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Author Topic: Price stickiness at $5 USD/BTC?  (Read 9152 times)
finkleshnorts
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May 23, 2012, 12:33:53 AM
 #41

honestly that makes quite a bit of sense at first glance.
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May 23, 2012, 10:56:51 AM
 #42

I've been wondering whether pirate is involved as well. The one confusion is that he mentions local customers, and if he's doing bitcoin HFT to profit off of volatility (thus smoothing it out) then I don't understand why he would have local customers... but this is probably explainable.

-s


https://bitcointalk.org/index.php?topic=82849.msg915349#msg915349

Pirate said :


Quote
The only thing that would affect my profits would be a huge spike in price over a very short period of time.

That is consistent with what we have been talking about.  A spike would break through a ceiling or floor he had set up.



also:

To be perfectly honest, it's funny to watch the Speculation board after I run transactions on Mt. Gox.  Everyone thinks they know what happened and come up with these crazy ideas as to who is manipulating the market.  I guess that's why it's here.

The truth is, it's nothing more than trading.  We all try to get the best price for our USD/BTC trades.  Why it's called manipulation when I trade thousands at a time vs hundreds I don't know.  Maybe it's the fact that the market really isn't that big and feels like it's being "controlled" by these large transactions.  Should I not trade anymore? If you played with the same volume I do, you'd see that building a "wall" to add support allows you to pick up or sell more coins at a better price.  It's really that simple.

So tell me, is it REALLY manipulation?


from https://bitcointalk.org/index.php?topic=63933.0;all

edit:

mtgox fee reduction is a problem...  that limits the game to large players

kinda hard to imagine that much money squeezed from gox' market, though.


blockchained.com ■ bitcointalk top posts
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May 23, 2012, 04:08:33 PM
 #43

I've been wondering whether pirate is involved as well. The one confusion is that he mentions local customers, and if he's doing bitcoin HFT to profit off of volatility (thus smoothing it out) then I don't understand why he would have local customers... but this is probably explainable.

-s


https://bitcointalk.org/index.php?topic=82849.msg915349#msg915349

Pirate said :


Quote
The only thing that would affect my profits would be a huge spike in price over a very short period of time.

That is consistent with what we have been talking about.  A spike would break through a ceiling or floor he had set up.



also:

To be perfectly honest, it's funny to watch the Speculation board after I run transactions on Mt. Gox.  Everyone thinks they know what happened and come up with these crazy ideas as to who is manipulating the market.  I guess that's why it's here.

The truth is, it's nothing more than trading.  We all try to get the best price for our USD/BTC trades.  Why it's called manipulation when I trade thousands at a time vs hundreds I don't know.  Maybe it's the fact that the market really isn't that big and feels like it's being "controlled" by these large transactions.  Should I not trade anymore? If you played with the same volume I do, you'd see that building a "wall" to add support allows you to pick up or sell more coins at a better price.  It's really that simple.

So tell me, is it REALLY manipulation?


from https://bitcointalk.org/index.php?topic=63933.0;all

edit:

mtgox fee reduction is a problem...  that limits the game to large players

kinda hard to imagine that much money squeezed from gox' market, though.




that mount is accrued from "thousands."  Even though he's not getting much for each trade the volume makes up for it.  

It's called penny shaving or salami slicing
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May 23, 2012, 05:34:02 PM
 #44

If you're right, he eventually won't be able to hold it back and it will skyrocket very quickly.  If that happens and he defaults at the same time you can say you were right.  Until that happens, you are just making yourself look like a conspiracy theorist.  Also, look a little wider.  While USD/BTC might be holding close to 5, EUR/BTC is trending up since the Euro is falling relative to the dollar.  Other NonUSD currencies also show a similar uptrend.  Big things are happening in the wider markets, and for BTC to hold $5 and not fall like stocks, metals, commodities, and other currencies is impressive.

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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May 23, 2012, 11:00:40 PM
 #45

Very interesting thread.

I would have expected the price to go higher now that shorting is closed on Bitcoinica.

Waiting to see what reward drop brings us. Hopefully $10 at least Cheesy
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May 25, 2012, 08:34:04 PM
 #46

I personally think OgNasty's explanation is ridiculous. It's the same as playing poker with the mindset of trying to win back money you have previously lost. Some people do this of course but for a serious player there is an expected value and you invest based on it and what happens, happens.

Of course it can be smart to lower your average price if the entry point was really bad. For example, if someone bought bitcoins at $10+ and is still hoarding them, buying now would make sense if you want to get your average entry closer to the current price. But I just can't see how this could be a significant explanation for the sticky $5 price.

My explanation is fairly simple, I just think that Bitcoin growth rate at the moment is fairly close to the inflation of the money supply. Secondary reasons are psychological reasons and the fact that leveraged rallies have been less crazy for a number of reasons ever since we had the massive long squeeze at Bitcoinica.

reminds me of mid-2000....   well, that was more like quadrupling position on some nasdaq garbage.  went from 50% down to ~10% down.  that's when i decided i shouldnt be throwing darts anymore

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I would have expected the price to go higher now that shorting is closed on Bitcoinica.

bitcoinica used "play" bitcoins  Undecided

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May 25, 2012, 09:02:42 PM
 #47

Maybe there's a big player buying them up progressively, in greater quantities when the price is towards $4.80, and in lesser quantities (or zero) when the price moves towards $5.20.

