Why dumps are important

[deisik]

This is just a theory, so bear with me (constructive criticism is welcome)

And this theory asserts that Bitcoin dumps like what we've seen recently (i.e. today and right after the rejection of the Winklevoss ETF by the SEC) contribute to more even Bitcoin distribution over time and will help stabilize prices in the future (read make Bitcoin growth more consistent). What real world facts is this theory based on? We know that initially there were only a few users (so-called early adopters) who held the majority of coins, so they could easily move the price by dumping their stashes (at least, some part thereof). In the case of the lack of major news (either positive or negative), the price is pretty stable right now. So the only viable explanation for all of a sudden price crashes is most likely someone dumping huge amounts of coins (maybe, the bros themselves). This causes the price to plunge (even if momentarily). It is almost certain as well that the coins dumped are bought by a lot of independent traders, and therefore the wealth distribution is set to level out eventually. That's basically why dumps are important since they are caused via massive sell-offs by a relatively small number of large Bitcoin holders and get absorbed by the market

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[giveen]

It is kind of important what you mentioned but it is also important that bitcoin gets a dump because it helps the smaller investors a lot as they normally wait for price to deduce and ya after a dump till date they growth in price has been stable. And after all bitcoin is like a stock itself so dump is something which will surely occur.

[Betwrong]

This is just a theory, so bear with me (constructive criticism is welcome)

And this theory asserts that Bitcoin dumps like what we've seen recently (i.e. today and right after the rejection of the Winklevoss ETF by the SEC) contribute to more even Bitcoin distribution over time and will help stabilize prices in the future (read make Bitcoin growth more consistent). What real world facts is this theory based on? We know that initially there were only a few users (so-called early adopters) who held the majority of coins, so they could easily move the price by dumping their stashes (at least, some part thereof). In the case of the lack of major news (either positive or negative), the price is pretty stable right now. So the only viable explanation for all of a sudden price crashes is most likely someone dumping huge amounts of coins (maybe, the bros themselves). This causes the price to plunge (even if momentarily). It is almost certain as well that the coins dumped are bought by a lot of independent traders, and therefore the wealth distribution is set to level out eventually. That's basically why dumps are important since they are caused via massive sell-offs by a relatively small number of large Bitcoin holders and get absorbed by the market

After reading your post I've voted "Yes, they are". You have a good point, I have never thought about this issue that way. If you are right, and hopefully you are, the dumps work to the benefit of Bitcoin because it is dumped by a few and adopted by many.

Right now I can witness the confirmation of your theory on a Bitcoin exchanger I use: many people are buying BTC for the amounts from $10 to $30, and I'm pretty sure big part of them are buying their first Bitcoins now.

[deisik]

This is just a theory, so bear with me (constructive criticism is welcome)

And this theory asserts that Bitcoin dumps like what we've seen recently (i.e. today and right after the rejection of the Winklevoss ETF by the SEC) contribute to more even Bitcoin distribution over time and will help stabilize prices in the future (read make Bitcoin growth more consistent). What real world facts is this theory based on? We know that initially there were only a few users (so-called early adopters) who held the majority of coins, so they could easily move the price by dumping their stashes (at least, some part thereof). In the case of the lack of major news (either positive or negative), the price is pretty stable right now. So the only viable explanation for all of a sudden price crashes is most likely someone dumping huge amounts of coins (maybe, the bros themselves). This causes the price to plunge (even if momentarily). It is almost certain as well that the coins dumped are bought by a lot of independent traders, and therefore the wealth distribution is set to level out eventually. That's basically why dumps are important since they are caused via massive sell-offs by a relatively small number of large Bitcoin holders and get absorbed by the market

After reading your post I've voted "Yes, they are". You have a good point, I have never thought about this issue that way. If you are right, and hopefully you are, the dumps work to the benefit of Bitcoin because it is dumped by a few and adopted by many

