A message from Wallstreet

[Xosihc]

*I also posted this message on reddit, so sorry if it's a double post for some of you*

Full disclosure: I do have a position in bitcoins.

The reason I feel compelled to write this is because I am SO tired of hearing people bitch or speculate that “wallstreet” somehow in some way has been manipulating the market. As a representative of one of the big 4 wirehouses, I thought perhaps one or two of you might be interested in my perspective on bitcoins.

So I have been following bitcoins for a year or so now. Since about late March with the explosion of coverage I have made it my personal goal to survey as many people as I can in “the industry” on whether or not they too have any interest in bitcoins. The answer? Almost 0. Part in this is because the average age of a wallstreet employee is 62. I asked the simple question “hey, have you ever heard of bitcoins”. Even as recent as YESTERDAY the majority answer is “no” I get that about 80-90% of the time. I even called some people up in our FX department to ask – and even to my surprised the majority of the answers was “no”. I would say 1 in 5 respond “oh yeah I think I saw something about that in the paper yesterday - that look pretty stupid”. I’ve still yet to find another person in this industry that actually owns any coins (or at least would reveal to me they do).  

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.

I think back to playing Diablo 2 and trading the “virtual goods” in that game. When a Windforce went from $20, to $40, to over $500 for a single Windforce did anyone think “wallstreet must be involved”. No, we simply understood there was an extremely high demand in our very niche market and within the community there was somebody out there comfortable spending $500 on an item that doesn’t even exist (tell that to my Amazon!).  

But what about all the articles on yahoo.com/finance & cnn.com/money?!? No legitimate investor on wallstreet uses either of these mediums as a source for news. Even if this made the front page of Barrons or the WSJ – it would just be another one of those articles most people just skip over (like 3D printing, cloud technology, fracking in the US – all new and interesting technologies most investors don’t actually care about).

My last 2 thoughts…

Any mutual fund, hedge fund, or otherwise “fund” that takes people’s money for investments has to follow a prospectus. Yes, managers will bend the rules from time to time and invest outside of the box. Perhaps going 35% emerging markets when the prospectus says they can only go 30%. But there is NO CHANCE in HELL any of them would risk their firms asses to go so far outside the realm of what was set up to put real investors’ money in bitcoins. Yes, there was that ETF or two that was a “bitcoin ETF”. But hell… if you look deep enough I’m sure you can find a World of Warcraft ETF… There is one in practically every space.

Me personally, I think bitcoins are only the one of the coolest “new” technology, right up there with 3D printing (I’m a HUGE fan of 3D printing). I do own some coins myself. I am NOT trying to flip a quick buck. I do try and tell everyone I know about how great they are – and how they could possibly change the way we do commerce. I am not trying to bash bitcoins or create another thread on “why the bitcoin bubble is over”. I simply wanted to share my insight and possible clarify to some – the reasons why wallstreet is not involved.

I am more than happy to continue this conversation. On a complete side note – as a day trader I am more than happy to share in insight or prospective on any charts relative to BTC/LTC/PPC/TRC/NVC. I do REALLY enjoy trading alternate currencies as a hobby. Feel free to send me a PM.

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[leemar]

Great post, and I think a perspective that is easier for us newbies to understand. 

If you have been immersed in this for a long time, it seems like a bigger deal than it is to the outside world.  I can’t remember the name but it was interesting to watch the Canadian financier last week who said that he will now look at Bitcoin.  He said his starting point is to ignore any currency with a market cap of under 1 Billion, which makes complete sense if you are trying to invest even 10’s of thousands.

[lucif]

Hi. Thanks for post. I have a question. Bitcoin copies well stocks sentiments. Not proportions, but just sentiments. For example, stocks 2% selloff few days ago powered bitcoin 70% plunge very well.

Why?

[Xosihc]

Hi. Thanks for post. I have a question. Bitcoin copies well stocks sentiments. Not proportions, but just sentiments. For example, stocks 2% selloff few days ago powered bitcoin 70% plunge very well.

Why?

