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Author Topic: Market manipulators: is it possible to detect them?  (Read 904 times)
pera
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March 23, 2013, 03:56:19 PM
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One thing I love about Bitcoin is how transparent it is. Even though it is practically anonymous, you can see many things that can be used to understand the market.
But, is there anyway to detect possible manipulators watching (eg) peaks on trading volumes?
I am really interested in learning more about finance theory, so please, if you have any papers or articles about this topic post it itt Smiley

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chmod755
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March 23, 2013, 04:19:56 PM
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Only the markets that are trading Bitcoin could try to detect "unusual behavior" - cause they're managing the accounts, but it's very hard to describe manipulation in a way that everyone agrees with.

Technically everyone who trades "manipulates" the market in some way and why should someone who has $10,000,000 not buy BTC or someone who has 200k BTC keep them? That's just how a market works… of course there might be some people who are making walls to scare other traders, but this only works as long as others are getting scared by this behaviour.
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March 23, 2013, 05:27:43 PM
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For example, let's say I want to crash the bitcoin market because I'm the ECB and I'm worried about my reputation as a Central Bank. This is pretty much the best moment to do so: there is an upcoming economic crisis, people are starting to distrust banks and centralized currencies, and now, an amazing new technology exists that has the potential to change everything, even though it's still too small, nascent, and fragile to do so. With only a few million dollars I could destroy this competitor forever, and then say things like this is "evidence of how hard it is to make a real currency work," on the news.

So, the price of btc is rising and I will take advantage of this situation and create something that could look like a bubble by buying millions of dollars worth of btc in a short period of time (say, a few days), which will result in a big increase in the value. Then, I wait one day and start selling and buying "small" amounts of btc just to create an artificial volatility. Meanwhile I tell the media (yes, I am that powerful) to start writing some FUD articles without any real or supportable arguments, but who cares? people will think that other people will believe that shit. Then I make my last move: I sell all my bitcoins over a really short period of time (say, a couple of minutes) at an exponentially lower price.
Now, the market will "recover" for a few hours, but people will be scared about these fluctuations (because they are afraid of loosing all their money on this strange new virtual currency) and will start selling their bitcoins.



I know this has been discussed many times, but what I am asking is if any research has been done on this topic, and if so where I might be able to find it.

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March 23, 2013, 05:40:16 PM
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Let's say I'm the ECB and I'm not THAT stupid, so instead of crashing this market I'm using it to increase my own profits and move it around as I wish, because yes I do have a lot of influence.
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March 23, 2013, 05:53:36 PM
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Yeah but usually old bankers are that stupid Tongue maybe because they really don't care about the future (coz they dont have one!)..

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chriswen
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March 24, 2013, 03:08:11 AM
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well, you might not have hear about bitfinex.

Bitfinex is where people can trade on margin up to 5:1.

So, people who buy on margin have a greater ability to influence the market.  Secondly, if the price drops or rises too much they are forced to close their position.  These things might have an influence on price and volume.

Also, supposedly when mtgox api lagged it used to affect prices on bitfinex causing some weird stuff to happen.

Yeah, i'm also wondering what was happening at those times.  What caused it?
It could also be RSI bots.
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March 24, 2013, 11:48:01 PM
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Volume and price peaks mean that stupid money is coming in while the smart money is closing their positions.

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