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Author Topic: What if: an old hand dumps all their coins right now?  (Read 440 times)
Qoheleth
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November 04, 2017, 03:23:06 PM
 #1

First, a little bit of background.

In 2012, Dorit Ron and Adi Shamir published a paper analyzing the Bitcoin transaction graph, in an attempt to understand how much could be determined about the largest BTC holders, just from the publicly available info.

They concluded, among other things, that there were a dozen or so "entities" who - even in 2012 - were holding several hundred thousand BTC each:

Entity ID
Address Count
Total Incoming BTC
Transaction Count
A
78,251
2,886,650
246,012
B (Mt.Gox)
156,722
2,206,170
477,526
C
13,289
941,013
77,525
D
12,520
867,996
48,347
E
191
692,864
1,353
F
12
660,000
23
G (Instawallet)
23,649
633,606
92,593
H
9
580,000
59
I
10,561
514,066
49,550
J
4
500,021
6
K
134
479,254
1,039
L (Deepbit)
2
452,929
814,044
M
9
442,000
10
N
128
432,161
137
O
10
432,286
14
P
1
432,078
3
Q
14
430,490
23
R
2,124
321,866
300,486



Last night, I dreamt that I checked BitcoinCharts on my phone, only to see that someone had dumped a huge number of BTC onto the exchanges, causing the price to crash to about $2.

As you can see from the above chart, this is not an impossible situation. The whole order book of the big exchanges is "only" about 200,000 BTC deep. If one of these Entities were to rediscover a lost wallet... or if the price were to reach their "exit price" that they'd decided upon long ago... it's easy to imagine that "get all of my money out before anyone can react" would become more important for them than getting the absolute best price for it.

So my question here is... if this were to happen, what would happen next? Would the price bounce back, bolstered by confidence that this sort of holder was less likely to still be lurking around? Or would people get scared, and try to sell off their own BTC too? How would miners act? How would exchanges act? Et cetera.

If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the prevalence of users convinced that BTC is a magic box that will turn them into millionaires, and of the con-artists who have followed them here to devour them.
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November 04, 2017, 03:32:24 PM
 #2

Question is, why would they dump all coins and crash the price? If I would own that huge amount, I would dump max. 1000 coins daily to not drop the price.

I just checked bitcoinwisdom and seen that somebody dumped 3k coins at once on bitstamp (and 12k coins at bitfinex) a few hours ago. In the past, that would lead to a crash. Now, the price went down to 6.5k and is already back to 7.3k. It gets harder and harder to manipulate.

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November 04, 2017, 03:53:55 PM
 #3

i will celebrate that day and will invite all of you to join my party.

you see, one of the things that i like about bitcoin is its distribution. it never had things like premine. you could mine any block from 1 to today if you were willing to do it and get the reward. you could always buy any amount you wanted too.

but something that may bother many (not exactly unfair but lets call it unfair) is the early adopters who got 10000 bitcoin for only 100 bucks for example. if any one them "dumps" that means that much bitcoin is being re-distributed among lots of people. lets say 1000 people will hold that 10K bitcoin instead of one. that leads to a fairer distribution.

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November 04, 2017, 04:15:45 PM
 #4

Hah, they would need to think of how to get that fiat out instead of thinking to offload it and get away with it pretty easily.

Have you also wondered why there hadn't been much of a dump like 100k in a single splash? Probably because they are also aware that once they do, the government would be alerted and be interested about the situation resulting into an even more headache they would face. I'm not even surprised that no one does, but I know someone still has these fat wallets active but cannot dump all at once due to the governments possible interference once they release those.

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November 04, 2017, 04:43:22 PM
 #5

First, a little bit of background.

In 2012, Dorit Ron and Adi Shamir published a paper analyzing the Bitcoin transaction graph, in an attempt to understand how much could be determined about the largest BTC holders, just from the publicly available info.

They concluded, among other things, that there were a dozen or so "entities" who - even in 2012 - were holding several hundred thousand BTC each:

Entity ID
Address Count
Total Incoming BTC
Transaction Count
A
78,251
2,886,650
246,012
B (Mt.Gox)
156,722
2,206,170
477,526
C
13,289
941,013
77,525
D
12,520
867,996
48,347
E
191
692,864
1,353
F
12
660,000
23
G (Instawallet)
23,649
633,606
92,593
H
9
580,000
59
I
10,561
514,066
49,550
J
4
500,021
6
K
134
479,254
1,039
L (Deepbit)
2
452,929
814,044
M
9
442,000
10
N
128
432,161
137
O
10
432,286
14
P
1
432,078
3
Q
14
430,490
23
R
2,124
321,866
300,486



Last night, I dreamt that I checked BitcoinCharts on my phone, only to see that someone had dumped a huge number of BTC onto the exchanges, causing the price to crash to about $2.

