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Author Topic: Possible explanation for the recent 48 hrs price massacre  (Read 6839 times)
andes
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June 12, 2011, 04:00:18 AM
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I am no trader, but it makes sense to me that many miners or early adopters were waiting for some round number to cash out, and it happened that 30 dollars caused some wealthy bitcoiners to sell massively. Remember that the nature of bitcoin is a bit strange in that the early adopters got massive amounts of bitcoins at practically no cost, so this gives them incentive for selling massively at some point to get filthy rich. When they decide to cash out, massive price drops are to be expected. This in turn caused many other miners and scared weak hands to sell also, and the price to drop further.

If this theory is right, we should be just in a healthy correction, meaning bitcoins are changing hands from a first generation adopters owning dirt cheap bitcoins in massive amounts, to second generation adopters, owning less amounts of relatively more expensive bitcoins, and should see the price start rising again soon. The more early adopters sell their massive amounts of bitcoins, the healthier the bitcoin economy will be, because people who buy at higher prices dont have so many bitcoins, and are expecting to see more profit before voluntaily selling.

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andes
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June 12, 2011, 04:08:35 AM
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Would like to post a graph, can anyone explain to me how to do that in this forum? I press the "insert image" button but it does not work.
Oldminer
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June 12, 2011, 04:11:13 AM
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Would like to post a graph, can anyone explain to me how to do that in this forum? I press the "insert image" button but it does not work.

You have to insert the URL of the graph between the [img] code.

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kiwiasian
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June 12, 2011, 04:12:28 AM
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Would like to post a graph, can anyone explain to me how to do that in this forum? I press the "insert image" button but it does not work.

Wrap it around the [IMG] code

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andes
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June 12, 2011, 04:12:46 AM
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You have to insert the URL of the graph between the [img] code.

Thanks, cant I upload an image directly from my desktop?
kiwiasian
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June 12, 2011, 04:14:07 AM
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You have to insert the URL of the graph between the [img] code.

Thanks, cant I upload an image directly from my desktop?

Use www.imgur.com

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andes
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June 12, 2011, 04:15:42 AM
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Cool, thanks man.
imperi
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June 12, 2011, 04:24:15 AM
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You must be new to the Internet. I wish I could have skipped the AOL and Myspace days...
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June 12, 2011, 07:31:40 AM
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I believe in Bitcoins as much as I ever did. But anyone who believes prices will fall more and doesn't sell is a fool. I'll happily buy back in when I believe a bottom has come because Bitcoins are, to me, as valuable as ever.

This price drop is simply a way of me doubling my bitcoin holding. I would bet I'm not alone. It certainly doesn't say anything about loyalty (and loyalty to a protocol would be pretty weird).

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kjj
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June 12, 2011, 07:48:29 AM
 #10

So, if early adopters were waiting for the $30 mark, why did so many of them cash out at prices far, far, far below that mark?

I don't think you understand how the exchange works.

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andes
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June 12, 2011, 07:57:36 AM
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So, if early adopters were waiting for the $30 mark, why did so many of them cash out at prices far, far, far below that mark?

I don't think you understand how the exchange works.
I dont understand what you mean by saying that there were so many cashing out far below the mark. You mean before or after this crash?

My point is that big sells would bring the price down massively. You know, supply increases massively and demand stays the same. Suddenly the same amount of dollars are chasing many, many more bitcoins. After the first crash in price, many get scared, and the price goes down further for a while.
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June 12, 2011, 08:40:35 AM
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There are bids, and there are asks.  Orders clear when the two meet.  You don't cash out at $30 by putting your asks below that price.  The only way to move the price down is for sellers to be willing to accept less.

I'm not saying that this wasn't a correction/panic sell off, because it really looks like one.  I'm saying that a cashout attempt at a given price cannot drive the price below that level, it merely prevents it from rising above it until the volume clears.

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DiabloD3
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June 12, 2011, 08:59:04 AM
 #13

I'm in ur thread, moderatin it.

Don't post image spam again, andes.

andes
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June 12, 2011, 09:00:08 AM
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There are bids, and there are asks.  Orders clear when the two meet.  You don't cash out at $30 by putting your asks below that price.  The only way to move the price down is for sellers to be willing to accept less.

I'm not saying that this wasn't a correction/panic sell off, because it really looks like one.  I'm saying that a cashout attempt at a given price cannot drive the price below that level, it merely prevents it from rising above it until the volume clears.

As far as I understand, what you say only makes sense if you ignore transaccions outside the open exchange. To me the demand and supply are based in more fundamental things than the exchange. So I think its a fallacy to conclude that a big transaccion outside the open exchange will not move the markets. A big sell (no matter where) will mean less dollars available to trade in mtgox, so the price drops. Also if a big player wants to cash out fast, I dont rule out that he ends up putting his asks below his initial price.
andes
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June 12, 2011, 09:01:40 AM
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I'm in ur thread, moderatin it.

Don't post image spam again, andes.
Diablo, please explain why did you delete my market charts, and why did you call them spam. They were important to what I was comunicating, and it took me some time to capture them from Bitcoin Charts, annotate and upload them. I really dont get it.

BTW, you not only deleted my graphs, but also some replies other people did to them!
btcLeger
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June 12, 2011, 09:11:12 AM
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I'm not saying that this wasn't a correction/panic sell off, because it really looks like one.  I'm saying that a cashout attempt at a given price cannot drive the price below that level, it merely prevents it from rising above it until the volume clears.
Sure it can. I decided to sell my 100.000 BTC when the market reached 30$/BTC, fearing others would take that opportunity first. Prices exaggerated strongly the hours before, best time to sell. Its the decision I made at 30$, not the order I placed at 30$. I placed various orders in various amounts at various prices. 1000BTC at 30.2, 1500 BTC at 29.8, 1200 BTC at 29.6, 2000 BTC at 29.3 and so forth. I had an average selling price of 26$ at the end. Many other will have seen the massive and sudden exaggeration and stepped in once the price started dropping, signalizing a possible reversion of the price trend.

Sure it can work that way. 30$ was psychological mark that may have triggered a selloff once some people dumped large ammounts into the market.

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paulie_w
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June 12, 2011, 10:14:17 AM
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@btcLeger

so can we confirm then that you are the first actual 'bitcoin millionaire' (actual in terms of converted USD holdings)?
Cluster2k
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June 12, 2011, 10:36:00 AM
 #18

I strongly feel we are now in the dead cat bounce phase of the bitcoin/USD$ price.  Look it up on Wikipedia.  Anything that falls as far as BTC has in the last 4 days is bound to have a semi revival, before falling even lower.  I still bet BTC will be below $10 by the end of this week.  The problem is difficulty is now set to reset so high that many miners (including myself) will drop out on Wednesday.  That will severely weaken the network.  I doubt anyone's too interested in mining for $5 a day after power/computing costs.

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Justsomeforumuser
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June 12, 2011, 10:44:49 AM
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Quote
Sure it can. I decided to sell my 100.000 BTC

I had an average selling price of 26$ at the end.

So you are a real world millionaire now?
Did you cash this out into your real bank account?

What do you plan to do with it? (Don't forget to find yourself banks with seperate account insurance over FDIC or whichever applicable local entity limit, perhaps spread the assets across 3-4 banks)

Are you considering T-Bill laddering / other yield rotation and living off of interest and part timing eventually?

Or hookers and blow all the way? (Semi-serious question..)

Ho-Hum.
neptop
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June 12, 2011, 10:47:01 AM
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@Cluster2k: I think you forget one thing. At the beginning of this month the price was similar to the current price.

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