Well my my opinion (and again this is just my opinion - so take it for what it's worth). The sell offs we've seen in stocks and even gold/silver have a very little correlation to coins. This entire sell of in my opinion is nothing more than stagnant coins (ones miners have been holding on to for years) finally entering the market.

I personally believe the market is being manipulated by big time miners vs. bit time investors (although one could argue those are 2 of the same).

[lucif]

Correlation of sentiments can be found even on daily basis. If something happening in stocks (noticeable rise or fall) it will be 90% repeated in bitcoin at evening after stocks close.

I have feeling that WS guys just press buy/sell buttons everywhere simultaneously.

Why in evening? They probably go home after hard trading day, opened a bottle of whisky, turned on porn and then... "Oh shit, forget to [buy/sell] bitcoin also". Turn computer on and repeat their stock actions during past day on bitcoin.

=)

[nebulus]

Thanks for sharing!

[Xosihc]

Correlation of sentiments can be found even on daily basis. If something happening in stocks (noticeable rise or fall) it will be 90% repeated in bitcoin at evening after stocks close.

I have feeling that WS guys just press buy/sell buttons everywhere simultaneously.

Why in evening? They probably go home after hard trading day, opened a bottle of whisky, turned on porn and then... "Oh shit, forget to [buy/sell] bitcoin also". Turn computer on and repeat their stock actions during past day on bitcoin.

=)

Well I have to admit, as a trader by profession I spend WAY too much time at night trading bitcoins. I have a fairly small position. I'm not tech savvy enough and I respect the hackers/scammers too much to put any real size of money into coins.

I do however find trading alt currencies a great way to entertain myself after the markets close. I've almost doubled my position since I started "night trading" coins haha

[nobbynobbynoob]

I agree, along with YouTuber "Bitcoin Bull", that it is unlikely Wall St or Big Finance played much rôle in the recent bitcoin bubble. If they dumped in serious money, they could've made it a real bubble - think four- or five-figure prices - and then crashed it back for fun. But that'd be like whales splashing about in duck ponds, and it doesn't really happen, does it?

[Xosihc]

I agree, along with YouTuber "Bitcoin Bull", that it is unlikely Wall St or Big Finance played much rôle in the recent bitcoin bubble. If they dumped in serious money, they could've made it a real bubble - think four- or five-figure prices - and then crashed it back for fun. But that'd be like whales splashing about in duck ponds, and it doesn't really happen, does it?

Well if i were a betting man (which I am) I'd bet wallstreet does do this all the time in the "real" markets (granted this is illegal)...

You got to think scalability... It was easy to turn $500, $1000, or even $10,000 into 2x, 3x, even 10x that amount with bitcoins. If the "big boys" of wallstreet wanted to influence our market they would be looking to double $10 million, $15 million, truthfully it's usually $billions of dollars and the market cap for bitcoins just couldn't support that kind of move.

I just don't think bit finance cares that much about doubling $50,000 with bitcoins.

[leemar]

I agree, along with YouTuber "Bitcoin Bull", that it is unlikely Wall St or Big Finance played much rôle in the recent bitcoin bubble. If they dumped in serious money, they could've made it a real bubble - think four- or five-figure prices - and then crashed it back for fun. But that'd be like whales splashing about in duck ponds, and it doesn't really happen, does it?

Well if i were a betting man (which I am) I'd bet wallstreet does do this all the time in the "real" markets (granted this is illegal)...

You got to think scalability... It was easy to turn $500, $1000, or even $10,000 into 2x, 3x, even 10x that amount with bitcoins. If the "big boys" of wallstreet wanted to influence our market they would be looking to double $10 million, $15 million, truthfully it's usually $billions of dollars and the market cap for bitcoins just couldn't support that kind of move.

I just don't think bit finance cares that much about doubling $50,000 with bitcoins.

precisely

[KarlChappe]

You must know there is bitcoin futures platform, right?

Someone told me that a put has been made for 45 000 BTC in April.

I'm not an expert in this field, but we're not talking about $100K here, they have made millions with the crash.

[leemar]

Not to dismiss this but even on a perfect 200$ move that is only 9 million, daily forex market is 5 Trillion dollars!

