Something is wrong. We cannot just gloss over the $100 sell

[bitcoinlitcoinbtcltc]

Very good theories from the OP. I find it very difficult to believe that someone was so stupid that just accidentally set a huge sell order without price limit..

It definitely happens from time to time, you would think someone having 5000coins will never make the mistake but the truth it can happen, it is less likely than someone making a 1BTC mistake but it can happen in a sell off

I don't think we will ever know for sure what happen but we cannot rule out the mistake, it is still the most probable explanation even if it seems weird

It was not mistake, someone with inside information sold all his coins, knowing that when the real crash starts, he wouldn't be able to sell it for even 50 (When FBI dumps 144k coins, bitcoin will go straight to 10 dollar).

And I and many others with me will be thrilled to buy at $10. Because the technology that is Bitcoin hasn't changed, the fundamentals haven't changed. There are still more companies accepting it and no technical flaws were discovered. Just one incompetent company showing the world they're incompetent while trying to shift the blame.

MtGox dying may cause a temporary dip in the price, but in the end we'll be better off. Just like when Silkroad closed down.

Don't fool yourself. The effects of the closing down of Silk Road are yet to come. Remember the 144,000 coins the FBI took? Not dumped yet.
So don't fool yourself, the closing down of Silk Road didn't have an effect... YET.

[Rannasha]

Very good theories from the OP. I find it very difficult to believe that someone was so stupid that just accidentally set a huge sell order without price limit..

It definitely happens from time to time, you would think someone having 5000coins will never make the mistake but the truth it can happen, it is less likely than someone making a 1BTC mistake but it can happen in a sell off

I don't think we will ever know for sure what happen but we cannot rule out the mistake, it is still the most probable explanation even if it seems weird

It was not mistake, someone with inside information sold all his coins, knowing that when the real crash starts, he wouldn't be able to sell it for even 50 (When FBI dumps 144k coins, bitcoin will go straight to 10 dollar).

And I and many others with me will be thrilled to buy at $10. Because the technology that is Bitcoin hasn't changed, the fundamentals haven't changed. There are still more companies accepting it and no technical flaws were discovered. Just one incompetent company showing the world they're incompetent while trying to shift the blame.

MtGox dying may cause a temporary dip in the price, but in the end we'll be better off. Just like when Silkroad closed down.

Don't fool yourself. The effects of the closing down of Silk Road are yet to come. Remember the 144,000 coins the FBI took? Not dumped yet.
So don't fool yourself, the closing down of Silk Road didn't have an effect... YET.

144K coins are a little bit more than 1% of the current amount of coins in circulation. If they get released, the total amount of available coins barely changes. Sure, if the FBI market-sells them on an exchange it would temporarily crash the price, but they're not that stupid. The coins will most likely be sold in one or more auctions where some large whale will be happy to scoop up 100% legal and accountable coins.

[phlogistonq]

Another likely explanation is that some whale had his bot set up with a stop-loss at $600, which would also explain why it happened simultaneously on bitfinex. Looking back at the chart minute by minute, it happened the exact moment the price hit $600.

It was not mistake, someone with inside information sold all his coins, knowing that when the real crash starts,

He did not need to have inside info, since it happened very shortly after the announcement came online. I sold manually prior to the event, and fortunately had already placed a few (small) buy orders down to $275. Thank you mr. mystery whale!

[knightcoin]

it could be a huge manipulation as a marketing strategy... so more people will inject fiat into exchange waiting for another "crash"

you just need to be fast enough to buy all coins you sell ...

[bitcoinlitcoinbtcltc]

Very good theories from the OP. I find it very difficult to believe that someone was so stupid that just accidentally set a huge sell order without price limit..

It definitely happens from time to time, you would think someone having 5000coins will never make the mistake but the truth it can happen, it is less likely than someone making a 1BTC mistake but it can happen in a sell off

I don't think we will ever know for sure what happen but we cannot rule out the mistake, it is still the most probable explanation even if it seems weird

It was not mistake, someone with inside information sold all his coins, knowing that when the real crash starts, he wouldn't be able to sell it for even 50 (When FBI dumps 144k coins, bitcoin will go straight to 10 dollar).