But this theory is still not without its weak points

For example, while it is certainly true (well, at least, I think so) that unexpected, out of the blue dumps are caused by cryptowhales liquidating their stashes, but what about pumps? It could be said that pumps are in fact offsetting the leveling out effect of dumps. And while dumps contribute to more even wealth distribution, pumps certainly work in the opposite direction, i.e. contribute to wealth centralization (accumulation) in fewer hands. That challenge in its turn could be somewhat refuted by claiming that pumps necessarily cause price hikes and thus their effect would be less pronounced since with higher prices you would just need more fiat to accumulate the same amount of bitcoins. Further, dumps are more profitable overall, so they should be preferred in case of the price rising. For example, the twins bought 100M dollar worth of bitcoins at the price of, say, 600 dollars per coin, but to buy the same amount of bitcoins today they would need twice as much cash. Therefore, with the same stack of dollars they could buy only half as many bitcoins today, and that would work against Bitcoin wealth centralization at higher prices. The bottom line is that higher prices make wealth centralization less likely at large

[DomainMagnate]

I believe a periodic dump is good for both traders and users of any crypto be it bitcoin or any other coin.
It allows more people to get hold of coin which is not possible because of high rates.

[genny2kuk]

This is just a theory, so bear with me (constructive criticism is welcome)

And this theory asserts that Bitcoin dumps like what we've seen recently (i.e. today and right after the rejection of the Winklevoss ETF by the SEC) contribute to more even Bitcoin distribution over time and will help stabilize prices in the future (read make Bitcoin growth more consistent). What real world facts is this theory based on? We know that initially there were only a few users (so-called early adopters) who held the majority of coins, so they could easily move the price by dumping their stashes (at least, some part thereof). In the case of the lack of major news (either positive or negative), the price is pretty stable right now. So the only viable explanation for all of a sudden price crashes is most likely someone dumping huge amounts of coins (maybe, the bros themselves). This causes the price to plunge (even if momentarily). It is almost certain as well that the coins dumped are bought by a lot of independent traders, and therefore the wealth distribution is set to level out eventually. That's basically why dumps are important since they are caused via massive sell-offs by a relatively small number of large Bitcoin holders and get absorbed by the market

Dumps are not important., but profit taking is. Dumps do not necessarily decentralize ownership of bitcoins, because in most cases it is dumpers themselves that end up buying the coins back after it has being undervalued.

[talkbitcoin]

that is a very good point. but there is a big if involved and that is if others buy cheap bitcoins not sell after the dump and join the dumpers and then buy back more expensive coins.

lets say a whale dumps 500BTC at $1230 and creates panic, there will always be panic sellers and chain reaction without exception but if other traders know this and start buying instead of selling themselves that is when the whale is either forced to dump another 500BTC to force the panic or buy back his first 500BTC at $1250. meaning he buys 492BTC and if this continues happening each time there will be no whales.

[deisik]

This is just a theory, so bear with me (constructive criticism is welcome)

And this theory asserts that Bitcoin dumps like what we've seen recently (i.e. today and right after the rejection of the Winklevoss ETF by the SEC) contribute to more even Bitcoin distribution over time and will help stabilize prices in the future (read make Bitcoin growth more consistent). What real world facts is this theory based on? We know that initially there were only a few users (so-called early adopters) who held the majority of coins, so they could easily move the price by dumping their stashes (at least, some part thereof). In the case of the lack of major news (either positive or negative), the price is pretty stable right now. So the only viable explanation for all of a sudden price crashes is most likely someone dumping huge amounts of coins (maybe, the bros themselves). This causes the price to plunge (even if momentarily). It is almost certain as well that the coins dumped are bought by a lot of independent traders, and therefore the wealth distribution is set to level out eventually. That's basically why dumps are important since they are caused via massive sell-offs by a relatively small number of large Bitcoin holders and get absorbed by the market

Dumps are not important., but profit taking is. Dumps do not necessarily decentralize ownership of bitcoins, because in most cases it is dumpers themselves that end up buying the coins back after it has being undervalued.

