Reason why MtGox can go to 0 - without arbirage opportunity with Bitstamp

[Calavera]

Price drop then would not be necessarily just from the Gox or ones that bought in Gox cheap selling... Other people will follow selling... actually it's happening right now... 8.87 price decrease in one day... that's not Gox price on coinmarketcap.com

Sorry, but you haven't given any valid mechanism that's going to equalise the market on gox and the external markets without gox reinstatating their withdrawals or otherwise regaining the public confidence.  Gox has dropped much further than the other markets over the same day, so your final observation doesn't support your point at all. 

[1714861383]

1714861383

[nejat76]

All this is conspiracy though and yes we are certain about the mtgox's fall.

why would they do this, if not for a theft? they are making bank.

Sorry, I'm not not that fluent in English. Could not grasp what you say exactly.

If not for a theft, possibilities are :

1. They are doing the golden shot. Dump all for good where they can securely get the fiat money. Not much probable...
2. They have the knowledge of very good news that could relieve bitcoin from this mess and drive really high. So they deliberately make it crumble before it. Not much probable...
3. Incompetence, bad direction. Most possibly

Again I'm talking about possibilities here. These are not even my actual estimations. Maybe it's actually theft, maybe they are just incompetent. But that doesn't necessarily rule out the other possibilities given we don't know if there is a theft and the relative amount to market at gox if there is. Real suspicious thing is how slow gox reacting to events. They have somewhat good news  yet it takes them just 1 whole week to deliver which took other exchanges just mere days: that is enabling withdrawals. They could just work this issue out behind the scenes and while working for the fix manually check suspicious withdrawals.

[nejat76]

Price drop then would not be necessarily just from the Gox or ones that bought in Gox cheap selling... Other people will follow selling... actually it's happening right now... 8.87 price decrease in one day... that's not Gox price on coinmarketcap.com

Sorry, but you haven't given any valid mechanism that's going to equalise the market on gox and the external markets without gox reinstatating their withdrawals or otherwise regaining the public confidence.  Gox has dropped much further than the other markets over the same day, so your final observation doesn't support your point at all. 

Well, please read what I wrote again. Gox and external price should find equilibrium somehow with a positive or negative offset after gox enabling withdrawals. Much or less that's what I said. A good news is a good news for all but the existing trend will be reversed. After the good news gox will increase and the other markets will just decrease. Then it's all about what's unknown in the story and the look to the general reception of bitcoin will determine the market price at gox and elsewhere.

[Calavera]

Price drop then would not be necessarily just from the Gox or ones that bought in Gox cheap selling... Other people will follow selling... actually it's happening right now... 8.87 price decrease in one day... that's not Gox price on coinmarketcap.com

Sorry, but you haven't given any valid mechanism that's going to equalise the market on gox and the external markets without gox reinstatating their withdrawals or otherwise regaining the public confidence.  Gox has dropped much further than the other markets over the same day, so your final observation doesn't support your point at all. 

Well, please read what I wrote again. Gox and external price should find equilibrium somehow with a positive or negative offset after gox enabling withdrawals. Much or less that's what I said. A good news is a good news for all but the existing trend will be reversed. After the good news gox will increase and the other markets will just decrease. Then it's all about what's unknown in the story and the look to the general reception of bitcoin will determine the market price at gox and elsewhere.

Why does Gox allowing withdrawals create a massive price drop on the external exchanges?  If anything I would expect them to trade up on such an event, not down, but in any case the vast majority of the equalising price changes would take place on Gox, not on the external exchange. 

[nejat76]

Price drop then would not be necessarily just from the Gox or ones that bought in Gox cheap selling... Other people will follow selling... actually it's happening right now... 8.87 price decrease in one day... that's not Gox price on coinmarketcap.com

Sorry, but you haven't given any valid mechanism that's going to equalise the market on gox and the external markets without gox reinstatating their withdrawals or otherwise regaining the public confidence.  Gox has dropped much further than the other markets over the same day, so your final observation doesn't support your point at all. 

Well, please read what I wrote again. Gox and external price should find equilibrium somehow with a positive or negative offset after gox enabling withdrawals. Much or less that's what I said. A good news is a good news for all but the existing trend will be reversed. After the good news gox will increase and the other markets will just decrease. Then it's all about what's unknown in the story and the look to the general reception of bitcoin will determine the market price at gox and elsewhere.

Why does Gox allowing withdrawals create a massive price drop on the external exchanges?  If anything I would expect them to trade up on such an event, not down, but in any case the vast majority of the equalising price changes would take place on Gox, not on the external exchange. 

Because most of the international customers who bought cheap at gox will try to sell high on other exchanges. Price difference is big enough to cover the costs/risks of arbitrage.

[Calavera]

Price drop then would not be necessarily just from the Gox or ones that bought in Gox cheap selling... Other people will follow selling... actually it's happening right now... 8.87 price decrease in one day... that's not Gox price on coinmarketcap.com

Sorry, but you haven't given any valid mechanism that's going to equalise the market on gox and the external markets without gox reinstatating their withdrawals or otherwise regaining the public confidence.  Gox has dropped much further than the other markets over the same day, so your final observation doesn't support your point at all.  