As you can see from the above chart, this is not an impossible situation. The whole order book of the big exchanges is "only" about 200,000 BTC deep. If one of these Entities were to rediscover a lost wallet... or if the price were to reach their "exit price" that they'd decided upon long ago... it's easy to imagine that "get all of my money out before anyone can react" would become more important for them than getting the absolute best price for it.

So my question here is... if this were to happen, what would happen next? Would the price bounce back, bolstered by confidence that this sort of holder was less likely to still be lurking around? Or would people get scared, and try to sell off their own BTC too? How would miners act? How would exchanges act? Et cetera.

This is a very interesting question and I'm sure many have been thinking about it.I think it's possible that something like that happens,because people sometimes do not think too much logical.As others say,it is not hard to sell at once some big amount of BTC,but I think it would attract too much attention.However in the event that something like this happens,price will go down very fast and there will be panic selling and after some time the market would start to recover.

Personally I would not want to something like this happens,but we should always be prepared to all possible situations.

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November 04, 2017, 04:55:23 PM
 #6

if an old hand dumps big amount bitcoin will crash for sure

But I wonder ! Huh if the famous exchange sites bitfinex and bitstamp , bittrex  will allow the deposit and circulation of these huge sums ?

answer No for sure

that mean exchange sites bitfinex and bittrex.... are the ones that control prices

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November 04, 2017, 05:48:31 PM
 #7

Question is, why would they dump all coins and crash the price? If I would own that huge amount, I would dump max. 1000 coins daily to not drop the price.

I just checked bitcoinwisdom and seen that somebody dumped 3k coins at once on bitstamp (and 12k coins at bitfinex) a few hours ago. In the past, that would lead to a crash. Now, the price went down to 6.5k and is already back to 7.3k. It gets harder and harder to manipulate.
True, why would they dump everything at once while they could get a better price is they sold gradually (1000 coins a day like you said). And even if one of the entities you listed would be so stupid to dump all their hundreds of thousands of coins on the market and it would drop to $2, investors and hedgefunds would massively stock up on bitcoin causing the price to bounce back up again insanely fast.

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November 04, 2017, 06:01:52 PM
 #8

If there is a syndicate of entities that decides to drop their large number of coins at once, the price will surely crash because supply and demand determines the price! But why would a private syndicate of entities want to destroy the value of their coins? This doesn't make any sense!

Only if there is a governmental syndicate that wants to destroy bitcoin this scenario could make sense, but if such a syndicate would exist they would have already done it, because the more famous bitcoin will become the more difficult it will be to destroy it!

If a single and private holder of bitcoin will sell a huge amount, the price will surely bounce back like it happened few months ago when it temporarily dropped from $5,000 to $3,000 and then recovered within a few days.

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November 04, 2017, 06:07:17 PM
 #9

the bitcoin demand is big now,, so if they dump the coin, of course it will make the bitcoin price down,
but, slowly and surely the price will be back on track, because of the demand , and the believer from bitcoin that always waiting for this

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November 04, 2017, 06:11:52 PM
 #10

As big as demand may be. 99% of all btc is in the hands of something like 10 people. If even one of them decides to dump,  even partially,  the price completely collapses. This in turn will cause a chain reaction of others panic selling where the price drops probably to single cents permanently. Trust in Bitcoin will be gone forever.
A matter of time really. When,  not if.

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November 04, 2017, 06:14:35 PM
 #11

Price manipulation is no longer easy for the whales with that high bitcoin market cap and high demand. Even if they sell all their coins, price is corrected very soon.

And if these holders sell their coins I will be very happy as coins will be distributed among the people more properly.

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November 04, 2017, 06:19:28 PM
 #12

This seems all like science fiction-conspiracy theory. First of all, show me the actual proof. Where did the guy that made this research come up with these entities from?

Show me the evidence (with links to a blockchain explorer) of 2,886,650 BTC belonging to the same entity.

Supposedly, Satoshi was the highest stakeholder with near 1 million BTC. This is easy to find, you just need to sum all the early mined BTC. And I heard some people say it was never anywhere close to 1 million anyway.

So who could this entity A be and where is the proof of 78,251 addresses pointing to entity A?