I don't really see how profit taking is opposite to dumping

Since you seem to be opposing them. Care to explain? Further, it is not just the dumpers themselves who are buying back the coins that they have sold earlier at higher prices because otherwise buying back would be meaningless. If they were the only ones buying back their own coins, they would likely end up with losses since it makes sense to buy back if you assume to sell later at higher prices. But this is only possible if you are not the only one who is buying at lows. In other words, you would be able to buy back only a part of what you sold before, and thus dumps still necessarily contribute to leveling out Bitcoin wealth distribution. On the other hand, you still have to explain that folks that bought your coins at highs will be willing to sell these coins at all (back to you) even if the price went down. Either way, you are set to end up with less coins every turn of a pump and dump cycle

[deisik]

that is a very good point. but there is a big if involved and that is if others buy cheap bitcoins not sell after the dump and join the dumpers and then buy back more expensive coins.

lets say a whale dumps 500BTC at $1230 and creates panic, there will always be panic sellers and chain reaction without exception but if other traders know this and start buying instead of selling themselves that is when the whale is either forced to dump another 500BTC to force the panic or buy back his first 500BTC at $1250. meaning he buys 492BTC and if this continues happening each time there will be no whales

That's exactly my point

At the end of each cycle, the dumpster will have less coins (and more fiat), therefore dumps are useful. Apart from that, as I said in my previous post, there should not just be panic sellers (there will always be some), there should be a sufficient number of them. But since the price of Bitcoin is consistently going up at the end of each pump and dump cycle, there will never be enough panic sellers to offset the redistribution of coins (otherwise, price wouldn't be growing). In this way, higher prices play against the dumpsters since they inevitably lose their coins over time (accumulating cash instead)

[Tuyul Gupies]

well if it's like this it looks like the pattern of the holder of bitcoin will change because after the dump occurred so many people have bitcoin for buying and selling process, which there are many to be reduced eventually so no equalization holder bitcoin, so the benefits of the dump it is also important to maintain continuity of bitcoin, so the market fixed path

[Xester]

This is just a theory, so bear with me (constructive criticism is welcome)

And this theory asserts that Bitcoin dumps like what we've seen recently (i.e. today and right after the rejection of the Winklevoss ETF by the SEC) contribute to more even Bitcoin distribution over time and will help stabilize prices in the future (read make Bitcoin growth more consistent). What real world facts is this theory based on? We know that initially there were only a few users (so-called early adopters) who held the majority of coins, so they could easily move the price by dumping their stashes (at least, some part thereof). In the case of the lack of major news (either positive or negative), the price is pretty stable right now. So the only viable explanation for all of a sudden price crashes is most likely someone dumping huge amounts of coins (maybe, the bros themselves). This causes the price to plunge (even if momentarily). It is almost certain as well that the coins dumped are bought by a lot of independent traders, and therefore the wealth distribution is set to level out eventually. That's basically why dumps are important since they are caused via massive sell-offs by a relatively small number of large Bitcoin holders and get absorbed by the market

In a way we cannot deny that dumps are important to small time and independent bitcoin holders. Dumps are the best way of taking over bitcoins from the huge whales and will make bitcoin be evenly distributed to all members in bitcoin community. If there will be no big whales in the bitcoin industry there will be no more pumps in the future and bitcoins price will be as stable as gold.

[deisik]

This is just a theory, so bear with me (constructive criticism is welcome)

And this theory asserts that Bitcoin dumps like what we've seen recently (i.e. today and right after the rejection of the Winklevoss ETF by the SEC) contribute to more even Bitcoin distribution over time and will help stabilize prices in the future (read make Bitcoin growth more consistent). What real world facts is this theory based on? We know that initially there were only a few users (so-called early adopters) who held the majority of coins, so they could easily move the price by dumping their stashes (at least, some part thereof). In the case of the lack of major news (either positive or negative), the price is pretty stable right now. So the only viable explanation for all of a sudden price crashes is most likely someone dumping huge amounts of coins (maybe, the bros themselves). This causes the price to plunge (even if momentarily). It is almost certain as well that the coins dumped are bought by a lot of independent traders, and therefore the wealth distribution is set to level out eventually. That's basically why dumps are important since they are caused via massive sell-offs by a relatively small number of large Bitcoin holders and get absorbed by the market

In a way we cannot deny that dumps are important to small time and independent bitcoin holders. Dumps are the best way of taking over bitcoins from the huge whales and will make bitcoin be evenly distributed to all members in bitcoin community. If there will be no big whales in the bitcoin industry there will be no more pumps in the future and bitcoins price will be as stable as gold

