MTGOX trade post Dwolla

[organofcorti]

I just finished an analysis of some MTGOX trade statistics post Dwolla.

http://organofcorti.blogspot.com/2013/06/113-mtgox-trade-post-dwolla.html

It's quite a long post and I wont repeat it here in it's entirety, I've reproduced the summary and a few charts below. I;m not sure I understand the implications of some of the data, so if anyone here has a better or clearer interpretation of the data than I, please post!

5. Summary
I have really only scratched the surface of the sorts of analyses this method allows, but I'm not really familiar enough with the exchanges or the intricacies of BTC trading generally to make many inferences based on the analyses. For example, why does the weekly volume and weekly average BTC per trade for BTC-E USD BTC follow that for MTGOX USD BTC so closely? Coincidence, or were BTC-E indirectly affected by MTGOX's Dwolla problems?

Anyway, here is a summary of the inferences in which I have a degree of confidence, and some answers to my initial questions.

1. MTGOX USD BTC daily trade volume was not affected from the 14th May (the date Dwolla announced it would no longer be a MTGOX partner) and the 17th May.
2. MTGOX USD BTC weekly trade volume and average BTC per trade reduced significantly after 17th May, and have not recovered. Interestingly, the weekly number of trades has not been significantly affected. Why? I don't know. Suggestions are welcome.
3. CampBX USD and Bitstamp USD both had a significant increase in both trade volume and average BTC per trade compared to the week ending 16th May. The weekly numbers of trades do not show a significant change.
4. MTGOX currency pairs that may have been affected by the Dwolla account closure (in order of confidence): USD, GBP, PLN.
5. Non MTGOX currency pairs that may have been affected by the Dwolla account closure: BTC-E USD.

To answer my initial questions directly:

* Will most traders use other methods to get fiat currency to MTGOX? If this is the case we should see a recovery in trade volume.
From point 2, this does not seem to be the case. Rescaled trade volume compared to 33 other exchange currency pairs was still quite low - lower than 80% of exchange currency pairs.

* Will most traders move to other exchanges? In this case other exchanges will have an increase in trade, and the MTGOX trade volume will not quickly recover.
From point 3, this is quite possible, Bitstamp and CampBX being the most likely recipients of the volume.

* Will this cause a decrease in BTC trades, due to a loss of confidence in bitcoin? If so, all currency pair trade volume will decrease.
No. With the exception of BTC-e USD BTC and possibly MTGOX GBP BTC and PLN BTC, no other exchange currency pairs showed any correlation to MTGOX's trade statistics.

[ldrgn]

2. MTGOX USD BTC weekly trade volume and average BTC per trade reduced significantly after 17th May, and have not recovered. Interestingly, the weekly number of trades has not been significantly affected. Why? I don't know. Suggestions are welcome.

If the distribution of traders was bimodal (a few whales buying/selling their life savings and many bots fighting over pennies) this would make sense if the whales were cut out of the equation.

I also tend to think of exchange volume as valued in fiat instead of BTC.  In my mind I don't want to give as much credibility to a cumulative 'BTC volume' number by itself because of the exchange rate.  You tackled this problem in a couple of ways (exchange rate, trade size, btc volume) in the blog post.  I'm wondering if I should change my thinking here - is it best to use BTC as the baseline or USD?  Do I gain anything by keeping all numbers in USD or am I losing precious information about the distribution of trades when I do so?

[organofcorti]

2. MTGOX USD BTC weekly trade volume and average BTC per trade reduced significantly after 17th May, and have not recovered. Interestingly, the weekly number of trades has not been significantly affected. Why? I don't know. Suggestions are welcome.

If the distribution of traders was bimodal (a few whales buying/selling their life savings and many bots fighting over pennies) this would make sense if the whales were cut out of the equation.

I had the same thought, but until your post I didn't know how to look at that. Now, I think comparing weekly variance in trade volume might be key.

I also tend to think of exchange volume as valued in fiat instead of BTC.  In my mind I don't want to give as much credibility to a cumulative 'BTC volume' number by itself because of the exchange rate.  You tackled this problem in a couple of ways (exchange rate, trade size, btc volume) in the blog post.  I'm wondering if I should change my thinking here - is it best to use BTC as the baseline or USD?  Do I gain anything by keeping all numbers in USD or am I losing precious information about the distribution of trades when I do so?

