[2019-04-03] Bitcoin's Recent Renaissance Could Be Linked to Algorithmic Trading

[tyz]

Bloomberg: Bitcoin's Recent Renaissance Could Be Linked to Algorithmic Trading

The recent crypto market jump could be linked to algorithmic trading, Bloomberg writes on Wednesday, April 3. The industry has seen 17 new algo or quantitative funds launched since September, an amount that purportedly comprises 40 percent of crypto hedge funds started during this period.

https://cointelegraph.com/news/bloomberg-bitcoins-recent-renaissance-could-be-linked-to-algorithmic-trading

[gentlemand]

I certainly can't believe it's anything other than money that's been sitting and waiting for a long time which means professional money which these days means bots.

The nature of those huge buys is really weird though. Did someone get bored or were they trying to impress some Russian tart?

[NeuroticFish]

The nature of those huge buys is really weird though. Did someone get bored or were they trying to impress some Russian tart?

It's interesting to see that nobody tells "Bitcoin was long undervaluated, it's a normal development".

Well, there are news from Bakkt from what I see. And Bakkt/ETF news have a bad habit to trigger now and then big pumps that end up in a Bart Simpson shape. I also expect a bull trap. But at least I hope I'm wrong 

[gentlemand]

It's interesting to see that nobody tells "Bitcoin was long undervaluated, it's a normal development".

Well, there are news from Bakkt from what I see. And Bakkt/ETF news have a bad habit to trigger now and then big pumps that end up in a Bart Simpson shape. I also expect a bull trap. But at least I hope I'm wrong 

It's the nature of the buy that doesn't make sense, not the overall sentiment.

No one other than a huge swinging dick could make a buy of that size. It doesn't seem like rational behaviour to me. Still, I hope he got a good hand job out of it.

[cr1776]

The nature of those huge buys is really weird though. Did someone get bored or were they trying to impress some Russian tart?

It's interesting to see that nobody tells "Bitcoin was long undervaluated, it's a normal development".

Well, there are news from Bakkt from what I see. And Bakkt/ETF news have a bad habit to trigger now and then big pumps that end up in a Bart Simpson shape. I also expect a bull trap. But at least I hope I'm wrong 

Bitcoin has been way undervalued for a long time - or it is and has been way over valued since dollar parity.  IMO.

[LeGaulois]

There have been several theories about this sudden rise. I read about algorithmic trading, April fool's joke, an order worth about $100 million across 3 exchanges https://www.reuters.com/article/us-crypto-currencies/bitcoin-soars-20-percent-mystery-buyer-seen-as-catalyst-idUSKCN1RE0JY but no one can really explain it. If it's because Bitcoin is undervalued the rise wouldn't have come so suddenly, it would have taken several days or weeks. Unless we're entering in a period of big spikes like in 2017.

[Kakmakr]

There have been several theories about this sudden rise. I read about algorithmic trading, April fool's joke, an order worth about $100 million across 3 exchanges https://www.reuters.com/article/us-crypto-currencies/bitcoin-soars-20-percent-mystery-buyer-seen-as-catalyst-idUSKCN1RE0JY but no one can really explain it. If it's because Bitcoin is undervalued the rise wouldn't have come so suddenly, it would have taken several days or weeks. Unless we're entering in a period of big spikes like in 2017.

I am not convinced that a $300 million buy order, spread over 3 exchanges, would cause a big spike like this in the price. You need a lot more money to pump the overall price of Bitcoin like this. <Yes, it might have been a small trigger> 

Algorithmic trading is not something new and it happens almost daily on exchanges all over the world. People are simply grabbing at straws, because they do not know what the real reason for this pump was. 

[1Referee]

It's a guessing game. In all cases we see the mainstream media talk down on Bitcoin after a sweet increase. It's either manipulation, one single entity playing with the market, rogue governments taking positions, etc. One thing is certain, the mainstream media mostly is very wrong with their analysis, and it wouldn't surprise me that the same is the case right now.

The most probable reason for this increase is the breakout of the ascending triangle we were in for months. A breakout would net a $1000ish increase, and we got exactly that. The only thing that wasn't certain was when it would break out with how it easily could have taken a few more weeks for the breakout to initiate.

[scambust]

The most probable reason for this increase is the breakout of the ascending triangle we were in for months. A breakout would net a $1000ish increase, and we got exactly that. The only thing that wasn't certain was when it would break out with how it easily could have taken a few more weeks for the breakout to initiate.

One could also argue that the extreme selling since January 2018 is also bot-initiated and aggravated by majority panicky traders. Imagine a bear market without any significant relief rally?

[Lucius]

I am not convinced that a $300 million buy order, spread over 3 exchanges, would cause a big spike like this in the price. You need a lot more money to pump the overall price of Bitcoin like this. <Yes, it might have been a small trigger> 

As I see it is only 100$ million which are used on top three exchanges (Coinbase, Kraken and Bitstamp) “If you look at the volumes on each of those three exchanges – there were in-concert, synchronized, units of volume of around 7,000 BTC in an hour”.

I think 100$ million is quite enough to pump price for some 800$ in very short period of time, especially if this is done in the way it is performed here. We can only guess whether it is a rich individual, a big company or some country who invest such money in bitcoin. The trigger for the price change can only be in two things, bad&good news, or big money which is pumped into the market.

[gentlemand]

I am not convinced that a $300 million buy order, spread over 3 exchanges, would cause a big spike like this in the price. You need a lot more money to pump the overall price of Bitcoin like this. <Yes, it might have been a small trigger> 

Absolutely it can. Check how piddly the order books are on most exchanges. Right now on Bitstamp it would only require $6.8 million to go from $5000 to $5500. Obviously sellers will pop up to meet you on the way normally but if you simply buy up everything that's in front of you you could push the market cap to $21 trillion with probably a a few hundred million of actual expenditure, maybe much less as the orders run out. 

[NeuroticFish]

It doesn't seem like rational behaviour to me.

A bull trap is not irrational. The problem that worries me is.. it looks too much like a bull trap. I mean, if one tries to fool the others, he has to spend a bit of time to conceal his plans.
So maybe you're right, maybe it's just a show off.

[Betwrong]

How do they know for sure that it was a single buyer? For example the top comment on reddit regarding this news is this:

You are assuming that reporting was correct. Did anyone came out with proof that they did a 100M buy? No? Ok then, it's just speculation. What was more obvious were the short positions. They got wiped out in liquidations and short squeeze.

And as others point out, if only one person was behind this huge buy, it would be wiser to spread it over a longer period of time, like a week or more, to avoid buying at higher prices.

[LeGaulois]

How do they know for sure that it was a single buyer? For example the top comment on reddit regarding this news is this:

You are assuming that reporting was correct. Did anyone came out with proof that they did a 100M buy? No? Ok then, it's just speculation. What was more obvious were the short positions. They got wiped out in liquidations and short squeeze.

And as others point out, if only one person was behind this huge buy, it would be wiser to spread it over a longer period of time, like a week or more, to avoid buying at higher prices.

There is no irrefutable evidence (at least in the article I mentioned) but rather evidence. The probability that 3 people will buy the same amount of bitcoins at the same time is the same as winning the national lottery.
Once the order is filled and the coins bought you don't care a higher price because you already bought the coins.