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Author Topic: Cause of MtGox exchange rate rise?  (Read 4836 times)
Psychoactive
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March 23, 2011, 12:32:16 AM
 #1


There has been quite a strange rise in MtGox exchange rate today, from approx 0.745-.765 to .8-.81.

I say strange for a good number of reasons, one was the speed at which the rise occured.

Looks also strange to me that the difference between bidding and asking sides was approx .02 btc relatively constantly (with a 0,65% fee, i.e. approx. 0.005 btc), and now the difference is only 0.001 btc. The difference between first offers of the asking and bidding sides is now so low (ask : .81 ; bid : .80901, i.e. 0.12%), that I can't see the point of making an offer so close to the other without matching them if you really want to buy or sell  Huh (such a small difference is well under exchange fees or usual variation of the price). Can someone see a reason ?

Moreover the volumes implied in the first offers on both asking and bidding sides are quite big (~ 400 btc) considering the relatively low volumes that have been exchanged on MtGox for a moment (ask : .81, vol. 339.44 ; bid : .80901, vol. 419.74), whereas there were before usually under 50 btc.

This concretely "forces" the price to remain between .80901 and .81, which is equivalent to setting the price to .81. .The only reason I can see for not matching bid and ask offers while they are so close would be that it is the same person or a coordinated group of persons with 1000+ btc behind the offers on both sides, doing this in order to drive the price as desired. Seems to me the price was driven to the actual level in a few stages using this technique :
1. Buy all bitcoins up to the desired price,
2. Propose the lowest ask price with a large volume,
3. Propose the highest bid price with a large volume at a price very close to ask price so as to closely surround the price,
4. Wait until everyone updates his offers, including automated robots,
5. and repeat a few times until desired price is reached.

Do you think MtGox exchange rate is artificially moved ? Are there any known techniques for doing so ? In which ways could moving the market be profitable ?

I wonder how many distinct active MtGox users there are, and I wonder how wealth is distributed among those users. That would give a good idea of how the market can be manipulated. Any clues on this ?


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Stephen Gornick
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March 23, 2011, 01:08:01 AM
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Do you think MtGox exchange rate is artificially moved ?

Perhaps the rise is because funds added to Mt. Gox (sent after seeing the prices the $0.70s last week) have finally reached Mt. Gox?

It is trivial to manipulate the price in Mt. Gox, ... if you have the bank and tolerance for risk.
More is described here:
  http://bitcointalk.org/index.php?topic=2436.msg32962#msg32962
  and
  http://bitcointalk.org/index.php?topic=4424.msg65056#msg65056

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March 23, 2011, 01:09:26 AM
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There has been quite a strange rise in MtGox exchange rate today, from approx 0.745-.765 to .8-.81.

I say strange for a good number of reasons, one was the speed at which the rise occured.

Looks also strange to me that the difference between bidding and asking sides was approx .02 btc relatively constantly (with a 0,65% fee, i.e. approx. 0.005 btc), and now the difference is only 0.001 btc. The difference between first offers of the asking and bidding sides is now so low (ask : .81 ; bid : .80901, i.e. 0.12%), that I can't see the point of making an offer so close to the other without matching them if you really want to buy or sell  Huh (such a small difference is well under exchange fees or usual variation of the price). Can someone see a reason ?

Moreover the volumes implied in the first offers on both asking and bidding sides are quite big (~ 400 btc) considering the relatively low volumes that have been exchanged on MtGox for a moment (ask : .81, vol. 339.44 ; bid : .80901, vol. 419.74), whereas there were before usually under 50 btc.

This concretely "forces" the price to remain between .80901 and .81, which is equivalent to setting the price to .81. .The only reason I can see for not matching bid and ask offers while they are so close would be that it is the same person or a coordinated group of persons with 1000+ btc behind the offers on both sides, doing this in order to drive the price as desired. Seems to me the price was driven to the actual level in a few stages using this technique :
1. Buy all bitcoins up to the desired price,
2. Propose the lowest ask price with a large volume,
3. Propose the highest bid price with a large volume at a price very close to ask price so as to closely surround the price,
4. Wait until everyone updates his offers, including automated robots,
5. and repeat a few times until desired price is reached.

Do you think MtGox exchange rate is artificially moved ? Are there any known techniques for doing so ? In which ways could moving the market be profitable ?