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November 05, 2017, 08:19:38 PM
 #13

Maybe Here we make sure that sites exchange Affects prices bitcoin  Roll Eyes

Thousands of user accounts are locked in bittrex and poloniex and And in many other sites exchanges (https://bitcointalk.org/index.php?topic=2279516.0
https://bitcointalk.org/index.php?topic=2325580.0
https://bitcointalk.org/index.php?topic=2338497.0) for avoid dump bitcoin and Keep up the bullish trend Huh




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November 05, 2017, 09:05:05 PM
 #14

It’s not inconceivable that someone would attempt to cash out a huge number of Bitcoins. However, the seller could only get top price for a portion of those coins because he would have to sell against lower buy orders the more that are sold, even if they sell across several exchanges.

They would be better off selling gradually over the course of a year or so to make sure the price doesn’t tank. But anything is possible but I doubt someone would want to make the market tank especially if it affects their money.

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November 05, 2017, 09:20:36 PM
 #15

just think about it, 1000 bitcoins are over 7 million dollars right now, 10k bitcoins are 70 million dollars, and the list goes on, this is a very huge marketcap for bitcoin, if more than 1 million of bitcoins are dumped, the whole marketcap will go to the hell, and this is not because i am saying it, it is true.
just do this math, 1m x 7600=7600 million dollars, this is more than a 15% percent of the whole capitalization, and bitcoin will go down to five thousand dollars for sure.



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November 05, 2017, 11:15:36 PM
 #16

Thanks for the replies, all.

To be clear, this really is a "What If" scenario more than anything else. I agree that in most cases, such a person probably wouldn't try to dump all their coins all at once. With current order books, it'd be better to do the job in small batches; even if you're worried about people noticing a huge, old coin stockpile moving on the blockchain, and trying to front-run it onto the exchanges, there's ways to cover your butt - those cash-settled BTC futures that CBOE is going to launch soon, for instance.

I think if a huge holder like this did just do a market sell, the price would recover almost instantly. That kind of thing actually happens already from time to time, when someone with deep pockets fat-fingers a trade (see, for example, June 23rd 2016 on Bitstamp, or June 22nd 2017 on GDAX). The price almost always recovers instantly, because the order books on one exchange only represent a tiny fraction of the actual demand.

But a slow sell-off could also work out okay. About 10,000 BTC are traded daily on any major exchange, so 2-3kBTC daily might fly under the radar without tripping dedicated traders' "big money is cashing out for some reason" alarms. It does mean that you have to wait a few months to get all your money, but with withdrawl limits at most major exchanges (as @dothebeats mentioned), that was probably true already.

This seems all like science fiction-conspiracy theory. First of all, show me the actual proof. Where did the guy that made this research come up with these entities from?

Show me the evidence (with links to a blockchain explorer) of 2,886,650 BTC belonging to the same entity.

Supposedly, Satoshi was the highest stakeholder with near 1 million BTC. This is easy to find, you just need to sum all the early mined BTC. And I heard some people say it was never anywhere close to 1 million anyway.

So who could this entity A be and where is the proof of 78,251 addresses pointing to entity A?
Paper is here, including methodology. The appendix includes transaction graphs, with amounts and datestamps included.

If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the prevalence of users convinced that BTC is a magic box that will turn them into millionaires, and of the con-artists who have followed them here to devour them.
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November 05, 2017, 11:33:23 PM
 #17

If your math is right (and I'll take your word on it), it could happen.  But those whales would be stupid
to dump all their bitcoin onto a falling market, so I don't think this is even a remote possibility.  They'd
be smart to take some profit but not to crash the market.  And even then, we're in a strong bull market
and people would be snapping up bitcoin like it was a red light special at K-Mart.

In addition, those buy orders are not static things.  If all those coins were put up for sale, I suspect
people would be jumping in with both feet.  Regardless...it's a hypothetical question only, not a reality
that I think we're likely to see.
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November 05, 2017, 11:43:36 PM
 #18

It is possible that we could see some big dumps after the current fork,i am expecting that to happen this time around because of the two opposing factors trying to claim which fork would be better and i would not be surprised if satoshi suddenly appears and start moving his millions of bitcoin around and if that happens,there is no doubt that the market will crash instantly. Grin

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gentlemand
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Hello You


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November 05, 2017, 11:45:45 PM
 #19

The price would collapse, but buying would be so frenzied that it may not collapse very far. There's an awful lot of money sat on the sidelines for such scenarios. And that's before we even try to bother finding out why.

BTCMILLIONAIRE
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Blocklancer - Freelance on the Blockchain


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November 05, 2017, 11:47:04 PM
 #20

Hard to really say, since it depends heavily on the market and the overall mood of the people in it.

More interestingly though, how many of those 100k+ Bitcoin addresses do you think are no longer accessible? Cheesy

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