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

[Threebits]

I suppose that BIT may be tempted try to drive the BTC price down before enabling liquidity, because then they would have to pay less USD to the investors who liquidate.  In that "plan", BIT would later buy back those coins on-market to drive the price back up.  I don't know whether this would work; it may push more investors to liquidate and may scare new investors (not that they have many now it seems).  Note that this manipulation is possible with bitcoin due to the limited liquidity of the exchanges.

Does this make sense?

EDIT: typo

I don't understand why BIT wish to drive price down and then liquidate their bitcoins. This undermines their customers and does no good for themselves. Or I'm not smart enough to understand what is it ?

Maybe I am not understanding it right, but this month some of their investors who bought shares at 12$ will be allowed to liquidate, meaning that BIT will have to pay them ~60$ per share (and tear those shares up).

The BIT share price is pegged to the BTC price, so if the latter goes down to 300$ before those investors have time to liquidate, then BIT would have to pay them ~30$/share, instead of ~60$/share.   If the BTC price later returns to 600$, BIT shares will go back to 60$, the other investors (who can't liquidate yet) will be in the same state they were before --- but BIT would have saved a lot of money.

Thanks for the explanation. I see the logic.

[Asrael999]

http://online.wsj.com/news/articles/SB10001424052702303563304579447020246651110

The Treasury Department will come after the many digital currency exchanges and administrators that haven't registered with the Financial Crimes Enforcement Network, the Department's top official for terrorism and financial intelligence said Tuesday.

Goodbye, Bitstamp and BTC-E.

AFAIK Bitstamp and BTC-E neither operate nor have any bank account in US

What does it matter? They serve US customers without following the regulations, and the US has global power.

c. De-Centralized Virtual Currencies

            A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may obtain by their own computing or manufacturing effort.

            A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter. By contrast, a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter. In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency.


Doesn't this imply that anyone who sells a cryptocurrency for fiat is a money transmitter? So not just the exchanges but anyone who sells bitcoin for cash?

[JorgeStolfi]

If I recall correctly, Overstock's CEO invested heavily in bitcoin,  Was that from his pocket, or through the company?

I struggle to comprehend - why you want to stretch logic to attempt to see a zebra in a herd of horses.... and zebras are a rarity. 

I don't undertsand your remark. I stated a fact (AFAIK, read it here) and asked a factual question. No opinions there.

By the way, zebras are notorious for being impossible to tame. You can't take them for a ride. 

[jl2012]

I suppose that BIT may be tempted try to drive the BTC price down before enabling liquidity, because then they would have to pay less USD to the investors who liquidate.  In that "plan", BIT would later buy back those coins on-market to drive the price back up.  I don't know whether this would work; it may push more investors to liquidate and may scare new investors (not that they have many now it seems).  Note that this manipulation is possible with bitcoin due to the limited liquidity of the exchanges.

Does this make sense?

EDIT: typo

I don't understand why BIT wish to drive price down and then liquidate their bitcoins. This undermines their customers and does no good for themselves. Or I'm not smart enough to understand what is it ?

Maybe I am not understanding it right, but this month some of their investors who bought shares at 12$ will be allowed to liquidate, meaning that BIT will have to pay them ~60$ per share (and tear those shares up).

The BIT share price is pegged to the BTC price, so if the latter goes down to 300$ before those investors have time to liquidate, then BIT would have to pay them ~30$/share, instead of ~60$/share.   If the BTC price later returns to 600$, BIT shares will go back to 60$, the other investors (who can't liquidate yet) will be in the same state they were before --- but BIT would have saved a lot of money.

Thanks for the explanation. I see the logic.

That's completely nonsense. BIT is 100% backed by real BTC. If a customer wants to liquidate their BIT share, BIT will just sell the bitcoin at market price.