And I and many others with me will be thrilled to buy at $10. Because the technology that is Bitcoin hasn't changed, the fundamentals haven't changed. There are still more companies accepting it and no technical flaws were discovered. Just one incompetent company showing the world they're incompetent while trying to shift the blame.

MtGox dying may cause a temporary dip in the price, but in the end we'll be better off. Just like when Silkroad closed down.

Don't fool yourself. The effects of the closing down of Silk Road are yet to come. Remember the 144,000 coins the FBI took? Not dumped yet.
So don't fool yourself, the closing down of Silk Road didn't have an effect... YET.

144K coins are a little bit more than 1% of the current amount of coins in circulation. If they get released, the total amount of available coins barely changes. Sure, if the FBI market-sells them on an exchange it would temporarily crash the price, but they're not that stupid. The coins will most likely be sold in one or more auctions where some large whale will be happy to scoop up 100% legal and accountable coins.

Dude, stop your bullshit with your ''amount of coins in circulation.''
You have to look at what is traded, the volume on exchanges. That's what counts in a market.
There are hundreds of trillions of USD in circulation, that doesn't mean crap on Wall Street. You're clearly too stupid to realize that.

All exchanges combined don't even have a 144,000 bitcoin volume (and some even fake their volume, especially Chinese exchanges).
If 144k coins get dumped, it will ruin bitcoin's price. And not just temporary.

[Ekaros]

144K coins are a little bit more than 1% of the current amount of coins in circulation. If they get released, the total amount of available coins barely changes. Sure, if the FBI market-sells them on an exchange it would temporarily crash the price, but they're not that stupid. The coins will most likely be sold in one or more auctions where some large whale will be happy to scoop up 100% legal and accountable coins.

Dude, stop your bullshit with your ''amount of coins in circulation.''
You have to look at what is traded, the volume on exchanges. That's what counts in a market.
There are hundreds of trillions of USD in circulation, that doesn't mean crap on Wall Street. You're clearly too stupid to realize that.

All exchanges combined don't even have a 144,000 bitcoin volume (and some even fake their volume, especially Chinese exchanges).
If 144k coins get dumped, it will ruin bitcoin's price. And not just temporary.

The market depth of BTC-E is good to notice.  It's supply and demand.

In a way Silkroad bust might have even increased the price. As there is less coins used in circulation opposed in holding. I think relatively large share of those 144k coins were in use as currency which means they were traded and not stored... Which meant availability on exchanges which lowers the prices...

[Zule]

This is my first time posting, I've never bothered to do it before but i got to share my fear on this matter..
What can someone who stole a bunch of BTC and has very limited fiat do to cover his traces?
I would make a flash crash on a low volume market and prepare everything i have on several accounts to catch the low figures and buy as many clean coins as i could.
I would prolly lose 3/4 of coins but i get clean 1/4.

[toknormal]

3. Somebody wanted to dump stolen coins...They dumped in a crash to camouflage their actions.

LoL ! Well that worked out well then, given that the trade was about as camouflaged as a rhinoceros in a bird cage  

[j3steven]

I am glad you brought up the post about not glossing this over, it was an extreme anomaly and was crazy to see.

My personal opinion was that it was human error, but I have never sold BTC on BTC-E so I do not know if any sort of queue's pop up before you confirm your sale or anything.  My off the wall thought, or you could call it the conspiracy theory thought, that is just for fun and not something I truly believe....is that there was a single person or group of persons responsible at MtGox for the bug on their end that eventually led to the crash, and they were forced to sell their personal wealth of BTCs at $102 OR ELSE!

Anyways, I hope the true story comes out but until then I am sure we will get many guesses..