Well, please read what I wrote again. Gox and external price should find equilibrium somehow with a positive or negative offset after gox enabling withdrawals. Much or less that's what I said. A good news is a good news for all but the existing trend will be reversed. After the good news gox will increase and the other markets will just decrease. Then it's all about what's unknown in the story and the look to the general reception of bitcoin will determine the market price at gox and elsewhere.

Why does Gox allowing withdrawals create a massive price drop on the external exchanges?  If anything I would expect them to trade up on such an event, not down, but in any case the vast majority of the equalising price changes would take place on Gox, not on the external exchange.  

Because most of the international customers who bought cheap at gox will try to sell high on other exchanges. Price difference is big enough to cover the costs/risks of arbitrage.

The price difference will cease to exist if people are confident in mtgox.   More likely the other exchanges get a bump due to increased confidence in bitcoin in general.  If they do drop there's no reason to think it'll be a major one like you suggest.   People who end up having bought cheap coin on gox will do whatever they rationally see fit to do with it at that point, which won't necessarily be selling it on another exchange.   They can no longer buy cheap coin on gox so the price difference you speak of won't exist anymore.  

[jaybny]

or is https://www.bitcoinbuilder.com/ , making muppets out of nobs?

[brucels99]

Just an FYI on the OP's comment of "MtGox can go to 0".  I have been curiously looking at the full MtGox order book.  There are orders so deep, and so many people with orders of Bitcoin from current price down to .00001 USD.  The full order book for bids is currently almost 34,000,000 BTC deep and I think the complete order book has what looks like a value of around $4.7 million USD.  Only tradingview and RTBTC allow you to magnify out to see the complete order book view.  I think I am correct by assuming since you can't place a bid unless you have fiat in your MtGox account, that means there is at least $4.7 Million USD tied up in MtGox right now, and that would only represent the fiat that is associated with trades.

This is RTBTC:
http://imgur.com/PCKEGOv

Compare that to Bitstamp's full order book, which is only 130,000 BTC deep in bids right now.
http://imgur.com/hKVgbha

[jaybny]

really weird that goxBTC is going up on bitcoinbuilder, but gox discount to bitstamp is dropping..

[wheatstone]

if MtGox is actively buying up goxBTC, and goxBTC is not real BTC, then they are in effect using their fiat to compensate their customers at .50 BTC for each BTC, which is exactly what would happen to all BTC deposits in an event of court ordered liquidation and insolvency.

i think we can all agree that this does not end well for MtGox.  

I have no particular insight or knowledge of MtGox operations.

However, it appears simple to create a scheme by which a large exchange short btc and without sufficient cash assets to cover their btc liability could come out on top and probably without anyone being the wiser (aside from a freeze of customer payouts, such as with MtGox currently).

This is a hypothetical, so let us call our large exchange BigExchange

The key is that customer btc in BigExchange accounts is held by BigExchange, not the customers. What the customers have is just a number on a (BitExchange) server and the sum of these is not public. Similar for dollar amounts held by customers in BigExchange accounts.

Perhaps easier to see with numbers:

Assume BigExchange initially holds 3 btc and 3000 usd to cover their three customers, each of whom have 1 btc and 1000 usd.

BigExchange is hacked and loses 1 btc. Their liabilities are still 3 btc and 3000 usd, but they only have assets of 2 btc and 3000 usd, making them technically insolvent.

BigExchange halts payouts.

Intra-customer trades don't change BigExchange's liabilities or assets, since the three customers would still hold 3 btc and 3000 usd among them (just redistributed).

Now BigExchange creates a user on their system with 1000 usd in his account (this changes nothing in terms of liabilities or assets).

However, this user then buys up 1.5 btc at an exchange rate of 200, resulting in shift of liabilities from 3 btc and 3000 usd to 1.5 btc and 3300 usd.

BigExchange now sells 0.5 btc (of the 2 they had after being scammed) on an external exchange at an exchange rate of 600. They now hold 1.5 btc and 3300 usd, exactly matching their liabilities, and resume normal operations.

[Luno]

Just an FYI on the OP's comment of "MtGox can go to 0".  I have been curiously looking at the full MtGox order book.  There are orders so deep, and so many people with orders of Bitcoin from current price down to .00001 USD.  The full order book for bids is currently almost 34,000,000 BTC deep and I think the complete order book has what looks like a value of around $4.7 million USD.  Only tradingview and RTBTC allow you to magnify out to see the complete order book view.  I think I am correct by assuming since you can't place a bid unless you have fiat in your MtGox account, that means there is at least $4.7 Million USD tied up in MtGox right now, and that would only represent the fiat that is associated with trades.

This is RTBTC:
http://imgur.com/PCKEGOv

Compare that to Bitstamp's full order book, which is only 130,000 BTC deep in bids right now.
http://imgur.com/hKVgbha

I would think that there is a lot more than 4.7M$ on the accounts. Some of those unrealistic buy offers have been there for ages. Similarly I would also imagine that forgotten accounts with only BTC balances exist. Personally I would never "paint the book"to catch some trades, as you always catch them in the wrong direction and if you are loaded, makes yourself a target.

The real amount might be ten times higher, but thank your for the effort, I was wondering how much was down there.

[jaybny]

just follow the market. market never lies... now all mtgox action is in bitcoinbuilder.