Because I don't know of any statistical test I could use, I had to compare value to quantiles. In order to get quantiles I needed as large a dataset as possible, and to do that I had to use as many of the larger exchange fiat / BTC currency pairs as possible. So for this type of method denominating in BTC necessary. The only way around this would be to have a statistical test that I could use - unfortunately the trade data daily and weekly deltas are not distributed normally

Now I've completed the post and I'm getting some good feedback I might revisit this in a week or two. I've already got a few ideas, and it might be nice to have a regular post on the health of the various exchanges, similar to the weekly pool and network stats posts.

It's been much more interesting that I thought it would be. Thanks for the head's up, ldrgn .

[kokojie]

dwolla was key to mtgox's popularity, without dwolla, mtgox is just another hard to get fiat into exchange.

[notme]

dwolla was key to mtgox's popularity, without dwolla, mtgox is just another hard to get fiat into exchange.

Good point.

[organofcorti]

dwolla was key to mtgox's popularity, without dwolla, mtgox is just another hard to get fiat into exchange.

Good point.

I think while that might be the underlying motivator for the changes, there's more complexity to how those changes are affecting or have affected other exchange currency pairs.

For example, it doesn't explain the correlation between BTC-E and MTGOX trade volume and btc/trade, though, or the negative correlation between MTGOX trade volume and btc/trade and those for Bitstamp and CampBX.

[Crypt_Current]

dwolla was key to mtgox's popularity, without dwolla, mtgox is just another hard to get fiat into exchange.

Good point.

Excellent point.  Dwolla is the key service provider in this chain (for the small-time traders anyway) ... I can live with $0.25 transfers as many times per day as I need to, but a $25 flat fee (for a wire) is outrageous for the comparably small volumes I trade.  MtGox has lost / is losing a LOT of US based business after the incident.  I use CampBX now -- no problems with them as of yet.

[bitcon]

i still dont understand why you cant add funds to gox acct using visa, mastercard or other major credit card.

[notme]

i still dont understand why you cant add funds to gox acct using visa, mastercard or other major credit card.

Fraud rates would require them to set a 50% fee, and they still might lose.

[abdullahadam]

Credit cards can be reversed, bitcoin transactions cannot

i still dont understand why you cant add funds to gox acct using visa, mastercard or other major credit card.

[MOB]

Gox may now be hard to get fiat into, but for those of us that already got it there is now *hard to get fiat out of.*  Bitstamp is a OK, and CampBX theoretically great.

I have been moving BTC around to different sites, but seem to end up back at Gox if I like it or not.  It CampBX ever had a decent volume I might cash out there and withdraw to Dwolla, but god knows that will never happen.

Anyway, I now trade on non-Gox about 60% of the time.  I withdraw nowhere, because there is nowhere good to withdraw.  All my money ends up at Gox eventually, ready for another cycle of arbitrage.


My point is just that it is not the whole story to report on Gox, one also needs to consider the lack of viable alternatives at even this fairly late stage of the game.  No one else has volume and an easy add/withdraw for USD.

edit: also, I am trying, right now, to buy BTC on CampBX.  Waiting a full 10 seconds from clicking show trades to even have the server respond.  Their website is a joke.

[organofcorti]

Gox may now be hard to get fiat into, but for those of us that already got it there is now *hard to get fiat out of.*  Bitstamp is a OK, and CampBX theoretically great.

I have been moving BTC around to different sites, but seem to end up back at Gox if I like it or not.  It CampBX ever had a decent volume I might cash out there and withdraw to Dwolla, but god knows that will never happen.

Anyway, I now trade on non-Gox about 60% of the time.  I withdraw nowhere, because there is nowhere good to withdraw.  All my money ends up at Gox eventually, ready for another cycle of arbitrage.


My point is just that it is not the whole story to report on Gox, one also needs to consider the lack of viable alternatives at even this fairly late stage of the game.  No one else has volume and an easy add/withdraw for USD.

I understand your point, but I'll leave that sort reporting to others. All I do is analyses of bitcoin related data, and this post was aimed at finding out if mtgoxUSD volume had decreased. I think it shows that, but I'll be posting something more rigorous and provable at some point.

[bitcon]

Credit cards can be reversed, bitcoin transactions cannot

i still dont understand why you cant add funds to gox acct using visa, mastercard or other major credit card.

so i guess, i'll start using my CC and reversing every TX wherever i use it. its everywhere i want to be.

[epetroel]

so i guess, i'll start using my CC and reversing every TX wherever i use it. its everywhere i want to be.

Of course you would quite quickly lose your card (and probably find yourself in court for fraud). 

The problem isn't so much people using their own cards, but people using stolen cards.