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

[Bagatell]

Given the calibre of the participants of the auction,  and who they are buying the coins from,  I don't think they are going to be doing market manipulation like that.

If Rashid Mohamed Indian whale was buying coins from Mark Kerpeles then maybe he'd do that but not when  U.S. business CEO is buying from U.S. marshall.

Wakey,wakey.

http://www.zerohedge.com/news/2014-06-19/peek-inside-secret-world-currency-manipulation

[JayJuanGee]

I believe that one person could bid 10 times and win all ten lots, so long as his/her bid is the highest one on each lot.  And, if that bidder only bid on one lot, then the most that bidder could win would be one lot.

The auction mechanism is clearly described in the USMS note.  Each bidder submits one "sealed" bid where he says "I will buy up to N blocks of 3000 BTC for X dollars each, and up to M blocks of 2,656.51306529 for Y dollars each", where N is between 0 and 9, and M is 0 or 1.  When the bidding period is over, the USMS "opens" the bids, and awards the blocks of each type to the bidders, by decreasing bid price, until all blocks are awarded.

It appears that the USMS will not release any results to the public:  http://www.usmarshals.gov/assets/2014/bitcoins/faqs.pdf It will only tell losing bidders that they lost.  But perhaps the terminally curious will file a FOIA request.

And they felt it was necessary to write

The USMS does not make any representations or warranties regarding Bitcoin.

So you will not get a refund if you buy those bitcoins and they turn out to be counterfeited, or half of their bits fall off after the first transaction.  

The process seems a little illogical in certain respects, but it seems to clearly communicate what it will be.  Additionally, the actual bidding seems to be a little less than transparent, yet I would imagine that they cannot give a lot to anyone who bid lower, b/c the higher bidder would truely complain if s/he did NOT receive a lot and a lower bidder did.

[TERA]

Given the calibre of the participants of the auction,  and who they are buying the coins from,  I don't think they are going to be doing market manipulation like that.

If Rashid Mohamed Indian whale was buying coins from Mark Kerpeles then maybe he'd do that but not when  U.S. business CEO is buying from U.S. marshall.

Wakey,wakey.

http://www.zerohedge.com/news/2014-06-19/peek-inside-secret-world-currency-manipulation

You're talking about manipulation of billion dollar trades versus manipulation to a acquire a million dollars worth of bitcoin.  the calibre of investor who engages in the former is not going to risk their operation by taking extra risks to engage in the second. That was my point. The amounts of money involved here with this bitcoin auction are peanuts compared to the amount of money that the buyers are used to playing with so why would they bother with market manipulation?

[JorgeStolfi]

If I were bidding at such a sealed-bid auction, I would try to estimate (a) how much revenue I could get from the item if I got it, and (b) what is the minimum profit that I would be happy with on my investment. Then I would bid for the difference (a) minus (b).

For example, I am currently pessimistic about the chances of the price ever getting much higher than now, and expect a downtrend in the short term.  Therefore, if I were to get those bitcoins I would try to sell them right away for the best price, as fast as I could.  If the auction were today, I would expect to get maybe 550 USD/BTC average from selling 3000 coins on the exchanges over the next week.  Thus, I would bid for 500 USD/BTC to have an expected profit of 150'000$ with an investment of 1'500'000$.

By the same reasoning, someone with a more optimistic outlook may bid higher than market.  If he expects BTC to be 10'000 USD next year, then he can bid at 5'000 USD/BTC and still expect to make a nice profit.  But if such person existed, he would be buying all coins in the market now, at any price.  Obviously the optimists are all out of money now.

I suppose that one can build more sophisticated probabilistic models to find one's optimum bid, given one's expectations about future bitcoin prices.  However, one must assume a very broad probability distribution for the other people's bids, so I doubt that one can do much better than the simplistic method above.

[tarmi]

For example, I am currently pessimistic about the chances of the price ever getting much higher than now

that's new.

[Tzupy]

If I were bidding at such a sealed-bid auction, I would try to estimate (a) how much revenue I could get from the item if I got it, and (b) what is the minimum profit that I would be happy with on my investment. Then I would bid for the difference (a) minus (b).

For example, I am currently pessimistic about the chances of the price ever getting much higher than now, and expect a downtrend in the short term.  Therefore, if I were to get those bitcoins I would try to sell them right away for the best price, as fast as I could.  If the auction were today, I would expect to get maybe 550 USD/BTC average from selling 3000 coins on the exchanges over the next week.  Thus, I would bid for 500 USD/BTC to have an expected profit of 150'000$ with an investment of 1'500'000$.

By the same reasoning, someone with a more optimistic outlook may bid higher than market.  If he expects BTC to be 10'000 USD next year, then he can bid at 5'000 USD/BTC and still expect to make a nice profit.  But if such person existed, he would be buying all coins in the market now, at any price.  Obviously the optimists are all out of money now.

I suppose that one can build more sophisticated probabilistic models to find one's optimum bid, given one's expectations about future bitcoin prices.  However, one must assume a very broad probability distribution for the other people's bids, so I doubt that one can do much better than the simplistic method above.