[KarlChappe]

Not to dismiss this but even on a perfect 200$ move that is only 9 million, daily forex market is 5 Trillion dollars!

This is a lot of money for some organizations.
I didn't say it is wallstreet, it could be a small hedge funds or some rich/mafia guys from russia.

It is easier for these organizations to manipulate a small, irregulated and illiquid market as Bitcoin than Fx.

[abbyd]

Thanks for weighing in with a "Wall Street perspective". 

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.

But if a Wall Street guy is looking for a quick arbitrage or pump and dump, don't they look for precisely this - a penny stock or junk bond?  My understanding is it's all about yield - if you can make 150% ROI, who cares if it's Chia Pets or whatever?  Also, I don't see how entry/exit is easier, considering bitcoin is hardly regulated at all?

I am NOT trying to flip a quick buck.

...well then you can't be much of a Wall Street guy!

[ex-trader]

Part in this is because the average age of a wallstreet employee is 62.

Really - not my experience. I'd say average age was 10-20 years lower than that. Few people make it to 62.

[Birdy]

I also think 3D printing is going to be a really big thing. But I don't know what I could do with that knowledge.
(not like I have sums to invest anyway)
In 10 years I can show people this post and say "See!? I was right!" :p

[KarlChappe]

I also think 3D printing is going to be a really big thing. But I don't know what I could do with that knowledge.
(not like I have sums to invest anyway)
In 10 years I can show people this post and say "See!? I was right!" :p

You can start a blog and explain everything about 3D printing. What is 3D printing? What you can do with 3D printing? What do you need? Where you can get what you need? And in 10 years, you could be big. You could be a reference about it, you could earn a bit of money and invest on the right player because you will know everything about 3D printing et cetera.

Of course, this is a lot of work and need passion about it. But money is not an excuse.

Nobody cares you were right, only what you do count.

Sorry for that, I'm drunk but I think what I tell you.

[meangreen]

 i have since calmed down

[Luckybit]

I agree, along with YouTuber "Bitcoin Bull", that it is unlikely Wall St or Big Finance played much rôle in the recent bitcoin bubble. If they dumped in serious money, they could've made it a real bubble - think four- or five-figure prices - and then crashed it back for fun. But that'd be like whales splashing about in duck ponds, and it doesn't really happen, does it?

Well if i were a betting man (which I am) I'd bet wallstreet does do this all the time in the "real" markets (granted this is illegal)...

You got to think scalability... It was easy to turn $500, $1000, or even $10,000 into 2x, 3x, even 10x that amount with bitcoins. If the "big boys" of wallstreet wanted to influence our market they would be looking to double $10 million, $15 million, truthfully it's usually $billions of dollars and the market cap for bitcoins just couldn't support that kind of move.

I just don't think bit finance cares that much about doubling $50,000 with bitcoins.

It doesn't change the fact that it only takes a few guys to do it, not "big finance" but just a few day traders with algorithms.

[Xosihc]

Thanks for weighing in with a "Wall Street perspective". 

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.

But if a Wall Street guy is looking for a quick arbitrage or pump and dump, don't they look for precisely this - a penny stock or junk bond?  My understanding is it's all about yield - if you can make 150% ROI, who cares if it's Chia Pets or whatever?  Also, I don't see how entry/exit is easier, considering bitcoin is hardly regulated at all?

I am NOT trying to flip a quick buck.

...well then you can't be much of a Wall Street guy!

Well by entry/exit I just mean it's actually pretty difficult to get in and out of bitcoins. All this "instant transfer" that people preach is semi-bs in my opinion. The number 1 thing I see in the btc-e chat room is: "how can I get money into this". People still don't seem to have an answer for an easy way to transfer in/out.

haha well I take that back... OF COURSE i'm trying to make money. We all are. If someone said they weren't - they are lying.

I guess what I mean was - I'm not JUST in this for the $. I actually think bitcoins could be the future of commerce worldwide - and even if they don't take over the world, it's a really cool idea. I should have said; making money isn't the only reason I'm here.