$1.6 million property purchased through bitpay

[An amorous cow-herder]

Seriously, that can hardly be the whole truth.
So basicly selling $1.6M worth of BTC caused market cap to drop by ~$400M?

[1715256276]

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[wachtwoord]

Seriously, that can hardly be the whole truth.
So basicly selling $1.6M worth of BTC caused market cap to drop by ~$400M?

The percentage of Bitcoin actually open for purchase and the amount of Bitcoin buy orders present at exchanges, are very small relative to all outstanding Bitcoins.

[MakeBelieve]

Seriously, that can hardly be the whole truth.
So basicly selling $1.6M worth of BTC caused market cap to drop by ~$400M?

It's possible that it made the price go down by a awful not but im wondering when more people have a lot of money in btc and make big purchases such as this will that make bitcoin crash?

[An amorous cow-herder]

It's possible that it made the price go down by a awful not but im wondering when more people have a lot of money in btc and make big purchases such as this will that make bitcoin crash?

Hmm, we might want to check that theory.
Anyone want to buy this thing, its already heavily discounted after all.

[oda.krell]

Keep in mind that payment processing through Bitpay allows the recipient to set a percentage (from 0 to 100) in how much of the value he wants to receive in Bitcoin, and how much in fiat currency.

Let's assume the payout was requested completely, or at least: mostly in fiat. It is then up to Bitpay how to process such an order. They need to be liquid enough (in fiat) to be able to serve the customer without delay, but they also need to be profitable. Imagine for a second they'd process an even larger order: if they pay out 10M USD to a customer, but drop the entire Bitcoin amount valued at 10M in one big dump, they'll never receive the full USD amount, through slippage and market panic. They'd incur a huge loss for themselves.

For that reason, I consider it extremely likely that Bitpay will have a number of quants doing nothing but optimizing the above process: how much to sell, when, and at which rate, to remain a) liquid, and b) profitable. Which, in practice, can very well mean that they wouldn't dump the coins at all for some period after a transaction - but I also agree: to limit their risk, the bias will be on selling. Just not in the form of big dumps.

[An amorous cow-herder]

if they pay out 10M USD to a customer, but drop the entire Bitcoin amount valued at 10M in one big dump, they'll never receive the full USD amount, through slippage and market panic. They'd incur a huge loss for themselves.

Hmm, does anyone know if they calculate the conversion rate a customer (buyer) gets based on current market rate or on average sales price they would get?
In other words, if a customer buys an item worth $100 its at current market rates (say $550), but if its something really expensive (e.g. >$1M) you only get the average conversion rate they could get by dumping immediatly (e.g. $540 or whatever)?

Hmm, actually i somehow dont expect anyone here to know for sure ...

[wachtwoord]

if they pay out 10M USD to a customer, but drop the entire Bitcoin amount valued at 10M in one big dump, they'll never receive the full USD amount, through slippage and market panic. They'd incur a huge loss for themselves.

Hmm, does anyone know if they calculate the conversion rate a customer (buyer) gets based on current market rate or on average sales price they would get?
In other words, if a customer buys an item worth $100 its at current market rates (say $550), but if its something really expensive (e.g. >$1M) you only get the average conversion rate they could get by dumping immediatly (e.g. $540 or whatever)?

Hmm, actually i somehow dont expect anyone here to know for sure ...

I'd say it must be in the agreement somewhere. Happy hunting!

[Skoupi]

So you are saying that Bitpay sold the coins in bitstamp the moment they got the order? I don't think that's the way things work.

It definitely works this way actually, otherwise they would be exposed to a huge risk in case of fluctuations.

So they just lose money from paying the exchange fees.
It is obvious that they buy and sell through exchanges but they don't do so for every single transaction...

[oda.krell]

if they pay out 10M USD to a customer, but drop the entire Bitcoin amount valued at 10M in one big dump, they'll never receive the full USD amount, through slippage and market panic. They'd incur a huge loss for themselves.

Hmm, does anyone know if they calculate the conversion rate a customer (buyer) gets based on current market rate or on average sales price they would get?
In other words, if a customer buys an item worth $100 its at current market rates (say $550), but if its something really expensive (e.g. >$1M) you only get the average conversion rate they could get by dumping immediatly (e.g. $540 or whatever)?

Hmm, actually i somehow dont expect anyone here to know for sure ...

Customer pays according to current market price, but at a rate fixed for the day, minus 1% fee. From their webpage:

Let's look at an example. Suppose you create a payment button with a USD price of $10, and sell ten orders during the day. If you have Instant Exchange enabled, your payout at the end of the day will be for $100 USD, regardless of how the price of bitcoin changed during the day. After deducting our 1% fee (plus $0.15 for the bank transfer) you will receive $98.85 to your bank account.

