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

[virtualfaqs]

Really, smoothie? In the past few days, the following arbitrage opportunity has emerged: Send money to MtGox, buy up goxBTC, sell goxBTC at the going rate, liquidate the realBTC elsewhere => profit. If you can do it in a reasonable timeframe, then it's pretty good.

I just look at anyone sending fiat to Mtgox as an investment opportunity. I won't take part in it though until there are confirmed BTC withdrawals in which case it will probably be too late. Basically too risky for me.

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[N12]

This has nothing to do with Bitcoin withdrawals, it's only to do with transfering goxBTC ownership which you can do on MtGox, as you can "withdraw" to an internal MtGox deposit address that somebody else holds.

[windjc]

Really, smoothie? In the past few days, the following arbitrage opportunity has emerged: Send money to MtGox, buy up goxBTC, sell goxBTC at the going rate, liquidate the realBTC elsewhere => profit. If you can do it in a reasonable timeframe, then it's pretty good.

I agree. I will also add this.

If you are staying abreast of the current rumor mill, you can easily double or triple your goxbux before selling on bitcoinbuilder.

For instance, the rise today was on rumors. Its based on air. So you could easily sell here and watch the price fall back to around $100 in the next couple of days as we hear nothing from Gox.

People that have had direct communication with Gox - like Andreas over at blockchain.info said this would probably take a few weeks of programming by Gox to straighten out.

We all know that the longer people wait, the more pressure is going to happen on the price.

So sell now, buy back in a couple of days, double up, then take all your money back out through bitcoinbuilder at .5 and you are risk free.

[podyx]

I just learned a story about a 'bitcoin investment fund' in a certain Latin American country.  The fund took several thousand coins from clients,  promising large returns in BTC.  Then the owner claimed that the fund had been hacked an all the coins were stolen, and closed the fund.  The clients have not yet received their coins back.

What makes the story interesting is that that same person is the owner of that country's main bitcoin exchange.  And his clients see nothing wrong with that.

Why is there so much tolerance to dishonesty in the bitcoin community?

Same as banks and governments then

Why is there so much tolerance to dishonesty in the name of higher powers?
That's a money question right there

[billyjoeallen]

35 min to go. Care to revise your statement?

always.  now i say 588 in 8 hours.

Keep trying, Amigo.

[N12]

wind, the rise was on the same air that the fall was on. There are good arguments for why a a goxBTC is worth much more than just 20-25% of a goxUSD at real market USD/BTC rates (of course, this factor could change to the downside as well …). Furthermore, Emptygox can come out of their holes anytime and say or do something unexpected which even if it turns out hot air as well can do a lot.

So, I wouldn't unconditionally recommend what you said, but it is certainly worth thinking about.

[windjc]

wind, the rise was on the same air that the fall was on. There are good arguments for why a a goxBTC is worth much more than just 20-25% of a goxUSD at real market USD/BTC rates. Furthermore, Emptygox can come out of their holes anytime and say or do something unexpected which even if it turns out hot air as well can do a lot.

So, I wouldn't unconditionally recommend what you said, but it is certainly worth thinking about.

True on all accounts. Although bitcoinbuilder will always a premium because it is EASIER than getting $$ into Gox. Also, you take a time risk with getting money into Gox too.

So the bet is that Karpales is going to be slow. I think its a pretty good bet at the moment. Certainly there is a short squeeze possibility, but given that its the weekend, I seriously doubt we get any updates in the next 24-36 hours.

Meanwhile the FUD spreaders are not going to shut up and panic selling is a matter of time.

In fact, if by 8pm Monday Tokyo time we haven't gotten an update - I expect $100 coins again.

And if I am right, I just eliminated all of my risk. If I am wrong, well, I can live with that.

[billyjoeallen]

Am I the only one who noticed that the Gox bottom really does look like an ass?

[ChartBuddy]

Explanation

[N12]

Am I the only one who noticed that the Gox bottom really does look like an ass?

It does indeed look like a classic double bottom, though I don't dare predict anything about MtGox because I don't understand the reason for the fall's magnitude in the first place (you can look up my thinking two posts ago) and there have been a few promising bottoms that failed. But it's possible that double digit is a psychologically especially strong support here, along with the fact that we've bounced off the long-term lower log support trendline.

