Speculation: Coinbase causing these massive peaks and dips.

[gmiwenht]

This is my theory. For the first time, people are able to buy Bitcoin simply by linking their bank account. That means no need for Dwolla, Mt. Gox, etc. and hence no need to understand (or even know about) "the market". I think all this talk about panic sells, big players, reversals etc, is just speculators writing their own narratives. "Who would be so stupid as to buy/sell xxxx BTC at market price? It must be manipulation." The truth is, what we have is a live wire in a bathtub. People who don't know or care about markets want to cash in or cash out immediately, and Coinbase gives them the opportunity to do this, directly, from end to end, at the click of a button. I would bet a lot of people are not even aware that there is a "market".

And for what it may be worth, remember that all SR prices are pegged to the USD. Most users would have their SR interface displaying in USD with the BTC/USD conversion happening implicitly, and only affecting the customer at the checkout. If some "big player" (read: some random rich dude with money to burn) wants to buy a lot of drugs, all he has to do is buy BTC and then immediately part with it to get his products. Market prices do not affect his actions.

I think that all these crazy peaks and dips are natural consequences of increased activity in a (relatively) shallow market, and we should not read too much into them. We have been slowly drifting into a seismic zone -- if you can't handle the tremors, you should move somewhere else.

[dancupid]

This is my theory. For the first time, people are able to buy Bitcoin simply by linking their bank account. That means no need for Dwolla, Mt. Gox, etc. and hence no need to understand (or even know about) "the market". I think all this talk about panic sells, big players, reversals etc, is just speculators writing their own narratives. "Who would be so stupid as to buy/sell xxxx BTC at market price? It must be manipulation." The truth is, what we have is a live wire in a bathtub. People who don't know or care about markets want to cash in or cash out immediately, and Coinbase gives them the opportunity to do this, directly, from end to end, at the click of a button. I would be a lot of people are not even aware that there is a "market".

And for what it may be worth, remember that all SR prices are pegged to the USD. Most users would have their SR interface displaying in USD with the BTC/USD conversion happening implicitly, and only affecting the customer at the checkout. If some "big player" (read: some random rich dude with money to burn) wants to buy a lot of drugs, all he has to do is buy BTC and then immediately part with it to get his products. Market prices do not affect his actions.

I think that all these crazy peaks and dips are natural consequences of increased activity in a (relatively) shallow market, and we should not read too much into them. We have been slowly drifting into a seismic zone -- if you can't handle the tremors, you should move somewhere else.

Coinbase are doing $1 million per month - mtgox is doing more than this every day.
So no is the answer.

[gmiwenht]

I want to offer a bit of follow-up speculation: the process as I outlined it is symmetric. That is, people are now able to both buy and sell with greater ease and increased ignorance. But let's consider the dynamics here: it is the customer who is buying BTC and it is the vendor who is receiving (and possibly selling) the BTC. It is far more likely that the vendor has a deeper understanding of Bitcoin economics than the customer. Thus, although the customer may simply buy at market price (driving the price high), and then immediately part with his BTC, the vendor is much more likely to either hold the BTC, or sell it off gradually (keeping the price stable).

SR is a prime example of this (since prices are pegged to the dollar), but I believe this asymmetry would apply to most emerging points of sale. Just like the high street shopper does not concern him or herself with foreign exchange rates while on a shopping spree abroad, while the owner of a high street retail chain probably has a good understanding of their market, currency rates and the economy in general.

So in conclusion, this supplier/consumer asymmetry will continue to facilitate an increasing number of uninformed BTC buys at market price by consumers. However we will not see a corresponding number of dumps because the suppliers receiving the BTC know better. As a result, the price will continue to climb.

[redbeans2012]

I was just about to post something like this. Right when coinbase began having problems the price kinda stopped going up..  I had 3 btc on there now it shows zero.  HM 

[molecular]

excuse my ingorance, but what kind of problems is coinbase having?

[redbeans2012]

excuse my ingorance, but what kind of problems is coinbase having?

Well i've noticed for the past few days alot of people were complaining that they couldn't buy bitcoins and that they were "out".  I haven't tried.  There was also a problem with  unconfirmed transactions with coinbase.  Not sure of the specifics but if you read their blog they made an update last night. 

Like I said my wallet of 3 bitcoins is empty this morning.  Hoping its just a glitch that is being fixed. 

