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Author Topic: money required to move the price has increased?  (Read 1234 times)
Desolator
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August 23, 2011, 04:41:06 AM
 #1

I wasn't keeping a log or anything but last month, didn't MTGox live say $10,000 would get you a $1.00+ movement given all the buy and sell orders in place?  According to it now, it's at $11 even and it takes about $325,000 to bump it down to $10 and $250,000 to $12.
I'm thinking that means the price is pretty darn stable as far as the big dollar per day spikes or giant $5 crashes like a couple weeks ago.  Then again I have no experience in the stock market which I'm sure takes millions to swing certain stocks either way and they still do so I might be way off.  What do you people with investment experience think?
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alexanderanon
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August 23, 2011, 05:27:35 AM
 #2

I too would like to hear some thoughts on this subject. I'm not aware of the historical volume of options in the bitcoin market, but $250k to move a dollar does seem like a lot. But a stability around $11 is confusing also, because that's still high enough for miners to get a ROI within a mere few months, which should keep miners selling their mined bitcoins and pushing the price lower still towards an equibrium with electricity costs...and yet on the other hand bitcoin's unparalleled fundamentals should send it to the moon.
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August 23, 2011, 02:31:00 PM
 #3

The bid depth has indeed increased significantly in the last couple months. It will take quite a bit more money to move in either direction now. It is important to remember, though, that those bids (both buy and sell) can disappear instantly if the person withdraws them. If some amazing news occurred, the price could move very fast.

Note that even though the bid depth is much higher now, there still isn't yet much "real money" in this market. Pro traders and finance guys may spend hundreds of thousands or even millions on a single trade. If that happens, BTC price will not be so stable Smiley

In any case, it's safe to say the price is more stable than it used to be - probably by a fairly significant degree.
tsvekric
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August 24, 2011, 07:09:06 PM
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I too would like to hear some thoughts on this subject. I'm not aware of the historical volume of options in the bitcoin market, but $250k to move a dollar does seem like a lot. But a stability around $11 is confusing also, because that's still high enough for miners to get a ROI within a mere few months, which should keep miners selling their mined bitcoins and pushing the price lower still towards an equibrium with electricity costs...and yet on the other hand bitcoin's unparalleled fundamentals should send it to the moon.

Price of bitcoins and cost of electricity are not related like that.  When price goes up, difficulty goes up.  When electricity costs go down, difficulty goes up.  The price of bitcoins are not affected because the increase in the supply of bitcoins is always constant, regardless of difficulty.


The only way to have price be stable without risk of crash is when there are too many buy orders for bitcoins - if the demand for bitcoins at $5 is 9 million bitcoins, then it will never go below that as of now because there aren't that many coins in existence. 
mizike29
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August 24, 2011, 07:19:26 PM
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All the drama has settled down, we had the first bitcoin conference, I work for the FDA and they had a meeting about bitcoins, the word is spreading, more things can be bought for bitcoins now, so I think it has just gotten a little more grown up, resulting in some stability.  I too agree at any time it could crash to 5 bux or so in one day, not that difficult to happen which is a risk we will take forever with bitcoin.

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August 25, 2011, 12:52:30 AM
 #6

It looks like selling off about 68,000 bitcoins on MTGox would result in about an $8.80 price but only on MTGox so if Tradehill has the same volume, double it.  $8.80 really wouldn't scare me that much.  I'd probably buy up a whole bunch after it leveled off for a bit Tongue but there are technically 7.1 million coins in existence.  I don't have any numbers for the last fear induced sell off but it possibly could have been more than 68,000.  I just don't think so though.  I mean maybe 68 people here have 1000 for example and would try and cash em out if they heard some bad enough news.  That's conceivable.  Or some company who accepts them or a small exchange that would instantly dump 10,000 or more instantly.

All that cascading sell off crap is just stupid because you don't ever sell low.  If you were sitting on a pile of BTC with no intent to sell it and wake up and it's at like $7, you don't panic and sell it Tongue It's like some quantum stuff, it's only a loss if you sell it.   You pretend nothing happen and sit on them.  In fact, double down and buy some more.  Every time there's a dip and I buy some, I've never lost money on that deal if I'm patient enough.  The only time you jump ship on a sinking investment is when you know it's artificially inflated already like gold prices right now for example.  If gold start falling, it's not getting back that high for years and years and years.  BTC, not so much.
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August 25, 2011, 07:53:53 AM
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All that cascading sell off crap is just stupid because you don't ever sell low.  If you were sitting on a pile of BTC with no intent to sell it and wake up and it's at like $7, you don't panic and sell it Tongue It's like some quantum stuff, it's only a loss if you sell it.   You pretend nothing happen and sit on them.  In fact, double down and buy some more.  Every time there's a dip and I buy some, I've never lost money on that deal if I'm patient enough.  The only time you jump ship on a sinking investment is when you know it's artificially inflated already like gold prices right now for example.  If gold start falling, it's not getting back that high for years and years and years.  BTC, not so much.

People sell into panics for various reasons.  The key reason is this: if a commodity or stock is falling, will it fall much further and could it fall to zero?  People gladly sell up at a loss if they think the next price they could get is $0.00.  It's the only logical thing to do.  Buying into a falling market is often dismissed as catching a falling knife.  That describes the scenario rather nicely. 

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August 25, 2011, 01:58:37 PM
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All that cascading sell off crap is just stupid because you don't ever sell low.  If you were sitting on a pile of BTC with no intent to sell it and wake up and it's at like $7, you don't panic and sell it Tongue It's like some quantum stuff, it's only a loss if you sell it.   You pretend nothing happen and sit on them.  In fact, double down and buy some more.  Every time there's a dip and I buy some, I've never lost money on that deal if I'm patient enough.  The only time you jump ship on a sinking investment is when you know it's artificially inflated already like gold prices right now for example.  If gold start falling, it's not getting back that high for years and years and years.  BTC, not so much.

People sell into panics for various reasons.  The key reason is this: if a commodity or stock is falling, will it fall much further and could it fall to zero?  People gladly sell up at a loss if they think the next price they could get is $0.00.  It's the only logical thing to do.  Buying into a falling market is often dismissed as catching a falling knife.  That describes the scenario rather nicely. 

Or they could just have two mt.gox accounts and sell them to themselves ,so they can then buy up cheap as the price moves down. It's easy to spot the gaps in the orderbook.  Anyone with 6000 bitcoins and $70,000 could do it.
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August 25, 2011, 09:02:19 PM
 #9

lol, looks like a lot of ppl just got screwed on frantic sell orders cuz it bottomed at like $9.20 and I was kinda mad that I bought at like $9.90 cuz it fell from over $11 but it's already rebounding  Grin Cheesy it's starting to get really expensive for all these people to keep panicking every week Tongue

I saw it tank and skimmed the forum, found no listed reason as to why, and bought a bunch when it was low Tongue other people looked at the rate of decline and that's it and sold  Cheesy I estimate it'll rebound to $10.40 but that's not based on enough data for me to say it's set in stone.  If you were smart, you should make quite a bit on this one Cheesy


As for your theory, it doesn't make sense to me.  It still sounds like in the end, it would lose the person money for every buy or sell order that wasn't theirs by lowering the value of the coins they just bought or sold.  What are the precise steps that would cause it to work?
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