other direct sellers like BitInstant)?  It is hard to guess but I wouldn't be surprised if it is more than 40K to 60K BTC per week.

Thanks for this valuable info. I've always been suspecting that OTC Volume was high. Add to that volume on other exchanges and the gox market starts to look a little less mighty. The less liquid mtgox is the more likely it is to be "manipulated". It's just very tempting for someone seeking to buy a large amount OTC or on other exchanges to just slam the price on gox beforehand and then lock in good prices with bitcoin suppliers, isn't it?

I'm not sure arbitraging between exchanges is working the way I expected it to work (make it all one big market). I'll have to ponder this more.

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January 13, 2013, 08:29:29 PM
 #23

We (Tangible Cryptography LLC) sell about 10K BTC a week in direct off exchange sales.  Our highest volume week was closer to triple that.  I have learned indirectly through clients that there are about three or four other entities which can handle transactions in the >1000 BTC range.  So what is total OTC volume (to include other direct sellers like BitInstant)?  It is hard to guess but I wouldn't be surprised if it is more than 40K to 60K BTC per week.

Is BitInstant really a direct seller? I always thought that they just transfer the money to an exchange, so their trades show up in the order book.

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Gerald Davis


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January 13, 2013, 08:34:17 PM
 #24

I may have overspoke I don't want to define the role of another company but with the "BTC to email" option I would assume that is an off exchange transaction. 
casascius
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January 13, 2013, 08:36:23 PM
 #25

I have bought recently and am not concerned if the price drops.

If the price drops, I will chalk it up to "Oh well, I missed a better opportunity to buy I could have never known for certain would exist", and that it will go up again eventually before I need to spend that money.

I am convinced that one day, which could be tomorrow, or could be 6 months, 12 months, 18 months from now, somebody who owns a single building in all of Manhattan (which on paper is worth more than Bitcoin as a whole) will make it over our arduous learning curve and will say OMG, $150 million for the future of money is a god damn bargain, this is it, right here right now, and the risk is manageable.  And they will act accordingly.  And at that point, buying bitcoin at anything remotely what we're used to will be a long gone opportunity, and people will be saying, "WTH was I thinking listing an ask at $15?"

In my view, the only thing standing between now and then, which may or may not happen, is some threat to the block chain or a major vulnerability, or someone successfully demonstrates a 51% attack or scary double spend, which would cause a temporary sharp dip in the price, followed by a fix within days.  People without the ability to assess the technical aspects of a problem and the soundness of any fix will fold and run, and meanwhile I know my well-secured paper bitcoins will be safe.  I'll be buying and telling everyone else I know to buy, watching the price slowly climb back as everyone else realizes that Bitcoin will always win the long game, the same way BitTorrent wins the long game against the Hollywood media cops.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper or hardware wallets instead.
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January 13, 2013, 09:01:37 PM
 #26

I have bought recently and am not concerned if the price drops.

If the price drops, I will chalk it up to "Oh well, I missed a better opportunity to buy I could have never known for certain would exist", and that it will go up again eventually before I need to spend that money.

I am convinced that one day, which could be tomorrow, or could be 6 months, 12 months, 18 months from now, somebody who owns a single building in all of Manhattan (which on paper is worth more than Bitcoin as a whole) will make it over our arduous learning curve and will say OMG, $150 million for the future of money is a god damn bargain, this is it, right here right now, and the risk is manageable.  And they will act accordingly.  And at that point, buying bitcoin at anything remotely what we're used to will be a long gone opportunity, and people will be saying, "WTH was I thinking listing an ask at $15?"

In my view, the only thing standing between now and then, which may or may not happen, is some threat to the block chain or a major vulnerability, or someone successfully demonstrates a 51% attack or scary double spend, which would cause a temporary sharp dip in the price, followed by a fix within days.  People without the ability to assess the technical aspects of a problem and the soundness of any fix will fold and run, and meanwhile I know my well-secured paper bitcoins will be safe.  I'll be buying and telling everyone else I know to buy, watching the price slowly climb back as everyone else realizes that Bitcoin will always win the long game, the same way BitTorrent wins the long game against the Hollywood media cops.

This.