I wonder how many distinct active MtGox users there are, and I wonder how wealth is distributed among those users. That would give a good idea of how the market can be manipulated. Any clues on this ?




Every fast rise and fall must be manipulated! OMG!

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March 23, 2011, 02:19:32 AM
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You may just try to drop the exchange rate back if it was really manipulated. Wink

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March 23, 2011, 02:41:06 AM
 #5

I looked at the diagram of rate BTC/USB on mtgox yesterday when it surged by 0.08 points. Really, instantly dollars rate moved up with Bid offers at amount of approximately 1500 BTC

Think we should look at the history of order book at sites that provide such statistics. May be bitcoincharts.com can show 3D diagram of market depth for such interval of time?

New bitcoin lottery: probiwon.com
- Может, ты ещё и в Невидимую Руку Рынка веруешь? - Зачем же веровать в то, что можно наблюдать непосредственно?
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March 23, 2011, 02:56:58 AM
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Wow! Cool!

New bitcoin lottery: probiwon.com
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March 23, 2011, 03:09:27 AM
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Yeah! Smiley

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March 23, 2011, 06:32:56 AM
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You may just try to drop the exchange rate back if it was really manipulated. Wink

I've just assessed that would require around 1500 btc, which I don't have. You can send your donations at the address abcdefghijklmnopqrstuvwxyz0123456789  Tongue

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March 23, 2011, 07:29:41 AM
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Every fast rise and fall must be manipulated! OMG!

You're right, maybe. I haven't monitored previous fast rises /falls though.

I wouldn't talk of manipulation if sell and buy bids had not been so close during the rise. I understand if the price goes up because there is a rush on bitcoins for any reason. But I don't understand why the rise in price on the asking side was so closely followed by a rise in price on the bidding side with offers not matching (and large volumes). I do not understand why one would not match his bid to another bid that is only 0.1% away from his. Can you see any reason ?

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March 23, 2011, 07:51:49 AM
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It's possible someone's running a trading bot, well designed or not, to automate bids and sells and try to take advantage of market fluctuations.

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March 23, 2011, 07:56:32 AM
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I looked at the diagram of rate BTC/USB on mtgox yesterday when it surged by 0.08 points. Really, instantly dollars rate moved up with Bid offers at amount of approximately 1500 BTC

Think we should look at the history of order book at sites that provide such statistics. May be bitcoincharts.com can show 3D diagram of market depth for such interval of time?

I don't know of any sites that provide order book history. Anyone ?

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March 23, 2011, 08:02:06 AM
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>btc: Seriously: can you please rename the title of this thread into something less invasive?
Feel free to discuss about market fundamentals and learn how markets work, but stop this manipulation talk (or are you again Baron?).

If I were an owner of an exchange, I would get an injunction against you granted you for this accusation.

The rise yesterday was a normal market movement.

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Psychoactive
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March 23, 2011, 08:08:22 AM
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Quote
Do you think MtGox exchange rate is artificially moved ? Are there any known techniques for doing so ? In which ways could moving the market be profitable ?

Sure, it is "artificially moved". Too lazy to get to a dictionary, but isn't word "artificially"  means created by humans (even if using computers or robots) as opposed to "naturally" i.e. created by the nature. Given dictionary definition, yes the price swings are ultimately created by human market participants or their agents and therefore is something artificial by definition.


I thought I would deserve that comment  Smiley

So the question would be : "do you think MtGox exchange rate is manipulated ?"
- definition of manipulate by http://wordnetweb.princeton.edu/perl/webwn?s=manipulate : 'influence or control shrewdly or deviously' -  hahahaha gonna take control of the world Smiley

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March 23, 2011, 08:34:03 AM
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>btc: Seriously: can you please rename the title of this thread into something less invasive?
Feel free to discuss about market fundamentals and learn how markets work, but stop this manipulation talk (or are you again Baron?).

If I were an owner of an exchange, I would get an injunction against you granted you for this accusation.

The rise yesterday was a normal market movement.

Sorry, but I'm not claiming the market operator is manipulating the exchange rate, so there is no reason why anyone should be offended. In this case, the manipulation would not come from the exchange owner but from some participants, so no harm intended to exchange owner (/ creator). And those 'manipulating participants' would just smartly use the system, which is legitimate in a way.

I don't see yesterday's rise as a normal movement, and I've explained why. Maybe you could answer my questions ? This is exactly about learning market fundamentals : can the market be "manipulated" when you have 1000+ btc. Do you know approx. how many active distinct users are on MtGox ?