There is a timing problem with the 'buy to dump immediately on exchanges' scenario:
The bidding is on the 27th, Online auction period from 6:00 AM EDT to 6:00 PM EDT
30th Winning bidder notified by 5:00 PM EDT
1st July Phase III Deadline for winning bidder to initiate wire transfer
The bitcoins will reach the winner(s) after the wire transfer completes (at least that seems reasonable to me),
so they can only be dumped around the 3rd July. The buyer has to be cautious with respect to market movement 27th June - 3rd July.

[macsga]

[ChartBuddy]

Explanation

[JorgeStolfi]

There is a timing problem with the 'buy to dump immediately on exchanges' scenario: [ ... ] The buyer has to be cautious with respect to market movement 27th June - 3rd July.

Yes, he must include that forced delay in his estimate of how much money he would get if he got those coins.  It is irrelevant for the optimistic bidder, very important for the pessimistic bidder.

[TERA]

Nobody is going to give themselves only a 10% profit margin if they are pessimistic. In fact professionals don't like trading against the market period. So most of the buyers are probably bulls, unless they're sending ridiculously low-ball offers like $200 per coin.

[Tzupy]

There is a timing problem with the 'buy to dump immediately on exchanges' scenario: [ ... ] The buyer has to be cautious with respect to market movement 27th June - 3rd July.

Yes, he must include that forced delay in his estimate of how much money he would get if he got those coins.  It is irrelevant for the optimistic bidder, very important for the pessimistic bidder.

That's why the pessimistic bidders are unlikely to win if the market is in a downtrend. The bears should bid like 20% below market price. The bulls (if any) will be willing to hold the bag.

[Miz4r]

There is a timing problem with the 'buy to dump immediately on exchanges' scenario: [ ... ] The buyer has to be cautious with respect to market movement 27th June - 3rd July.

Yes, he must include that forced delay in his estimate of how much money he would get if he got those coins.  It is irrelevant for the optimistic bidder, very important for the pessimistic bidder.

That's why the pessimistic bidders are unlikely to win if the market is in a downtrend. The bears should bid like 20% below market price. The bulls (if any) will be willing to hold the bag.

It's unlikely all the bidders are bears who want to bid way below market. The only reason a bear would want to buy those coins is to sell them immediately afterwards on the market. It's not easy to do that without huge slippage and also carries quite a lot of risk since it takes like a week before they actually receive the coins. If news comes out someone bought the coins with a huge discount the market will dive down way before the bidder receives their coins. I think it makes a lot more sense for a true bear to just go short on Bitfinex or find someone to lend them some coins.

[blatchcorn]

I am currently pessimistic about the chances of the price ever getting much higher than now

I bet you 1 bitcoin that some time during the lifespan of bitcoin the price will rise above the $580 range.  If this does not happen in the next 5 years, I give you a bitcoin.  Sound fair?

Oh and a sell off before July? This consolidation has bear trap written all over it.

[Parazyd]

I am currently pessimistic about the chances of the price ever getting much higher than now

I bet you 1 bitcoin that some time during the lifespan of bitcoin the price will rise above the $580 range.  If this does not happen in the next 5 years, I give you a bitcoin.  Sound fair?

Oh and a sell off before July? This consolidation has bear trap written all over it.

Yup. This trend is bullish as #&$@. We just need some panic buys now.

[ChartBuddy]

Explanation

[JorgeStolfi]

I am currently pessimistic about the chances of the price ever getting much higher than now

I bet you 1 bitcoin that some time during the lifespan of bitcoin the price will rise above the $580 range.  If this does not happen in the next 5 years, I give you a bitcoin.  Sound fair?

And if the price does go above 580$ I owe you nothing? It's a deal, I happen to have 0 BTC to spare. Oops, looks like you already won, contratulations. 

[empowering]

Appearantly, all the newcomers and the new businesses come in for the transactions only. Only the old hoarders hoard. Do they have any wives and daughters left? They are now selling their football cards and run after the bus to save money. Less and less people have heard about bitcoin. It will not only go to zero, but it will be forgotten! The blockchain is all that is left for the future archeologists. The bitcoin museum will be weighed down with spiderwebs.

Yeah and I suppose that the adoption rates will stay static as the hundreds of millions of VC cash poured into developing the ecosystem and as more and more huge companies take it on....  this has only just begun non? that is as plain as the nose on your face.

[Globb0]

Closed bids is a scammy way for sellers to get more out of the buyers.

Happens a lot in the housing market. Peeking at bids and whispering advice to someone all that kind of thing. If you were to bid x Im _sure_ you would get it


Not sharing the results and bids after doesnt fill you with confidence on the transparency front.

[ShroomsKit]

Blaaah blaah blaaaaah

I bet you 1 bitcoin that some time during the lifespan of bitcoin the price will rise above the $580 range.  If this does not happen in the next 5 years, I give you a bitcoin.  Sound fair?

Oh and a sell off before July? This consolidation has bear trap written all over it.

Why do you even reply to such trash?

[blatchcorn]

I am currently pessimistic about the chances of the price ever getting much higher than now

I bet you 1 bitcoin that some time during the lifespan of bitcoin the price will rise above the $580 range.  If this does not happen in the next 5 years, I give you a bitcoin.  Sound fair?

And if the price does go above 580$ I owe you nothing? It's a deal, I happen to have 0 BTC to spare. Oops, looks like you already won, contratulations. 

This is why you shouldn't listen to bears.