My internet connection is fucked for the time being, so I am using the internet with bare minimum, it's a shame I didn't get to see the MtGox ramp on clarkmoody.

[JorgeStolfi]

I forgot to mention one thing: MtGox has earned over 6k BTC the past two weeks.

If, when they locked the exit gates, the sum of all their client BTC accounts was X, then, in spite of all the trading that has happened there, they still owe X-6000 BTC to all their clients.  (Unless MtGOX itself has been buying BTC from their trapped clients, at their current panic price; which would be the closest think to armed robbery that they could do.)

Their trapped clients seem to think that Y, the amount of real BTC that MtGOX currently owns, is about 1/3 of X-6000.  Although that perception may change rapidly on faint echos of rumors.

Anyone dares to guess what was the value of X (basically, the total supply of goxBTC)?  (Note that the total volume traded at MtGOX over the last two weeks may not be a reliable estimate, since there may be many goxBTC that were not traded once in all that time, and many that got traded several times.)

[Holliday]

I forgot to mention one thing: MtGox has earned over 6k BTC the past two weeks. Assuming they lost an amount of user deposits, then their liabilities keep shrinking over time as long as people trade maniacally on high volume. Pretty funny.

I'm beginning to think Gox is less incompetent than I previously thought!

Not really, a fully functioning exchange which draws in more traders would make more than this over time. I expect Gox's volume to dwindle to nothing before long. They took a free monopoly and did everything in their power to destroy it!

Then again, people will probably praise Gox once they allow withdraws to trickle out. "Gox saved Bitcoin from malleability!"

[Elryk]

For all those who keep saying "this is the end" for gox. Gox sucks (without a doubt), unfortunately, they will probably still be around after this mess is over. Basically, EVERYONE needs to stop using gox in order to get rid of this cancer, but that wont happen (too many current opportunities, too many potential opportunities). Like it or not, Gox has its hardcore fans that think gox does no wrong and is the victim in this disaster.

If gox were a mouse: (or maybe this is the gox server "hamster"?)
http://youtu.be/Plz9JxsnhH4

It is at the *SNAP!* part now, getting its grip

P.S. Dont let gox steal your cheddar!

[N12]

gmaxwell has done a blockchain analysis and wasn't able to find out, so I expect there is no way to know for anyone but MtGox management. If an attacker has exploited it only in recent weeks, then the upper limit was about 70k BTC (such a loss they could likely stomach with what I believe is a 6 digit BTC reserve of their own though). If it was really exploited for a long time, then who knows, it depends solely on how MtGox has checked cold storage funds against the user balances and how early they noticed a difference.

Another thing to consider is that there is currently still inflow and outflow in fiat money from MtGox. Inflow any currency/deposit method and outflow is limited to SEPA/JPY, severely limited also in value as well as time. It could well be that MtGox is receiving a net inflow of funds and thus, if it operates a fractional reserve, it would serve to lower the percentage of the missing reserve.

[billyjoeallen]

I forgot to mention one thing: MtGox has earned over 6k BTC the past two weeks.

If, when they locked the exit gates, the sum of all their client BTC accounts was X, then, in spite of all the trading that has happened there, they still owe X-6000 BTC to all their clients.  (Unless MtGOX itself has been buying BTC from their trapped clients, at their current panic price; which would be the closest think to armed robbery that they could do.)

Their trapped clients seem to think that Y, the amount of real BTC that MtGOX currently owns, is about 1/3 of X-6000.  Although that perception may change rapidly on faint echos of rumors.

Anyone dares to guess what was the value of X (basically, the total supply of goxBTC)?  (Note that the total volume traded at MtGOX over the last two weeks may not be a reliable estimate, since there may be many goxBTC that were not traded once in all that time, and many that got traded several times.)

Even if they only have 1/3 of X, with withdrawal limits, they may be able to grow their way out of the hole they are in. Most banks have far less than 1/3 of depositors funds. Factor in the fresh fiat from arbitragers and they can operate a long time before being forced to admit they are insolvent. Cashflow is king.  All this fiasco will likely cost them in the long run is market share.

[Holliday]

All this fiasco will likely cost them in the long run is market share.

Hopefully a large chunk of it.