[eoJ]

This is my first time posting, I've never bothered to do it before but i got to share my fear on this matter..
What can someone who stole a bunch of BTC and has very limited fiat do to cover his traces?
I would make a flash crash on a low volume market and prepare everything i have on several accounts to catch the low figures and buy as many clean coins as i could.
I would prolly lose 3/4 of coins but i get clean 1/4.

Why do you need all that fiat at once suddenly? Why not slowly sell it on the exchanges, inconspicuously? A 75% loss is stupid, there are plenty of bulk buyers who'd pay cash and take a relatively small margin.

[cryptonikus]

just think harder guys, harder dammit!

[toknormal]

I don't think you folks quite appreciate the psychology of the moment yesterday.

I was trading on BTE-e when that sell went through. I had BTC-e's trading page open in one Browser windows (Safari 5.1.10, MacbookPro 2009) and Bitcoinwisdom 5-minute chart in another.

Trollbox had been on hyper yellow alert all night due to waiting for the Gox announcement. When the announcement came through, there were a couple of minutes of general discussion before trollbox trollers started screaming that the Bitcoin protocol was broken. This rapidly became the concensus in a period of about 3-5 minutes of frenzy. At the same time, the price started plummeting from around 710 to 600 in the space of a few minutes. People were dumping like crazy - you can see it if you go to the 30m chart here http://bitcoinwisdom.com/markets/btce/btcusd - those 2 big red candles around 11 O'Clock GMT yesterday.

I managed to dump 1 BTC at around 610 (after frantically liquidating PPC and XPM just to get into some fiat) and just then I saw the price ticker on Bitcoinwisdom display $300, then $110 which lasted about 10 seconds. That kind of sealed it for me that BTC was "finished" but since I've only ever got a small amount on the exchange, I decided just to sit back, watch the show and accept whatever losses were coming my way.

Obviously the rest is history as it turned out, BTC wasn't broken and once this started filtering through, a buying frenzy began and it leapt back up to 620 in no time making it very difficult to get back in unless you placed orders about $30 above the current price to give yourself a few seconds lead time on the order book.

To me, the $100 trade was just a panic sell - plain and simple. Things were happening so fast that everyone was trying to offload faster than everyone else. The price dropped $150 in less than a minute so I'm not suprised that someone with a lot of BTC to offload might have simply been trying to minimise their losses by buying up everything left on the order book before the crowd did. The only way you can do that is to put your ask in very low and let the trading engine pick up all the remaining bids for you on the way down to that base price.

It really did look like it was potentially going to $100 (or zero) over the next 5 minutes.

I don't think there's any need for people to start turning themselves into an army of crypto-market Columbos over this episode when a perfectly plain explanation is staring us in the face.

[JorgeStolfi]

I'm sure by now everyone knows about the freak $100 Bitcoin sells on BTC-e and Bitfinex yesterday.

They were certainly very, very strange. In fact I don't think we've seen a move like this in the entire history of bitcoin. Yet too many people seem to be willing to dismiss this as an action of a dumb whale, perhaps magnified by trading bots/stop losses, and other traders panic-selling.

I think that the simplest explanation is good enough.  Someone had thousands of bitcoins sitting in his BTC-e account.  He reads the MtGOX release, undesrstands it to mean that Bitcoin is finished, so he rushes to sell it all, at any price, before other traders read that release and pull out all their bids.

Either him, or someone else who reasoned like him, had another large pile of coins at Bitfinex and did the same.

Actually many people did the same in all markets, that is why the price crashed.  The only difference is that no other panicker had as many coins as those two.

In that situation, a trader either gets convinced that bitcoin is finished, or dismisses the claim as absurd and believes that the bug will eventually be fixed and forgotten.  The latter will probably guess that others will panic and there will a temporary crash, but is confident that the price will rebound; therefore he will wait, and will buy when the price gets low enough.  The former can only conclude that the price is about to fall to zero and will stay there forever, so for him the most rational decision is to sell everything he can, while there are still traders who did not realize that.

Owning a lot of bitcoins does not turn one into an expert in bitcoin algorithms.  It is not even a proof of intelligence.

