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Author Topic: Bitcoin Hedge Funds Operating Classic Pump and Dump  (Read 3856 times)
bonker
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May 02, 2013, 07:44:38 AM
 #1

Dear minions, I just you must be wondering about the recent dump of the BTC price. Well we've been doing some
analysis overhere on our Cray and it looks like someone big (hedge funds) is operating a pump and dump scheme.
Here's how it works.

1) Fund buys BTC heavily over a period of days/weeks
2) The masses get bullish and start buying
3) Funds stops buying
4) Masses in bull fever continue buying pushing prices to new highs
5) Fund starts selling to masses at new high making profit
6) Masses run out of cash/bull prices start to fall.
7) Fund continues selling pushing prices lower
Cool Masses get bearish and start selling
9) Fund stops selling
10) Masses in bear fever continue selling pushing prices to new lows
11) Fund starts buying from masses at new low making profit
12) return to 1

The free market is a pig sometimes

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bitleif
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May 02, 2013, 08:05:49 AM
 #2

Liked how your 8 fittingly turned into a 'cool' smiley.
empoweoqwj
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May 02, 2013, 08:30:06 AM
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What a waste of a cray, my pet crayfish could have figured that out  Grin
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May 02, 2013, 08:55:36 AM
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Dear minions, I just you must be wondering about the recent dump of the BTC price. Well we've been doing some
analysis overhere on our Cray and it looks like someone big (hedge funds) is operating a pump and dump scheme.
Here's how it works.

1) Fund buys BTC heavily over a period of days/weeks
2) The masses get bullish and start buying
3) Funds stops buying
4) Masses in bull fever continue buying pushing prices to new highs
5) Fund starts selling to masses at new high making profit
6) Masses run out of cash/bull prices start to fall.
7) Fund continues selling pushing prices lower
Cool Masses get bearish and start selling
9) Fund stops selling
10) Masses in bear fever continue selling pushing prices to new lows
11) Fund starts buying from masses at new low making profit
12) return to 1

The free market is a pig sometimes

Why finance shouldn't be open to your average Schmoe

My Credentials  | THE BTC Stock Exchange | I have my very own anthology! | Use bitcointa.lk, it's like this one but better.
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May 02, 2013, 09:28:13 AM
 #5

Dear minions, I just you must be wondering about the recent dump of the BTC price. Well we've been doing some
analysis overhere on our Cray and it looks like someone big (hedge funds) is operating a pump and dump scheme.
Here's how it works.

1) Fund buys BTC heavily over a period of days/weeks
2) The masses get bullish and start buying
3) Funds stops buying
4) Masses in bull fever continue buying pushing prices to new highs
5) Fund starts selling to masses at new high making profit
6) Masses run out of cash/bull prices start to fall.
7) Fund continues selling pushing prices lower
Cool Masses get bearish and start selling
9) Fund stops selling
10) Masses in bear fever continue selling pushing prices to new lows
11) Fund starts buying from masses at new low making profit
12) return to 1

The free market is a pig sometimes

Why finance shouldn't be open to your average Schmoe

I don'T want to piss people off, but didn't this guy write he is NOT willing to take a BTC loan?
bonker
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May 02, 2013, 09:54:06 AM
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nice tits!

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keatonatron
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May 02, 2013, 10:37:35 AM
 #7

Yeah, this has been explained many many times over the past few months. But usually it only needs 4 points!

1. Buy so much that demand is created, driving price up
2. Sell so much that supply is created, driving price down
3. Huh
4. Profit!

1KEATSvAhbB7yj2baLB5xkyJSnkfqPGAqk
bonker
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May 02, 2013, 10:59:42 AM
 #8

Yeah, this has been explained many many times over the past few months. But usually it only needs 4 points!

1. Buy so much that demand is created, driving price up
2. Sell so much that supply is created, driving price down
3. Huh
4. Profit!
That doesn't explain anything. How does Buying create demand? Your version is mush. I'll stick with the OP

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Schrankwand
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May 02, 2013, 01:01:58 PM
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Yeah, this has been explained many many times over the past few months. But usually it only needs 4 points!

