What an interesting day. I'm usually not a believer in The Manipulator. Most of the time people say it and I look at the charts and I see some walls on either side of the spread representing some arbitrageurs or market makers leaving their hook in the water, moving in rational ways predicted by commissions and profits. I post my charts, say "point him out", no one does other than saying "OMFG walls", I roll my eyes and move on.
Today's different. This was really interesting behavior by a single entity, either an individual or a coordinated group.
The left side of my chart is 22:00 GMT. Interesting moves:
0:50: Mr. X sells 50k. Crash.
1:00: the market behaves normally.
1:50: Mr. M: I'm in. $2.50.
2:30: M: $2.55
2:50: Mr. X sells through him. Ouch.
3:00: The price is creeping up and M starts backing it as it goes to prevent any sells from freaking the little run.
3:15: He pulls back to $2.50. Perhaps he's hoping 15 minutes of running it up is enough to start a rally? If so it didn't work. Crash to $2.50.
3:30: Mr. X sells right through his wall. That was expensive. M puts it right back up.
4:00: M pulls back to $2.40.
4:15: Down to $2.30. I'm pretty sure he pulled the $2.40 wall before the dump hit it. I'll have to check trade history to be sure.
4:20: He puts in a 3 bid spread.
... And after that, the dumps stop. The market starts to behave normally again. He catches a couple more small sells, the market continues to drift up, and he keeps backing it.
Mr M is clearly one entity. Mr X is uncertain. Someone wanted to unload some coins, but it's hard to say if it's just one guy. Some are probably panic sells. Some are probably exploiting M's bid wall - hey, if you want out, the time to do it is when someone's putting up a huge wall that you can dump into!
This cost M a whole lot of fiat. He gained a whole lot of BTC, and saved the price. I hope he wants them because he won't be able to unload them for a while.
But why? I can speculate two reasons:
#1, for Bitcoin's sake: he's willing to throw a bunch of money into stabilizing Bitcoin. That could be MagicalTux or anyone else who has a financial interest in a strong Bitcoin economy. It could be someone simply doing it for altruistic reasons, or because they hate PayPal. (Revalin holds his fist in the air!)
#2, corner a market and get rich quick! This is very hard to do right since you have to convince other people to do your work for you. If he has a whole lot of BTC and wants to cash out he'll need to create market depth. By propping up the market at $2.50-$3.00 he can put an end to The Great 2011 BitBear. By finishing Despair as quickly and cleanly as possible the market will regain confidence and hopefully start rallying again. As it does, he can gradually sell off his holdings starting around $3.50-4.00. Depending how much he has to dump that may prevent another bubble from forming (no complaints there); despite his dumping there may be a strong stream of investors to buy his BTC since they are no longer Despairing. If he's really good he can run it up higher before he sells... bigger risks, bigger rewards.
If it's #2, he'll need to stir up some hype soon. All the stability in the world doesn't do any good if no one is watching. I still contend that the fundamentals are very poor, so the price isn't going to rise on it's own without another big influx of outside interest.