The notion that wallstreet is behind these “pump and dumps” is retarded. At its peak the bitcoin market cap was what $2.5 billion maybe $3 billion. Wow!!! The size of a mid-cap stock! Jee-wiz!! I could probably name 500 companies that none of you have heard of, that have a larger market cap than bitcoins. In the investment world a $2.5 billion market cap is nothing. The reality is, bitcoins act like a thinly traded penny stock. If a hedge fund manager really wanted to do a pump and dump, they would just use a small stock. The entry/exit is 1000000x easier than bitcoins.
Right.
Bitcoin's "market cap" isn't that big. About 7 million early Bitcoins never show up in transactions. (See Shamir's paper.) Some are lost, generated by early users when the difficulty and value were both very low. Some are being hoarded. We can't tell which. The active float is about 4 million Bitcoins, worth about $400 million today. (Twice that last week, half that two days ago.)
This isn't a big market by financial standards. It's really tough to exit. Right now, you could sell about 500 Bitcoins on Mt. Gox without moving the price too much.