[keithers]

LTC/BTC is really surging while this temporary slow bleed on the price per BTC is going on.   It's a good time to be converting a few LTC back to BTC.  This is if you have a decent sized holding of LTC.   If not, I would suggest just continuing to hold your LTC (and BTC)

[adamstgBit]

I suppose that BIT may be tempted try to drive the BTC price down before enabling liquidity, because then they would have to pay less USD to the investors who liquidate.  In that "plan", BIT would later buy back those coins on-market to drive the price back up.  I don't know whether this would work; it may push more investors to liquidate and may scare new investors (not that they have many now it seems).  Note that this manipulation is possible with bitcoin due to the limited liquidity of the exchanges.

Does this make sense?

EDIT: typo

I don't understand why BIT wish to drive price down and then liquidate their bitcoins. This undermines their customers and does no good for themselves. Or I'm not smart enough to understand what is it ?

Maybe I am not understanding it right, but this month some of their investors who bought shares at 12$ will be allowed to liquidate, meaning that BIT will have to pay them ~60$ per share (and tear those shares up).

The BIT share price is pegged to the BTC price, so if the latter goes down to 300$ before those investors have time to liquidate, then BIT would have to pay them ~30$/share, instead of ~60$/share.   If the BTC price later returns to 600$, BIT shares will go back to 60$, the other investors (who can't liquidate yet) will be in the same state they were before --- but BIT would have saved a lot of money.

Thanks for the explanation. I see the logic.

That's completely nonsense. BIT is 100% backed by real BTC. If a customer wants to liquidate their BIT share, BIT will just sell the bitcoin at market price.

i thought BIT would open up a market for BIT shares, were poeple could buy and sell BIT, which should track bitcoin prices closely because its backed by bitcoin.

[dreamspark]

http://online.wsj.com/news/articles/SB10001424052702303563304579447020246651110

The Treasury Department will come after the many digital currency exchanges and administrators that haven't registered with the Financial Crimes Enforcement Network, the Department's top official for terrorism and financial intelligence said Tuesday.

Goodbye, Bitstamp and BTC-E.

AFAIK Bitstamp and BTC-E neither operate nor have any bank account in US

What does it matter? They serve US customers without following the regulations, and the US has global power.

c. De-Centralized Virtual Currencies

            A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may obtain by their own computing or manufacturing effort.

            A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter. By contrast, a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter. In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency.


Doesn't this imply that anyone who sells a cryptocurrency for fiat is a money transmitter? So not just the exchanges but anyone who sells bitcoin for cash?

Pretty much. Cassius was having trouble with his physical coins due to money transmitter laws. Im sure they stopped him at least at the time if I remember correctly?

[jl2012]

I suppose that BIT may be tempted try to drive the BTC price down before enabling liquidity, because then they would have to pay less USD to the investors who liquidate.  In that "plan", BIT would later buy back those coins on-market to drive the price back up.  I don't know whether this would work; it may push more investors to liquidate and may scare new investors (not that they have many now it seems).  Note that this manipulation is possible with bitcoin due to the limited liquidity of the exchanges.

Does this make sense?

EDIT: typo

I don't understand why BIT wish to drive price down and then liquidate their bitcoins. This undermines their customers and does no good for themselves. Or I'm not smart enough to understand what is it ?

Maybe I am not understanding it right, but this month some of their investors who bought shares at 12$ will be allowed to liquidate, meaning that BIT will have to pay them ~60$ per share (and tear those shares up).

The BIT share price is pegged to the BTC price, so if the latter goes down to 300$ before those investors have time to liquidate, then BIT would have to pay them ~30$/share, instead of ~60$/share.   If the BTC price later returns to 600$, BIT shares will go back to 60$, the other investors (who can't liquidate yet) will be in the same state they were before --- but BIT would have saved a lot of money.

Thanks for the explanation. I see the logic.

That's completely nonsense. BIT is 100% backed by real BTC. If a customer wants to liquidate their BIT share, BIT will just sell the bitcoin at market price.

i thought BIT would open up a market for BIT shares, were poeple could buy and sell BIT, which should track bitcoin prices closely because its backed by bitcoin.

