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Author Topic: Dangerous Game  (Read 937 times)
Steve
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June 12, 2011, 01:35:21 PM
 #1

Trying to panic the bitcoin market is a dangerous game.  That appears to be a game played by someone yesterday.  For those that panicked and sold yesterday, I hope that you weren't risking more on bitcoin than is prudent at this stage of development.  I also hope you are able to recognize it for what it really is: someone or a group trying to manipulate the market to their advantage or scare people away from bitcoin. 

If you were panicked out, I hope that you will re-assess the amount of risk you're willing to take on bitcoin and, if you still desire, are able to recover some or all of the position you lost before the price rebounds.

Trying to manipulate a digital commodity a dangerous game for would-be manipulators.  If panic was your objective, you may well have succeeded, but the market will learn and adapt from this.  In the future, panic might not be so easily achieved and you may spend a lot to try and generate a panic and fall well short of your goal.

A digital commodity like bitcoin is a far different animal than a physical commodity where most of the trading is in various derivative paper contracts (due to the obvious cost of taking physical possession).  With paper derivatives, a lot of firepower can be brought to bear on the market with relatively little capital.  Since it is possible and cost effective to take possession of bitcoins, people will want to take possession of them.  This means that naked shorting (in all it's various forms) will be nearly impossible with bitcoin (perhaps on very, very minuscule time frames).  So inducing a panic will be a very capital intensive affair...and when the market becomes more educated in this area, it will be the market the takes advantage of the people trying to create panic.

(gasteve on IRC) Does your website accept cash? https://bitpay.com
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There are several different types of Bitcoin clients. Hybrid server-assisted clients like Electrum get a lot of their network information from centralized servers, but they also check the server's results using blockchain header data. This is perhaps somewhat more secure than either server-assisted clients or header-only clients.
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Jack of Diamonds
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June 12, 2011, 02:32:15 PM
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Bitcoin markets are far easier to manipulate than penny stocks though.
With penny stocks pump & dump you need media attention these days. It doesn't come free or easy.

With BTC all you need is a few cleverly placed forum trolls on certain sites including this one, and a mass sell order going downwards systematically after every sale, as to make it look like everyone is trying to get rid of BTC.

Then at the end of the line you have suckers selling BTC for $10 when it cost double that just a few hours ago. You buy back and artificially deflate the price by selling to yourself in incrementally larger & larger amounts. Stop when it reaches critical mass on itself & buy back at $18-$19.

Somewhat low risk and only requires maybe 10-20k worth of cash to pull off. Most sales according to Mt.Gox live feed are in the 0.10BTC to 5BTC range so they are small players who are very easy to scare.

Mt. Gox doesn't lose out either way, they gain 0.65% per trade. I'm just saying there'd be less profit for panic speculation if they limited trades to 5 per day on an account.

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tymothy
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June 12, 2011, 02:34:52 PM
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limited trades to 5 per day on an account.

 Cheesy Cheesy Cheesy
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June 12, 2011, 02:36:42 PM
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As an investment medium I wouldn't recommend it to anyone. Not even an MBA graduate could take this market by the horns. Money can manipulate everything, so if you don't have none be very careful. If your poor you shouldn't even be looking to invest in the first place. Do some reserach into mining, which is a much more realistic path for the people of this forum.

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Jack of Diamonds
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June 12, 2011, 02:40:04 PM
 #5

limited trades to 5 per day on an account.

 Cheesy Cheesy Cheesy


I make maybe 20-30 on a normal day if active on Gox. I'm just saying.

5 trades: absolutely no room for price manipulation with large USD funds.

Unlimited trades: You can control the market with maybe 20-50k dollars (~2% of total daily volume) with a good bot and the profits will far outweigh 0.65% transaction costs per trade in the end.

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