To my understanding that means it is up to Coinbase to make a profit (or, if they fail, a loss) with the actual conversion on the market(s).

[EricTyle]

Let's be clear:

Market cap does not mean 7b$ USD in BTC. It means current BTC supply * current exchange rate.

People sell, and sell under someone else to sell faster, and then that person sell under the next lowest person, and they lower exchange rate

BTC stays same (relatively) so the lower exchange rate, the less effective value for market cap

It took 17k BTC to bring BTC from 585 to 535, 500m decrease in market cap value from 10$m in trade volume

[Fray]

if they pay out 10M USD to a customer, but drop the entire Bitcoin amount valued at 10M in one big dump, they'll never receive the full USD amount, through slippage and market panic. They'd incur a huge loss for themselves.

Hmm, does anyone know if they calculate the conversion rate a customer (buyer) gets based on current market rate or on average sales price they would get?
In other words, if a customer buys an item worth $100 its at current market rates (say $550), but if its something really expensive (e.g. >$1M) you only get the average conversion rate they could get by dumping immediatly (e.g. $540 or whatever)?

Hmm, actually i somehow dont expect anyone here to know for sure ...

Customer pays according to current market price, but at a rate fixed for the day, minus 1% fee. From their webpage:

Let's look at an example. Suppose you create a payment button with a USD price of $10, and sell ten orders during the day. If you have Instant Exchange enabled, your payout at the end of the day will be for $100 USD, regardless of how the price of bitcoin changed during the day. After deducting our 1% fee (plus $0.15 for the bank transfer) you will receive $98.85 to your bank account.

To my understanding that means it is up to Coinbase to make a profit (or, if they fail, a loss) with the actual conversion on the market(s).

Coinbase will also make a spread from the difference that they sell their bitcoin from what they buy bitcoin from customers. Since customers both buy and sell to them they will need to have very little activity on exchanges unless there is a lot of pressure on one side of the market.

[Benjig]

Let's be clear:

Market cap does not mean 7b$ USD in BTC. It means current BTC supply * current exchange rate.

People sell, and sell under someone else to sell faster, and then that person sell under the next lowest person, and they lower exchange rate

BTC stays same (relatively) so the lower exchange rate, the less effective value for market cap

It took 17k BTC to bring BTC from 585 to 535, 500m decrease in market cap value from 10$m in trade volume

Yeap , but the amount of bitcoins needed to reach some price is a fixed amount, you will need more usd to get from 400 to 300 than from 500 to 400.. he resistance levels can be changing

[wachtwoord]

if they pay out 10M USD to a customer, but drop the entire Bitcoin amount valued at 10M in one big dump, they'll never receive the full USD amount, through slippage and market panic. They'd incur a huge loss for themselves.

Hmm, does anyone know if they calculate the conversion rate a customer (buyer) gets based on current market rate or on average sales price they would get?
In other words, if a customer buys an item worth $100 its at current market rates (say $550), but if its something really expensive (e.g. >$1M) you only get the average conversion rate they could get by dumping immediatly (e.g. $540 or whatever)?

Hmm, actually i somehow dont expect anyone here to know for sure ...

Customer pays according to current market price, but at a rate fixed for the day, minus 1% fee. From their webpage:

Let's look at an example. Suppose you create a payment button with a USD price of $10, and sell ten orders during the day. If you have Instant Exchange enabled, your payout at the end of the day will be for $100 USD, regardless of how the price of bitcoin changed during the day. After deducting our 1% fee (plus $0.15 for the bank transfer) you will receive $98.85 to your bank account.

To my understanding that means it is up to Coinbase to make a profit (or, if they fail, a loss) with the actual conversion on the market(s).

Burt this would mean they lose a ton on a $1.6M order. It's a bit difficult to believe this would be their business model. Why take risk when that's not needed?

[oda.krell]

if they pay out 10M USD to a customer, but drop the entire Bitcoin amount valued at 10M in one big dump, they'll never receive the full USD amount, through slippage and market panic. They'd incur a huge loss for themselves.

Hmm, does anyone know if they calculate the conversion rate a customer (buyer) gets based on current market rate or on average sales price they would get?
In other words, if a customer buys an item worth $100 its at current market rates (say $550), but if its something really expensive (e.g. >$1M) you only get the average conversion rate they could get by dumping immediatly (e.g. $540 or whatever)?

Hmm, actually i somehow dont expect anyone here to know for sure ...

Customer pays according to current market price, but at a rate fixed for the day, minus 1% fee. From their webpage:

Let's look at an example. Suppose you create a payment button with a USD price of $10, and sell ten orders during the day. If you have Instant Exchange enabled, your payout at the end of the day will be for $100 USD, regardless of how the price of bitcoin changed during the day. After deducting our 1% fee (plus $0.15 for the bank transfer) you will receive $98.85 to your bank account.