I'm not sure but if it works like an ETF, customers may also request delivery of real BTC

[dreamspark]

Wall that was propping up $610 ish has been removed

[bassclef]

400 ATM's in Dubai within the next two weeks!

http://www.reddit.com/r/Bitcoin/comments/20q1hp/dubai_about_to_roll_out_a_massive_amount_of/

Was just reading about this. Pretty excellent news!

[aminorex]

           A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter. By contrast, a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter. In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency.


Doesn't this imply that anyone who sells a cryptocurrency for fiat is a money transmitter? So not just the exchanges but anyone who sells bitcoin for cash?

A plain reading does not indicate that merely dealing in bitcoin constitutes money transmission.  If it did, then dealing in mp3s would constitute money transmission no less.

[aminorex]

Pretty much. Cassius was having trouble with his physical coins due to money transmitter laws. Im sure they stopped him at least at the time if I remember correctly?

They did.  And they are criminals making threats of under color of law.

[barbs]

Bull trap?

Bear trap?

We're not out of the woods yet boys

[JorgeStolfi]

That's completely nonsense. BIT is 100% backed by real BTC. If a customer wants to liquidate their BIT share, BIT will just sell the bitcoin at market price.

That has nothing to do with the issue.

What that "100% backed in BTC" promise means is that, for each share held by investors, BIT will keep 0.1 BTC in its posession.  It does not mean that BIT must sell those BTC when the investor liquidates; if BIT has cash reserves, it can just pay the investor from those and keep the corresponding BTCs as reserve instead. That would not violate the "100% backed by BTC" promise to other investors, on the contrary.

(The whole point of the trust is to insulate the investors from the BTC trading that BIT must do to honor BIT's part of the contract.)

[BitChick]

Bull trap?

Bear trap?

We're not out of the woods yet boys

But it isn't as boring as it was last week.

[fonzie]

Greetings from my latest journey to S-E-Asia.
A full Bitcoin sponsored trip(shorting profits  )stuffed with a huge package of Acid bought with BTC.   
I just wanted to let you know that i´m still bullish about BTC after i talked to the local bulls over here,
altough it might take a few days until they will fully attack.





If you could please pump it to about 900$ that would be awesome

See you soon

[JorgeStolfi]

i thought BIT would open up a market for BIT shares, were people could buy and sell BIT, which should track bitcoin prices closely because its backed by bitcoin.

No, on their site they explicitly warn prospective investors that such a market for BIT shares is not in their plans, and none may develop. 

I understand that "liquidity" for an investment fund means just what I described, the investor can take money out from the fund (at the current share price) and give up his shares.  Am I wrong?

[barbs]

Greetings from my latest journey to S-E-Asia.
A full Bitcoin sponsored trip(shorting profits  )stuffed with a huge package of Acid bought with BTC.   
I just wanted to let you know that i´m still bullish about BTC after i talked to the local bulls over here,
altough it might take a few days until they will fully attack.





If you could please pump it to about 900$ that would be awesome

See you soon

Aaaand it's gone

[ShroomsKit_Disgrace]

Greetings from my latest journey to S-E-Asia.
A full Bitcoin sponsored trip(shorting profits  )stuffed with a huge package of Acid bought with BTC.   
I just wanted to let you know that i´m still bullish about BTC after i talked to the local bulls over here,
altough it might take a few days until they will fully attack.





If you could please pump it to about 900$ that would be awesome

See you soon

That is simply HILARIOUS. Fonzie, the PermaBull is a real person!

[dreamspark]

My understanding was the fund was constructed in the way Jorge describes where the investment fund can 'buy' the shares off its investors. This means that If the fund has the capital they can pay it from their fiat reserves but if not they would have to sell some BTC. May be wrong as others seem to think its more of BIT stock.