Even if all 21M bitcoins were evenly distributed between all people, the prices wouldn't be as stable as the gold price

Since most people would just dump all their bitcoins for fiat immediately, and we would end up with a relatively small group of people (like now), some of which would have more coins than the rest of the pack. That will be enough to provide volatility higher than that of gold. We will always have a sort of Brownian motion (or random walk) around the base price even in the most extreme case of however even Bitcoin distribution



Though such distribution would be still impossible in real life

[bravehearth0319]

I'm not saying that dumps are important, maybe sometimes we need it. Because in the world of trading as I can see and observed, traders act most of the time if there is pump happening and when dump is happening too traders had a chance to buy again a cheap coins for them to wait for a chance to sell.

[Mometaskers]

I wouldn't mind the occasional dump. For many poorer people like me, it's really the only way to buy affordable bits. Sure some of the richer guys are also probably gonna benefit from gobbling up all those cheaper coins (some can even accuse them of triggering it to buy more coins) but at least more people get to grab some extra for themselves. I'm not well versed with the economics of stuff but I'd definitely buy during dumps rather than when it's on a rally.

[xuan87]

I'm not saying that dumps are important, maybe sometimes we need it. Because in the world of trading as I can see and observed, traders act most of the time if there is pump happening and when dump is happening too traders had a chance to buy again a cheap coins for them to wait for a chance to sell.

Of course dumps are important, traders make trade from the swinging price, bitcoin need a balance dump and pump so the  price is stable, without dumping the transaction flow of bitcoin can be stagnant and dumping also makes the bitcoin price become cheaper so we have the opportunity to buy some coin and make some profit

[RoommateAgreement]

good point.
and from what i can see, i can tell that we are moving towards that too. if you compare the dumps and how price reacts things are changing, the volatility is not the same as say 3 years ago. whales are also way more careful with their dumps and manipulations and that shows they have lost money or at least can no longer acheive the same goals as before.

[xypos]

I am not sure whether or not a dump would necessarily be important or contribute at all to the Bitcoin environment. I mean let's face it we all hate dumps.

When you wake up like today and you see the Bitcoin price during that $1,000 value again you wondered yourself what the hell happened? What happened was really pure speculation. Traders live off the price inconsistencies between time and time.

But I really don't see a reason why a dump would make Bitcoin more stable over time. Yes the market reaction is reducing dramatically but the Bitcoin price level is still yet to be more stable than most small countries currencies. And we've got so many dumps that I can't even count them all.

[panju1]

Right now, the Bitcoin market has achieved sufficient scale to prevent market manipulations.
In other alt markets, lot of dumps are carried out by whales to depress the market and then pick up coins at a low rate. This is less likely to happen with bitcoins, though.

[deisik]

I am not sure whether or not a dump would necessarily be important or contribute at all to the Bitcoin environment. I mean let's face it we all hate dumps

If we are to really face it, not all people are greedy or impatient, and for me (and I guess many others as well) such dumps turn out to be an excellent opportunity to buy in and buy back what they sold at the highs. Just don't believe the bullshit that price is going to rise indefinitely

But I really don't see a reason why a dump would make Bitcoin more stable over time. Yes the market reaction is reducing dramatically but the Bitcoin price level is still yet to be more stable than most small countries currencies. And we've got so many dumps that I can't even count them all

Did you read the opening post?

Dumps, especially dumps caused by big whales liquidating their stashes (i.e. not linked to events and news having a pervasive and all-embracing negative effect) lead to more even Bitcon distribution. In other words, with every dump there will be less and less whales, which makes Bitcoin less prone to abrupt and sharp plunges overall. Even if someone starts massively buying up bitcoins (like what the Winklevoss dudes did in their time), this will raise the price, and when they eventually choose to dump all their coins the price will still remain higher that their entry point. So the end result will still be more even distribution, which is a good thing on its own

[BitDane]

I do agree that market needs some dumps for more spread.  This is what helps Bitcoin to be stable, by bringing in more hands that will support the network and economy.  Few people cannot sustain the system for very long time so they need much more people involved in it.  With this, there will be more fund to flow in the economy and more people advertising Bitcoin to invite new comer to the Bitcoin ecosystem.