manipulation and collusion in btc pricing

[impossible2short]

There are tons of conspiracy theories about entities attempting to artificially lower the price of bitcoins in order to destroy the virtual currency.  However, it will be the entities attempting to support the price of bitcoins that will ultimately lead to its permanent demise.

I'm referring to the obvious and blatant manipulation occurring at MtGox and other btc exchanges.  Anytime bitcoin prices drop suddenly, MtGox immediately slows trading, then shuts down.  It does not have this problem when the price is increasing on similar volumes traded.  When MtGox reopens, the bid prices are suddenly 20%+ higher than they are elsewhere.  Similarly, when MtGox re-opens at the higher bid price, the "current" price at btc-e.org jumps and the bid and sell stream is suddenly 20%+ lower than the "current" price.  When the bid and ask streams on btc-e "catch up," there are suddenly countless orders for 0.05 or 0.01 btc at the prices between the new current value and the price it most recently traded approximately 20%+ lower.  During normal trading, the bid and sell streams are populated without such neatly rounded orders at each price level, reflecting a traditional market.  They are added as place holders to shore up gaps in the tables when the current price is manipulated, resulting in the requisite lag between the current and the bid/sell stream values at times of btc drops.  Interestingly, the sell stream suddenly starts to populate with orders to sell at prices at the current, suddenly re-elevated price, in the same neatly rounded quantities- 0.05 and 0.01 btc.

Price fixing, then dumping at higher levels, in order to shore up the btc trade price is going to result in a lack of trust in the exchanges and charges of a "rigged game" will destroy the currency.  A currency only requires one thing to be viable- the trust of those using it.  The obvious manipulation of the market by the exchanges will destroy that trust and, ultimately, bitcoin.

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[btcmind]

"There are tons of conspiracy theories ..." that's how the best threads start.  Yes, there is manipulation and that's in part normal. Anyone can put bid and asks where and however they want. Longterm there will be new exchanges, and the users of the exchanges will decide what's best for them.

[QuantPlus]

I'm referring to the obvious and blatant manipulation occurring at MtGox and other btc exchanges.

I've been trading daily for 15 years...
And even in a highly regulated environment like the NYSE...
You are constantly cheated in various different ways...
But it's more like chiseled for pennies that add up over time.

Since MtGox has a monopoly on BTC pricing and is completely unregulated...
They are systematically manipulating the market to max their take...
Profits from these 20% moves like today dwarf that dinky 0.5% fee...
Because they probably do a LOT of large, private deals off-the-books.

Just about everything I ever read about MtGox negative...
I'm sure the truth is worse than anyone can imagine.

Ironically, BTC has a single point of failure = career criminals MtGox...
If BTC is soon co-opted and made irrelevant by Paypal or a Bank...
It will be because MtGox kept this market in this Stone Age...
And prevented BTC from becoming a stable currency.

Cue the Apologists from Gox who have infiltrated this place... 3-2-1.

[superduh]

i think there are more people fearing panic selling than panic buying.
bots, ddos etc could be programmed to drive prices one direction. there would have to be amazing news in order for those tactics to have an effect on the upward direction.

GOX is NOT Bitcoins
their whole system is messed up anyways. not liquid enough, $2 trades with the large spreads can move the "market cap" by millions
they would need to start limiting trades per hour/day, sizes etc to get things to more their natural order

[dhenson]

I have a different take on it.

I think what we are seeing here is large investors entering at a price point more advantageous to their bottom line.

Mr. Money Bag Investor strategy #1
1) Slowly build up a stash of 2000-3000 btc over the course of a couple of days as to not leak too much during accumulation.
2) Make sure to have around a large pool of USD ready in MTGox.
3) Wait for a general trend down, and hit the market with a 2000 btc market sell.  (causing the price to drop 5-10%)
4) Immediately place a limit sell order just above the new low you just artificially created.
5) Start the DDOS to disrupt regular trades. (easily purchased)
6) Watch the lemmings panic sell further forcing the price down.
7) Once a sufficient number of Sell orders are well below the previous starting price, issue your main buy market order (think 4000-5000 btc)

Using the above strategy, anyone wanting to enter into BTC in a big way can ensure instant equity.

Market manipulation like this is illegal in other markets, but not here.  Also, add in the small market cap and this is almost a guaranteed way to make money.

[Shinobi]

This is it in a nutshell. Bitcoin is an experiment that has served to reveal, among many lessons, the necessity of regulation, despite the wet dreaming of the anarchists/libertarians.

Market manipulation like this is illegal in other markets, but not here.  Also, add in the small market cap and this is almost a guaranteed way to make money.

[Shinobi]

GOX is NOT Bitcoins

But it is.