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Author Topic: Cause of MtGox exchange rate rise?  (Read 4828 times)
Psychoactive
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March 23, 2011, 11:36:23 PM
 #21


Thanks for the answer, I will read (& understand) & answer tomorrow ! This title was not intended to be an accusation, but the expression of what I thought happened, and what was an interesting question to me : can the market be 'easily' manipulated, and how. This allows me to assess the value of bitcoin and the value of market signals.

I was monitoring the market every minute at this time or even 30s (to try understand some behaviour when I noticed a strange behaviour). I still feel there was a technique used by one or a coordinated group of persons behind the rise, but I'll see tomorrow if it resists your analysis.

I have changed the title in the meantime.

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S3052
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March 24, 2011, 01:21:15 PM
 #22

Super btc, thanks a lot.

And to be clear, I do not say prices can't be driven in a certain direction. What I am saying is that this was a typical action that exchanges enable.
In normal stock markets, you can always buy up the value of certain stocks that are illiquid. But then the decisive phase comes aftwr: Either othere people jump on the bandwagon and prices stay up and move higher, or the next trade will be down again and then nothing happend (except of you losing some money).

As you can see on BTC/USD, the price has stayed up, which means we saw a decent rally, with rising volumes, which is a healthy sign. There were previous price spikes caused by some few individuals which were not sustainable, but this one currently is.
Overall, the market moves in a very similar fashion as stock markets or forex markets.

If you want to know how the market can be "manipulated", this is quite easy. If you look at the order book https://mtgox.com/trade/history, you see how much money it takes to move the market into a certain direction. This is not 100% accurate as there are dark pool orders on top of visible orders.
In any case this is a good overview.

i.e. you need:
on the upside
6 $M to break 0.90$
18 $M to break 0.95$
21 $M to break 1.00$ (parity
36 $M to break 1.10$ and make a new all time high

on the downside
4 $M to break through 0.8$
9 $M to break through 0.7$


This means that the small size of the market enables big price moves with low funds. On the other hand, this will change with time. Once BTC economy will have moved from 5 $MM to 50 $MM or 500 $MM, you need much more funds and market will be much more liquid.

>15years analysis experience

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CCCMikey
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March 24, 2011, 01:37:00 PM
 #23

Hmm, it must've got busy. Coinpal ran out of coins.
Psychoactive
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March 28, 2011, 03:58:45 PM
 #24

Thanks for the explanation, and sorry for the delay in replying.

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.

That would be true on the dark pool, but on the normal pool, I think people put their orders according to others' bid and ask orders. It seems to me very unlikely that you would buy 300-500 btc without looking at other orders, and also very unlikely that you wouldn't be meeting some other bid by 0.05% while you already placed yourself 1-2% above the second buy order.


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March 28, 2011, 04:15:38 PM
 #25

By the way, I don't know if this information is confidential, but does someone know approximately how many "active" users there are on MtGox ?

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March 28, 2011, 06:35:50 PM
 #26

no idea how many active users on mtgox

Based on how little trading goes on currently, its probably a handful or a dozen maximum who trade regularly
this is just my opinion as I am not part of any exchange management or related in any way.

You should ask Jed or magicaltux directly

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March 28, 2011, 07:15:15 PM
 #27

Hi Everyone,

what would cause the BTC exchange rates to rise?
 FUND INFLOWS INTO THE EXCHANGES from existing and / or new users. To make the BTC/USD exchange rate rise, the economy needs around 8000 BTCs worth of inflows every day (160 blocks per day * 50 = 8000 BTC). This of course assumes that all miners convert all back to USD regularly and dont save bitcoins at all, which is not 100% correct.

Still, there needs to be significant money inflows into BTCs regularly as we know that miners need to offset their costs and pay off hardware, pay electricity etc.

What could make BTC rates fall: no further money inflows make the BTC/USD rate fall on its own weight (because of the BTC inflation due to mining)


This means that ideally every current bitcoin users should convince another new user to start getting into bitcoins.