To my understanding that means it is up to Coinbase to make a profit (or, if they fail, a loss) with the actual conversion on the market(s).

Burt this would mean they lose a ton on a $1.6M order. It's a bit difficult to believe this would be their business model. Why take risk when that's not needed?

Correct. That's why I said, I'm sure they dedicate a lot of resources internally to model the market, their risk exposure, and let it guide their actions.

Two remarks:

1) as Fray pointed out, customers also take coins from them. I disagree however that this means they have little use for external markets. I do believe that, at least currently, they'll have more coins than they can "get rid off" internally.

2) Funny that, after a half year bear market, having to handle a  1.6M USD order in coins is suddenly considered  a liability unconditionally. Wanna bet people feel differently if we're in an uptrend? "Wooohooo, 1.6M USD *slippage free*. Jackpot baby!".

Note: I'm well aware it's a huge risk. But assuming they have capital (USD) reserves to remain liquid, they might chose not to liquidate a huge order like that, but instead sell it off slower, possibly even on higher prices than when they received it (and what they paid for). I really depends on their willingness to be exposed to an exchange rate risk, imo.

[zedicus]

if they pay out 10M USD to a customer, but drop the entire Bitcoin amount valued at 10M in one big dump, they'll never receive the full USD amount, through slippage and market panic. They'd incur a huge loss for themselves.

Hmm, does anyone know if they calculate the conversion rate a customer (buyer) gets based on current market rate or on average sales price they would get?
In other words, if a customer buys an item worth $100 its at current market rates (say $550), but if its something really expensive (e.g. >$1M) you only get the average conversion rate they could get by dumping immediatly (e.g. $540 or whatever)?

Hmm, actually i somehow dont expect anyone here to know for sure ...

Customer pays according to current market price, but at a rate fixed for the day, minus 1% fee. From their webpage:

Let's look at an example. Suppose you create a payment button with a USD price of $10, and sell ten orders during the day. If you have Instant Exchange enabled, your payout at the end of the day will be for $100 USD, regardless of how the price of bitcoin changed during the day. After deducting our 1% fee (plus $0.15 for the bank transfer) you will receive $98.85 to your bank account.

To my understanding that means it is up to Coinbase to make a profit (or, if they fail, a loss) with the actual conversion on the market(s).

Burt this would mean they lose a ton on a $1.6M order. It's a bit difficult to believe this would be their business model. Why take risk when that's not needed?

I am pretty sure that the price given to customers when they checkout on conibase or bitpay is based on the exchange rate at the time. I would assume that the fiat price the merchant price is somewhat similar to what the customer gets. To do anything else would make little sense and would subject coinbase and bitpay to extreme levels of market risk and potential manipulation by merchants.

[Benjig]

So you are saying that Bitpay sold the coins in bitstamp the moment they got the order? I don't think that's the way things work.

It definitely works this way actually, otherwise they would be exposed to a huge risk in case of fluctuations.

Which one. They sell immediatly, or they dump in small batches?

They obviously sell immediately, otherwise it would be gambling, as you yourself pointed out.

but where is stated that bitpay uses bitstamp?, bitpay can use two exchanges at the same time like coinbase and bitstamp so this way the dump cause half of the effect that if you dump all of them in one.

[Vortex20000]

Exactly. That's precisely how it works mr. cow herder.

Which one. They sell immediatly, or they dump in small batches?

I think in small batches.

If you think about it, they would not be doing themselves a favor by selling the coins all at once.

[minerpumpkin]

that's quite a bit of money.. it would explain why the price has crashed yesterday-ish. it seems bitcoin's market cap is not nearly big enough to absorb this kind of action.

http://www.siliconbeat.com/2014/08/12/tech-entrepreneur-pays-1-6-million-in-bitcoins-for-tahoe-parcel/

Umm I don't know. I still believe that they actually do have people on contract who readily buy those amounts of coins. It would be better for BitPay than just dumping them on an exchange. Try wouldn't have to take care about the market depth or be afraid of a drop in the meantime.

[wachtwoord]

that's quite a bit of money.. it would explain why the price has crashed yesterday-ish. it seems bitcoin's market cap is not nearly big enough to absorb this kind of action.

http://www.siliconbeat.com/2014/08/12/tech-entrepreneur-pays-1-6-million-in-bitcoins-for-tahoe-parcel/

Umm I don't know. I still believe that they actually do have people on contract who readily buy those amounts of coins. It would be better for BitPay than just dumping them on an exchange. Try wouldn't have to take care about the market depth or be afraid of a drop in the meantime.

You think they have people on contract for $1.6 M worth in a one time flat out buy? If so, Bitpay is even further along then I thought they were.