1. Buy so much that demand is created, driving price up
2. Sell so much that supply is created, driving price down
3. Huh
4. Profit!
That doesn't explain anything. How does Buying create demand? Your version is mush. I'll stick with the OP

you put orders on the buy side.


Let us say, there are 100 $ on the sell side. 100$ on the buy side. Now someone comes in and wants to buy for another $50.

So now the people that have the same amount of bitcoins on the sell side will start increasing the prices, since they want the 150, not the 100. The demand increases and people will start meeting this demand at higher prices. The more people are buying and willing to pay, the more people will increase the price they are willing to sell with.

Now when this initial buy leads the sellers to increase their prices, more buyers might come in, wanting to profit from the upward trend in price. They might think that "Hey, now one coin is one dollar, if the buy side is 150, it might get to 1,5, i need to get in and sell!"

So, the prices will increase by the willingness of people to buy and the demand for the good set by the sellers. When the increased demand ramps up the prices, the smart hedge fund will move from the buying side to the selling side, fulfilling the orders of the people who now ramped up the buy side. They have "stung the market" with their pumping and are the early sellers. They might meet a certain money criterium necessary, like an increase in 2-3% in price after fees are calculated.

So the hedge fund themselves have invested in buying a lot at let us say 1, 1.2, 1.25, 1.3 and 1.4. Now the price goes up due to buyers riding the upwards wave. At the same time people in bitcoin exchange come in just to buy and exchange their dollar. So they start selling at 1.4, riding the selling wave slowly until they have sold a good amount of their previously acquired goods. Then, the market will be tested. Can the increased demand from non manipulators hold up? If yes, the prices will slowly stabilize and the upwards trend will be slow and possibly stagnant. If not, the sell offers at some point will outweight the buy offers and people will start reducing their prices again, just to get their sell offers through. Now the first bigger red candle is seen and anyone who wanted in to just rake some upward profit is going to start selling. That is what you have seen yesterday night.

keatonatron
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May 02, 2013, 01:28:04 PM
 #10

How does Buying create demand?

People wanting to buy is the definition of demand. It's basic economics.

1KEATSvAhbB7yj2baLB5xkyJSnkfqPGAqk
niko
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May 02, 2013, 09:03:05 PM
 #11

Dear minions, I just you must be wondering about the recent dump of the BTC price. Well we've been doing some
analysis overhere on our Cray and it looks like someone big (hedge funds) is operating a pump and dump scheme.
Here's how it works.

1) Fund buys BTC heavily over a period of days/weeks
2) The masses get bullish and start buying
3) Funds stops buying
4) Masses in bull fever continue buying pushing prices to new highs
5) Fund starts selling to masses at new high making profit
6) Masses run out of cash/bull prices start to fall.
7) Fund continues selling pushing prices lower
Cool Masses get bearish and start selling
9) Fund stops selling
10) Masses in bear fever continue selling pushing prices to new lows
11) Fund starts buying from masses at new low making profit
12) return to 1

The free market is a pig sometimes
You forgot 1b, 2b, 3b: spend a little bit to create positive PR, with "news" articles, analyses, empty promises in press releases, etc.
No one should get me wrong - I am an optimist. Bitcoin is a great technology with immense potential. The potential, however, has not been realized. We need more useful tech built on top of it, and less speculation.

They're there, in their room.
Your mining rig is on fire, yet you're very calm.
bozak
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May 02, 2013, 09:12:49 PM
 #12

I am actually really surprised that this has not happened more often.  Not necessary a pump and dumb, but just the concept of big money moving around in the BTC space.  Until the last few months, the market for bitcoins has been so small that any big player could have executed this strategy with relative ease (I say relative because they still have to deal with the exchanges, nothing related to BTC exchanges is easy). 

This is actually one of the reasons why I invested in BTC years ago, it was only a matter a time before some big money started to play.  At that point, it didn' even matter if the money was actually for an investment or just for a pump and dump, either way any investor would make out as long as they got in before the craziness. 
Quantum_Negatum
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May 02, 2013, 09:53:41 PM
 #13

Most of the alt-coins are being pumped and dumped right now.  Over a long enough period, sustained pumping and dumping can look like a steady rise.  I wouldn't be surprised if this is how Bitcoin got its wings.  That is, repeated pumping and dumping throughout Jan and Feb, possibly much earlier.
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