Perhaps we can start a tell-a-friend mechanism where there are incentives for existing users?

>15years analysis experience

Always do your own due diligence & consult your financial advisor. Never invest unless you can afford to lose your entire investment.

http://twitter.com/BitcoinAnalyst

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March 28, 2011, 07:26:13 PM
 #28

Very true, although it’s 7200 BTC per day at constant hashrate and difficulty (50*6*24).

Of course investments help, but they aren’t much more than a limited stimulus which wears out fast, as we have seen – real growth will come from shops accepting Bitcoins which create a larger, long-term demand.

Maybe people should check this thread out, I think it’s a very important thing.

"Bitcoin had been transformed from an anarachistic challenge to the financial status quo, to the crypto spawn of Satan, fuelled by cut-throat greed and delusions of avarice." - MatTheCat
"these people don't seem to want to stop till Bitcoin is completely destroyed and left like an old cum rag in the corner of the room." - ShroomsKit
nofuture
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March 28, 2011, 09:38:41 PM
 #29

Hi Everyone,

what would cause the BTC exchange rates to rise?
 FUND INFLOWS INTO THE EXCHANGES from existing and / or new users. To make the BTC/USD exchange rate rise, the economy needs around 8000 BTCs worth of inflows every day (160 blocks per day * 50 = 8000 BTC). This of course assumes that all miners convert all back to USD regularly and dont save bitcoins at all, which is not 100% correct.

Still, there needs to be significant money inflows into BTCs regularly as we know that miners need to offset their costs and pay off hardware, pay electricity etc.

What could make BTC rates fall: no further money inflows make the BTC/USD rate fall on its own weight (because of the BTC inflation due to mining)


This means that ideally every current bitcoin users should convince another new user to start getting into bitcoins.

Perhaps we can start a tell-a-friend mechanism where there are incentives for existing users?

We need more FUND INFLOWS.   We know what supply is.  Over 5 million in circulation and a small fraction of that floating.   More currency exchange is what we need.  More points of entry.  The Bottleneck is the conversion of fiat into BTC and vice versa.   it's too difficult for most people.   Mt Gox is important but we need larger and more numerous points of conversion.    That is the key.   Goods and services available for bitcoin directly will help but the explosive growth comes from BTC/fiat convertibility and the ease with which that is provided. 
genjix
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April 02, 2011, 08:09:33 AM
 #30

Hi Everyone,

what would cause the BTC exchange rates to rise?
 FUND INFLOWS INTO THE EXCHANGES from existing and / or new users. To make the BTC/USD exchange rate rise, the economy needs around 8000 BTCs worth of inflows every day (160 blocks per day * 50 = 8000 BTC). This of course assumes that all miners convert all back to USD regularly and dont save bitcoins at all, which is not 100% correct.

Still, there needs to be significant money inflows into BTCs regularly as we know that miners need to offset their costs and pay off hardware, pay electricity etc.

What could make BTC rates fall: no further money inflows make the BTC/USD rate fall on its own weight (because of the BTC inflation due to mining)


This means that ideally every current bitcoin users should convince another new user to start getting into bitcoins.

Perhaps we can start a tell-a-friend mechanism where there are incentives for existing users?

We need more FUND INFLOWS.   We know what supply is.  Over 5 million in circulation and a small fraction of that floating.   More currency exchange is what we need.  More points of entry.  The Bottleneck is the conversion of fiat into BTC and vice versa.   it's too difficult for most people.   Mt Gox is important but we need larger and more numerous points of conversion.    That is the key.   Goods and services available for bitcoin directly will help but the explosive growth comes from BTC/fiat convertibility and the ease with which that is provided. 

Source code for Britcoin is free. You can either try to set it up yourself, or I will do it for 600 BTC. Or 2 people at the same time for 800 BTC.
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