That dump was a loss only if the coins were bought for more than 200 $ or so.  If they were bought at 10$, the trader still made 2000% profit from his investment.  Sure, he could have made more, but that does not make him a loser.  (People who still hold bitcoins that they bought six months ago could have sold them for 1200$... )

As for the government, if they wanted to kill bitcoin they would simply declare it subject to SEC rules.  No assets, no revenue, no dividends? You cannot sell it.

As for the FBI-seized coins, I see no reason why the the government would not sell them through public auction, as required by law.  The money will go to the Treasury, so they will not go out f their way to get the best price.   At most, they will split the stash into a dozen separate lots to make the auction sufficiently competitive.  And they do not care at all about the effect of the auction on the price (which should be small anyway, given the number of coins in already in the market).   

[stylin]

I don't think you folks quite appreciate the psychology of the moment yesterday.

I was trading on BTE-e when that sell went through. I had BTC-e's trading page open in one Browser windows (Safari 5.1.10, MacbookPro 2009) and Bitcoinwisdom 5-minute chart in another.

Trollbox had been on hyper yellow alert all night due to waiting for the Gox announcement. When the announcement came through, there were a couple of minutes of general discussion before trollbox trollers started screaming that the Bitcoin protocol was broken. This rapidly became the concensus in a period of about 3-5 minutes of frenzy. At the same time, the price started plummeting from around 710 to 600 in the space of a few minutes. People were dumping like crazy - you can see it if you go to the 30m chart here http://bitcoinwisdom.com/markets/btce/btcusd - those 2 big red candles around 11 O'Clock GMT yesterday.

I managed to dump 1 BTC at around 610 (after frantically liquidating PPC and XPM just to get into some fiat) and just then I saw the price ticker on Bitcoinwisdom display $300, then $110 which lasted about 10 seconds. That kind of sealed it for me that BTC was "finished" but since I've only ever got a small amount on the exchange, I decided just to sit back, watch the show and accept whatever losses were coming my way.

Obviously the rest is history as it turned out, BTC wasn't broken and once this started filtering through, a buying frenzy began and it leapt back up to 620 in no time making it very difficult to get back in unless you placed orders about $30 above the current price to give yourself a few seconds lead time on the order book.

To me, the $100 trade was just a panic sell - plain and simple. Things were happening so fast that everyone was trying to offload faster than everyone else. The price dropped $150 in less than a minute so I'm not suprised that someone with a lot of BTC to offload might have simply been trying to minimise their losses by buying up everything left on the order book before the crowd did. The only way you can do that is to put your ask in very low and let the trading engine pick up all the remaining bids for you on the way down to that base price.

It really did look like it was potentially going to $100 (or zero) over the next 5 minutes.

I don't think there's any need for people to start turning themselves into an army of crypto-market Columbos over this episode when a perfectly plain explanation is staring us in the face.

Your post is convincing. However the fact that it occurred on both Bitfinex and BTC-e simultaneously still nags me in the back of my mind. If this were true it would have made more sense for it to occur only on one exchange, or on all exchanges.

[Tzupy]

I don't think you folks quite appreciate the psychology of the moment yesterday.

I was trading on BTE-e when that sell went through. I had BTC-e's trading page open in one Browser windows (Safari 5.1.10, MacbookPro 2009) and Bitcoinwisdom 5-minute chart in another.

Trollbox had been on hyper yellow alert all night due to waiting for the Gox announcement. When the announcement came through, there were a couple of minutes of general discussion before trollbox trollers started screaming that the Bitcoin protocol was broken. This rapidly became the concensus in a period of about 3-5 minutes of frenzy. At the same time, the price started plummeting from around 710 to 600 in the space of a few minutes. People were dumping like crazy - you can see it if you go to the 30m chart here http://bitcoinwisdom.com/markets/btce/btcusd - those 2 big red candles around 11 O'Clock GMT yesterday.