[Vycid]

I forgot to mention one thing: MtGox has earned over 6k BTC the past two weeks.

If, when they locked the exit gates, the sum of all their client BTC accounts was X, then, in spite of all the trading that has happened there, they still owe X-6000 BTC to all their clients.  (Unless MtGOX itself has been buying BTC from their trapped clients, at their current panic price; which would be the closest think to armed robbery that they could do.)

Their trapped clients seem to think that Y, the amount of real BTC that MtGOX currently owns, is about 1/3 of X-6000.  Although that perception may change rapidly on faint echos of rumors.

Anyone dares to guess what was the value of X (basically, the total supply of goxBTC)?  (Note that the total volume traded at MtGOX over the last two weeks may not be a reliable estimate, since there may be many goxBTC that were not traded once in all that time, and many that got traded several times.)

This is ridiculous. How would Gox have only 1/3 of their obligations? Did 2/3 of the total Bitcoins on the exchange get stolen?

Keep in mind, this is a profitable exchange. It seems silly to suggest, without a large-scale theft or other compelling event, that they are so badly insolvent. There were some asset seizures in the past, but that comes nowhere near 2/3 of their deposits - in fact I am fairly certain those few millions have long since been made up by trading fees.

Further: If Gox had been stolen from so dramatically, wouldn't the evidence be in the blockchain? I'm sure someone would have noticed a huge spike in withdrawals.

Edit:

gmaxwell has done a blockchain analysis and wasn't able to find out, so I expect there is no way to know for anyone but MtGox management. If an attacker has exploited it only in recent weeks, then the upper limit was about 70k BTC (such a loss they could likely stomach with what I believe is a 6 digit BTC reserve of their own though).

70k IS pretty substantial, even if it's an upper bound, but I suspect that the internal accounting would have caught that long before then.

In any case, wasn't Bitstamp a target as well until recently? Why is nobody concerned about their solvency?

[HairyMaclairy]

I would nominate Mark Karpeles to the Oscar for his superb acting in the movie /Honey, I Shrunk the Coins/.

Seriously though: by allowing deposits while suspending withdrawals, MtGOX became a scam site in my book.

Any sensible person would flee from MtGOX at the first opportunity.  Yet by posts in this and other threads, many still defend Mark and expect MtGOX to continue trading there once it resumes withdrawals.

I just learned a story about a 'bitcoin investment fund' in a certain Latin American country.  The fund took several thousand coins from clients,  promising large returns in BTC.  Then the owner claimed that the fund had been hacked an all the coins were stolen, and closed the fund.  The clients have not yet received their coins back.

What makes the story interesting is that that same person is the owner of that country's main bitcoin exchange.  And his clients see nothing wrong with that.

Why is there so much tolerance to dishonesty in the bitcoin community?

Does it have something to do with the libertarian philosophy, in some broad sense of the term? Perhaps those loyal clients think, "The guy is not a scammer, because anyone who lost money to his scam is stupid, and stupid people deserve to lose their money"?

It is a good question Jorge.  I think the answer lies in a lack of effective remedies.  What *can* you do if someone in a small Latin American country rips you off?  Answer is likely nothing.

With some people yes the libertarian philosophy does come into play (I won't ask for help because I don't want the State interfering in my affairs) but I believe libertarians as a total proportion of investors are shrinking as the asset pool becomes more widely spread. 

[billyjoeallen]

I also thing the Xaction malleability hackers kept doubling down and got caught with a bunch of BTC in Gox's hot wallet when the music stopped. Those funds may soon be available to honest clients, buying Mark even more time. The network DDOS was an attempt to cover their tracks that probably didn't work. These are likely verified accounts and it's likely we'll know who the perpetrators were.

Like Churchill said of Americans, you can always count on Gox to do the right thing, after it has exhausted all the other options.

[fonzie]

Sending FIAT to Gox and selling it on Bitcoinbuilder to lure other(greedy) into the Goxtrap is one of the most fucked up things i have seen in bitcoinland(besides the other 1000+ scamactions).
I am not a really strong moralist( ), but seriously stop complaing about "bad" banksters and governments. This is just plain evil, altough the buyers
are doin it out of their free will. Just my 2 cents.

Go on you altruistic anarchists.