[redwraith]

Redbeans,

I also noticed that my meager supply of bitcoins at Coinbase now reads zero.  I suspect it may have something to do with their "big code update" Armstrong mentioned in his blog.  Neverthess, I sent an email just to be sure, 'cause it's a little alarming.

[MEGAMERICAN]

Any pending transaction on Coinbase will not show up on the transaction page anymore. You have to click on "Buy/Sell Bitcoins" on the left hand side and then click on the transfer history tab. This has confused a lot of people, including myself.

[redbeans2012]

Redbeans,

I also noticed that my meager supply of bitcoins at Coinbase now reads zero.  I suspect it may have something to do with their "big code update" Armstrong mentioned in his blog.  Neverthess, I sent an email just to be sure, 'cause it's a little alarming.

Yes hopefully so.  My own fault though.  No matter how cool you think the company is, never leave too many bitcoins on their site.  My gut tells me that this is just part of the update but will be more cautious for now on.

[notig]

If they are having problems it's probably because there was a huge new amount of interest.

[cypherdoc]

http://blog.coinbase.com/post/43285532179/unconfirmed-transactions

[Severian]

Coinbase reeks of scam, whether they mean to be one or not. They appear to prevent customers from buying as the price goes up and preventing customers from selling as the price drops. "Technical issues" as a method of CYA is the oldest trick in the book.

The price has certainly been dropping as they've interrupted the chain.

[notme]

In order for coinbase to do the instant conversion they offer they have to actually have the funds on an exchange to trade immediately.  When there is a lot of demand in either direction they will have problems.  It is a systemic issue with the services they offer, but should improve as the build up their buffers.  Buying will have more problems then selling since fiat moves so slow.

[Herodes]

Coinbase reeks of scam.

AFAIK, they're a serious buisiness, if you want to spread FUD, then please have some solid evidence to back it up with.

[Severian]

AFAIK, they're a serious buisiness, if you want to spread FUD, then please have some solid evidence to back it up with.

Please quote the full sentence:

Coinbase reeks of scam, whether they mean to be one or not.

In any business, incompetence can become indistinguishable from a scam if the operators aren't careful.

[Herodes]

AFAIK, they're a serious buisiness, if you want to spread FUD, then please have some solid evidence to back it up with.

Please quote the full sentence:

Coinbase reeks of scam, whether they mean to be one or not.

In any business, incompetence can become indistinguishable from a scam if the operators aren't careful.

That's true. And I agree things like this should not happen, all features should be tested properly before put on a live system. But software systems are often complex, and errors can happen, it even has happened to NASA, so it happening to a small bitcoin entrepenor is not unheard of. But that being said, there should be very elaborate testing before pushing features live.

[b!z]

Coinbase reeks of scam, whether they mean to be one or not. They appear to prevent customers from buying as the price goes up and preventing customers from selling as the price drops. "Technical issues" as a method of CYA is the oldest trick in the book.

The price has certainly been dropping as they've interrupted the chain.

I don't find this true at all.

[lebing]

Coinbase reeks of scam, whether they mean to be one or not. They appear to prevent customers from buying as the price goes up and preventing customers from selling as the price drops. "Technical issues" as a method of CYA is the oldest trick in the book.

The price has certainly been dropping as they've interrupted the chain.

They are silicon valley company, funded by noted investors. They are pretty much the furthest thing from a scam in all of bitcoinland.

[Severian]

They are silicon valley company, funded by noted investors. They are pretty much the furthest thing from a scam in all of bitcoinland.

I know who they are. I'm quite familiar with YC. Please read the full thought.

"Coinbase reeks of scam, whether they mean to be one or not."

My later reply to Herodes is still apropos:

"In any business, incompetence can become indistinguishable from a scam if the operators aren't careful."

[piramida]

Severian, did you actually use the site or your conclusions are based on hearsay? I have no problem buying when the price is stale, goes up, or goes down. There are some delays (up to several hours) when you try to withdraw the coins, and the reason for delay is explained in full technical detail. But the trading remains to be the most convenient and fast way to trade bitcoins, by a great margin.

They are a small company, yes, but they work hard and they sure do not look like scam - I've used most of bitcoin startups, and this one looks even a little more trustworthy than blockchain.info. So you better pick your words carefully or don't use them at all.

"interrupted the chain" What? Care to explain what you think you said there?