I managed to dump 1 BTC at around 610 (after frantically liquidating PPC and XPM just to get into some fiat) and just then I saw the price ticker on Bitcoinwisdom display $300, then $110 which lasted about 10 seconds. That kind of sealed it for me that BTC was "finished" but since I've only ever got a small amount on the exchange, I decided just to sit back, watch the show and accept whatever losses were coming my way.

Obviously the rest is history as it turned out, BTC wasn't broken and once this started filtering through, a buying frenzy began and it leapt back up to 620 in no time making it very difficult to get back in unless you placed orders about $30 above the current price to give yourself a few seconds lead time on the order book.

To me, the $100 trade was just a panic sell - plain and simple. Things were happening so fast that everyone was trying to offload faster than everyone else. The price dropped $150 in less than a minute so I'm not suprised that someone with a lot of BTC to offload might have simply been trying to minimise their losses by buying up everything left on the order book before the crowd did. The only way you can do that is to put your ask in very low and let the trading engine pick up all the remaining bids for you on the way down to that base price.

It really did look like it was potentially going to $100 (or zero) over the next 5 minutes.

I don't think there's any need for people to start turning themselves into an army of crypto-market Columbos over this episode when a perfectly plain explanation is staring us in the face.

Assuming the epic drop was just a mass panic sale, it could be a glimpse into the future.
When the market mood will be at it's lowest (at the very bottom of wave C) this support level might get tested again on BTC-E.

[7thKingdom]

I like the logic of the doom people...

Whale would be too smart to dump all those coins at once and tank the market.  They lost millions of dollars, something's up!

Meanwhile, they also shout that the FBI is going to dump all their coins at once and tank the market...

Hmmm, does anyone else see the silly logic here?

[7thKingdom]

From what I heard swirling around these forums it was somewhere around 5000 coins all at once on BTC-e. If a whale (or group of whales) were smart enough to accumulate that many coins, how could they have been stupid enough to sell off like that all at once? They must have lost millions of dollars.

To the OP, you're entire premise is based on the idea that no one who has accumulated 5,000 coins would be "dumb enough" to panic sell them.  Which is a completely faulty premise.

Here's what I wrote elsewhere the other day, "Even if they were an old hand, you have to remember that doesn't necessarily make you terribly wise... a lot of kids in their late teens/early 20's probably mined thousands of coins a few years ago.  Just because they got lucky and heard about bitcoin very early, doesn't mean they necessarily know wtf they're doing.  It just means they were in the right place at the right time."

It doesn't take an economic genius, or even someone particularly savvy, to mine a shit ton of bitcoin back in the day.  It just took someone who stumbled upon it at the right time.  So the idea that someone who has 5,000+ bitcoins couldn't panic and make a bad decision or a mistake is a bad premise to start with.

[creekbore]

I didn't want to have my account liquidated in the event that bitcoin was actually dying due to irrepairable protocol exploitation or failure.

The so-called bug is known for years. This suggests that you have no idea in what you are investing, and even worse, investing with margin

The most recent incident that might really have killed bitcoin was the hardfork in March 2013: https://github.com/bitcoin/bips/blob/master/bip-0050.mediawiki

Most sensible post here.

[aminorex]

The sell-off had nothing to do with the use of bitcoin as a currency.  Bitcoin is worth the same today as it was yesterday.  Two factors caused a financial event for speculators:  A false PR report by a broken company, Mt. Gox, and leveraged long positions facing margin calls.  You may recall the same thing happened to the stock market in 2008.  Perhaps the NYSE has immature infrastructure that means the U.S. dollar is not ready for prime time?  Unlike the stock market, bitcoin resumed normal pricing within hours. 

Everything is working as intended, here.  Except of course for Mt. Gox.

[beaconpcguru]

Could have been generosity, if I had 10,000 + coins and wanted to fill some dreams.... why not?  Chances are if I did have 10,000 + BTC I paid single digits or less for them, why not spread the wealth and take a huge profit at the same time.  Not worried.