PS : propose a better title that fits my question and I will change it.


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March 23, 2011, 08:48:45 AM
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It's possible someone's running a trading bot, well designed or not, to automate bids and sells and try to take advantage of market fluctuations.

Yes, I think it might be a trading bot (considering the speed at which it happened), using this method : backing up the rise on the sell price by surrounding the exchange rate with very close buy and sell prices and rather large volumes. A smart automated buying /selling bot wouldn't buy and sell back and forth at prices that don't even allow to recover trading fees, unless the intention is to move the market.

 


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March 23, 2011, 08:59:11 AM
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>btc: Seriously: can you please rename the title of this thread into something less invasive?
Feel free to discuss about market fundamentals and learn how markets work, but stop this manipulation talk (or are you again Baron?).

If I were an owner of an exchange, I would get an injunction against you granted you for this accusation.

The rise yesterday was a normal market movement.

Sorry, but I'm not claiming the market operator is manipulating the exchange rate, so there is no reason why anyone should be offended. In this case, the manipulation would not come from the exchange owner but from some participants, so no harm intended to exchange owner (/ creator). And those 'manipulating participants' would just smartly use the system, which is legitimate in a way.

I don't see yesterday's rise as a normal movement, and I've explained why. Maybe you could answer my questions ? This is exactly about learning market fundamentals : can the market be "manipulated" when you have 1000+ btc. Do you know approx. how many active distinct users are on MtGox ?

PS : propose a better title that fits my question and I will change it.



o.k.I will explain more later (I am on the run now and will get back to you this evening)

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March 23, 2011, 12:35:00 PM
 #17

PS : propose a better title that fits my question and I will change it.

"Cause of MtGox exchange rate rise?"

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March 23, 2011, 04:58:41 PM
 #18

There is no "manipulation".

The rise of Bitcoin value is caused by 2 things:

1. Slashdot effect, http://bitcointalk.org/index.php?topic=4827.msg70553#msg70553
2. Weusecoins.com / http://www.youtube.com/watch?v=Um63OQz3bjo&feature=player_embedded

Every time the total amount of goods & services rise faster than number of avaiable coins, the Bitcoin will rally. Every time the opposite happens, it's value will fall. It is as simple as that.
Therefore, every bigger influx of people into the system will rise the value of Bitcoins, which is what is happening when we are slashdotted / redditted / digged.

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March 23, 2011, 08:22:43 PM
 #19

PS : propose a better title that fits my question and I will change it.

"Cause of MtGox exchange rate rise?"

I like that, so yes, >>>btc, please change it.[/b]

As explained also by others, yesterday's rise was absolutely normal. I followed the market almost every 30mins over daytime, since I do not work this week.
Some observations over the past 7 months since I started to cover bitcoins as analyst:

1) The BTC/USD exchange rate follows technical patterns known from other financial markets in an almost textbook manner. There is herding psychology involved as for every other market: Flat, almost dead periods are followed by sharp rises or declines. As for stocks, commodities, etc. typically markets move in only 20% of time, but this makes up for more than 80% of the price changes.


2) The specific rise yesterday was predictable on the 10 day chart where prices coiled under the 50 day exponential moving average and once breaking above this line, accelerating quickly to much higher levels (0.8, 0.82..)



3) The spread is typically in the range of 0.5-5%, depending on the market dynamics. The small spread you observed yesterday was within the normal range and changed back to typical 2-3% right after. The spread just depends on what people put as bid and ask orders, and it can always happen that they get very close. Nothing special about that.

by the way, you will find my analysis soon also on bitcoincharts.com


and if you would be so kind, please change the thread title now.


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March 23, 2011, 09:39:28 PM
 #20

S3052, could you please explain what "curve fitting" is, particularly in relation to:

Quote
2) The specific rise yesterday was predictable on the 10 day chart where prices coiled under the 50 day exponential moving average and once breaking above this line, accelerating quickly to much higher levels (0.8, 0.82..)

vladimir,
sure.
the 50d EMA is a often successfully used technical indicator for financial markets. I realized that it fitted very well the hourly charts over the past month.
As you can see in the chart, the 50d average could be used as a trading signal.
i) Once BTC/USD prices are below, we remain in a downtrend
ii) Once BTC/USD rates are above we are (at least in a short term) uptrend

does this help? Let me know if not and I will try to address it asap

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