(and this)
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January 13, 2013, 09:27:56 PM
 #27

I have bought recently and am not concerned if the price drops.
i like your post, the problem of all enthusiasts here is that they are somehow already maxed out on how much they want to be exposed. or have to rethink their exposure over the next few months.
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January 13, 2013, 09:31:50 PM
 #28

I have bought recently and am not concerned if the price drops.
i like your post, the problem of all enthusiasts here is that they are somehow already maxed out on how much they want to be exposed. or have to rethink their exposure over the next few months.

New enthusiasts discover Bitcoin every day  Cheesy
casascius
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January 13, 2013, 09:42:52 PM
 #29

I have bought recently and am not concerned if the price drops.
i like your post, the problem of all enthusiasts here is that they are somehow already maxed out on how much they want to be exposed. or have to rethink their exposure over the next few months.

I felt that way when I didn't buy at $2.

Can't have everything I guess.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper or hardware wallets instead.
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January 13, 2013, 11:01:27 PM
 #30

I have bought recently and am not concerned if the price drops.
i like your post, the problem of all enthusiasts here is that they are somehow already maxed out on how much they want to be exposed. or have to rethink their exposure over the next few months.

I felt that way when I didn't buy at $2.

Can't have everything I guess.

 Grin

We will be repeating this conversation nearly verbatim in 2 years with quite different numbers involved.

Bro, do you even blockchain?
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January 15, 2013, 01:05:34 AM
 #31

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.

If it is one buyer, they are not here to make 2-3 times their money.  They are here to make 100 times.  Trust me. 

There are many, many entities that could buy all BTC in circulation.  How much would it take to drive the price to 100?  How about 1000?  Remember, buying begets buying. 





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January 15, 2013, 01:27:56 AM
 #32

the price nearly tripled

a 300% gain

noone else bothers anymore? Cheesy

where are all the math nazis hiding?
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January 15, 2013, 04:53:24 AM
 #33

The more that people think Bitcoin will go up, the less likely they are to sell now, and the price goes up.

A computer with $1000 of video cards brings in just a trickle of Bitcoins now.

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January 15, 2013, 04:56:18 AM
 #34

The more that people think Bitcoin will go up, the less likely they are to sell now, and the price goes up.


First they ignore you, then they laugh at you, then they keep laughing, then they start choking on their laughter, and then they go and catch their breath. Then they start laughing even more.
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January 15, 2013, 05:10:57 AM
 #35

The more that people think Bitcoin will go up, the less likely they are to sell now, and the price goes up.



But time would stop, and we would enjoy the enormous gains forever!

Meanwhile the outsiders can argue over Satoshi radiation.


Eventually people need to buy stuff, and if bitcoins are their last choice, supply will rise.

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January 15, 2013, 10:36:17 AM
 #36

or maybe it went up because of a drugged out Christmas and bASIC needing to re-purchase bitcoins.........

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January 15, 2013, 12:33:39 PM
 #37

I had a friend who I told about bitcoins, and he brought a few, and he told his boss, whis is a VERY rich man. His bosses comment was, Hmm, maybe I should just put 50 million into it. (Small change for him I think.)

But that's the point, there will be increasing numbers of very rich people who will want to invest in bitcoin. If I was  President Assad, I'd be doing that right now. On the other hand, if I was bright enough to do that I suppose I would not be doing what he is doing right now. More seriously, there will be increasingly large numbers of medium-rich investors who see bitcoin as safer than fiat. So many other killer-advantages to bitcoin, that I can only see long term going up.

And no, I don't think its one person, its a trend.

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January 15, 2013, 01:21:30 PM
 #38

Until someone publishes a grandma-easy Bitcoin client that makes secure backups, most old people with money won't know how to invest.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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January 15, 2013, 01:24:28 PM
 #39

Until someone publishes a grandma-easy Bitcoin client that makes secure backups, most old people with money won't know how to invest.
Most old people don't have any real wealth to invest. Their retirement plan is to have the government pillage the younger generations.
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January 15, 2013, 03:04:26 PM
 #40

Until someone publishes a grandma-easy Bitcoin client that makes secure backups, most old people with money won't know how to invest.
Most old people don't have any real wealth to invest. Their retirement plan is to have the government pillage the younger generations.

I almost feel sorry for them. Not long now before they realize that their ponzi scheme is going to implode.
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