Wall Observer BTC/USD - Bitcoin price movement tracking & discussion

[Adrian-x]

An arbitrage trader follows the same "buy low, sell high" strategy of an ordinary speculator, except that he doesn't have to guess the future -- he can do both trades at the same time.

I imagine that arbitrage should be particularly lucrative for exchange owners, especially if they collude.  

Suppose that owners Alice and Bob of exchanges A and B agree to show each other the first few entries of their order books in real time, while delaying that information to the public by a few seconds.  Whenever Alice sees a sell order in her exchange A that has a lower price than the highest bid in B, she immediately buys into that order, counting that Bob will immediately sell the same amount into that bid. And vice-versa.

If this scenario is possible, the partnership Alice&Bob obviously would make a profit on every such occasion. Alice and Bob could equalize their expenses and profits, at any later time, just by exchanging bitcoins. Thus, even if A is in Bulgaria and trades only with dollars, while B is in China and trades only with CNY, they would never need to exchange dollars to/from CNY.  The dollars that Alice would take home would have come from the dollars that her clients deposited in A, while the CNY that Bob would withdraw from B would come from the CNY that others deposited into B.

(Trading fees, bank fees, and currency exchange rates complicate the details, but do not seem to invalidate the idea.)

mmm, so now we know why MtGog is being saved, and the Japanese government is lobbying for uniform international regulayion on Bitcoin.  Arbitrage on a large scale where there the laws are not homogenous would be more difficult or risky.

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[ChartBuddy]

Explanation

[windjc]

My prediction:

A. Market goes back up to 2780-2800 range over next day or two and then collapses back near 2555 or lower on some new "news."

or

B. Market rallys back to 2900-2925 range within the next week and then collapses back near 2555 or lower on some new "news."

[OldGeek]

I imagine that arbitrage should be particularly lucrative for exchange owners, especially if they collude.  

I have always assumed that BFX and stamp are arbing the book before it opens.  This is standard practice in U.S. equity markets:  Orders are first matched in-house, only then on exchange.  Most HFT is just the attempt to approximate this at the exchange tier, in a competitive, rather than a cooperative environment.  HFT arbs are present on all computerized markets that I am aware of.

I think that what you have outlined is a safe assumption.  And, it confirms my biases perfectly.

That assumption, coupled with my very strong suspicion that the exchanges are trading for their own profit with users assets, and my belief that the exchange operators employ those pesky automated trade bots that keep posting fractional asks and offers simply to keep up the appearance of trading activity, are the reasons I closed my trading account on Feb 17 @ 547.

The six months of trading left me with more BTC than I began with, so it's OK.  My perception of the dangers of continued trading was not OK.  I'll just wait.

[ChartBuddy]

Explanation

[JorgeStolfi]

Perhaps today's drop was due to the FXBTC closure news.  The announcement on their site is dated May 02, 06:40:57 UTC (2:40 pm local time), and the drop started suddenly around 04:05 UTC (12:05 pm local).  Could be insider info?

Coindesk article

Google translation at Bitcoinregime.com

Announcement on FXBTC site (in Chinese)

Thread discussing the news

EDIT: that would explain why the price did not rebound, as would be expected after a mere freak dump.

[coins101]

Not bad. Who said that?

Chuck Norris   

Darude - Sandstorm

Satoshi

[keithers]

I actually like the poll going on right now...some of the terms are so fitting for the differences in attitudes rolling through this forum on a daily basis

[gentlemand]

The poll's a bit extreme in either direction, no? I would go for - so be it.

[ChartBuddy]

Explanation

[zby]

I actually like the poll going on right now...some of the terms are so fitting for the differences in attitudes rolling through this forum on a daily basis

Even if you assume that people would correctly asses their own state - it would be still rather useless when we don't know if they are long or short.

[adamstgBit]

such OPTIMISM
much HOPE

good stuff

[BitChick]

such OPTIMISM
much HOPE

good stuff

But no euphoria yet.  I guess we have to wait for that still.

[UnDerDoG81]

c´mon Bitcoin do something 

[spooderman]

c´mon Bitcoin do something  

*plummets to zero instantly*

such OPTIMISM
much HOPE

good stuff

so poll
very representation of the overall bitcoin community

[NewLiberty]

Explanation

Straight lines.....

[alani123]

I could completely wrong, it is likely that I am, but I think that there are a large number of automated traders on both Bitstamp and BTC-e.  Some while ago these bot-users determined that the Chinese markets could/would serve as nice triggers for the other exchanges.  ++ for a long while it was Gox that served up similar triggers ++

In our increasingly nervous market the bots detect a movement on, say, Houbi and automatically follow suit.  That combination is enough for human traders to climb on the bandwagon and reinforce the initial move.  Then the more rational/reasoned traders counter-move and the initial trajectory is reversed. 

I believe that these oscillations will continue until: 1.  There is no 'other market' that serves up a trigger; or, 2.  Confidence is regained, the nervous market ends, and a true vector forms.

$0.02

Or another possibility: market makers selling BTC short.

Hasn't anyone else noticed that TradeFortress (the guy that made inputs.io the "hacked" webwallet resulting to losses of 4000 bitcoins) is back in the forums posting totally irrelevant stuff?

[ChartBuddy]

Explanation

[podyx]

My prediction:

A. Market goes back up to 2780-2800 range over next day or two and then collapses back near 2555 or lower on some new "news."

or

B. Market rallys back to 2900-2925 range within the next week and then collapses back near 2555 or lower on some new "news."

So are you holding mostly bitcoin now then?

[cbutters]

My prediction:

A. Market goes back up to 2780-2800 range over next day or two and then collapses back near 2555 or lower on some new "news."

or

B. Market rallys back to 2900-2925 range within the next week and then collapses back near 2555 or lower on some new "news."

My prediction is that we will stop caring what the price in china is.