The BitCoin economy has grown significantly, more services have been developed, there is greater liquidity with things like BitInstant, Bit-Pay, foreign currency trading/arbitrage bots have been deployed, etc. and therefore more capital has moved into bitcoins. This has resulted in it taking at least 10-20x as much capital to move the price $.10 as it did 12 months ago.

Additionally, there is tremendous potential buying still sitting on the sidelines. I have had numerous discussions with people whose net worth is in excess of $100m and even helped one make a five figure bitcoin investment. BitCoin has made a proof of concept and proven itself worthy of additional capital which is starting to flow in. I know of at least 4-5 potential six figure bitcoin investors that are seriously sniffing around and other VCs who are looking for some serious BitCoin related businesses to invest in.

I'm glad you brought up the fact that big players are coming in. That's another reason why we should have more volatility. Market cap of bitcoin is roughly $45 million right now.  It wouldn't take anything for those big players to move this market.  If a big player bought any significant amount of bitcoins the price would soar.  Volume is roughly 30k bitcoins a day which is about $150k of bitcoins.  $150k is pocket change for "people whose net worth is in excess of $100m."  You can't have all of the activity described above and not have significant price variation.  So far the only thing we haven't ruled out market manipulation by insider trading.    Those players may realize this happening and be wary of entering the market now.  Those guys are professionals and study trading patterns and fundamentals under a microscope.  Why would they buy if the market is rigged?  Arbitrage bots don't explain it.


I think that I can explain it.  The Price stickiness at just under $5 (i.e. price drops to just below $5 per btc, and then recovers) imlies that there is a hidden buy order at around $4.90. (or more likely a bot) There is no way for us to know how big this buy order actually is, but assuming that it's actually just one major player iwth the buyorder, the past several months have already shown that it's someone well heeled & with a tolerance for risk.  It could be just about anyone with a couple million dollars in their petty spending account, but there is one particular billionare that comes to mind for me.  If correct, it means that someone is quietly both supporting bitcoin & intentionally damping voltility; perhaps with a /exchangecompanion sell order at $5.10 or so, thus range bounding the price.  Obviously if true, both the buy and sell orders are delayed execution type orders which would be likely if the intent is to suppress voltility and not invest per se, because it gives other speculators a chance to soak up the price movements before the bigwig's bot kicks in.  This makes sense for any major player with the funds to be able to dominate this little market, because it would not only allow said bigwig to quietly build up a substantioal amount of bitcoin wealth over time, without sending the price to the moon; it also allows the bigwig to profit later because suppressing voltility is what helps the (more risk adverse) small business type economy to mature.  Eventually, it then becomes in the bigwig's own interest to remove the top limit and leak the info that said bigwig has been investing in bitcoin; thus permitting the btc price to double or triple on that news alone.

Think about it, if the news came out today that some semi-famous investment billionare was buying bitcoins; say perhaps one that has a history of picking major tech/Internet winners while young, who had a well known and strong libertarian streak, who was highly tolerant towards risks (a venture capitalist, perhaps), a history in the online currency/money markets and a well-known connection to the cutting edge of the Interent; then the 'hangers on' that follow investors like that one would flood into bitcoin in short order, thus sending the exchange price back towards it's record in short order.  Said billionare then sells half his accummulation of bitcoins at four or five times the price he bought them for, restablelizes the price at a higher price point, makes a killing and still has a fortune left in bitcoin.  And bitcoin also gains withthe suddenly public knowledge that bitcoin has the very kind of backing that detractors claim that it does not because that isn't explicit.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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May 25, 2012, 10:10:37 PM
 #48

Maybe there's a big player buying them up progressively, in greater quantities when the price is towards $4.80, and in lesser quantities (or zero) when the price moves towards $5.20.

The BitCoin economy has grown significantly, more services have been developed, there is greater liquidity with things like BitInstant, Bit-Pay, foreign currency trading/arbitrage bots have been deployed, etc. and therefore more capital has moved into bitcoins. This has resulted in it taking at least 10-20x as much capital to move the price $.10 as it did 12 months ago.

Additionally, there is tremendous potential buying still sitting on the sidelines. I have had numerous discussions with people whose net worth is in excess of $100m and even helped one make a five figure bitcoin investment. BitCoin has made a proof of concept and proven itself worthy of additional capital which is starting to flow in. I know of at least 4-5 potential six figure bitcoin investors that are seriously sniffing around and other VCs who are looking for some serious BitCoin related businesses to invest in.

I'm glad you brought up the fact that big players are coming in. That's another reason why we should have more volatility. Market cap of bitcoin is roughly $45 million right now.  It wouldn't take anything for those big players to move this market.  If a big player bought any significant amount of bitcoins the price would soar.  Volume is roughly 30k bitcoins a day which is about $150k of bitcoins.  $150k is pocket change for "people whose net worth is in excess of $100m."  You can't have all of the activity described above and not have significant price variation.  So far the only thing we haven't ruled out market manipulation by insider trading.    Those players may realize this happening and be wary of entering the market now.  Those guys are professionals and study trading patterns and fundamentals under a microscope.  Why would they buy if the market is rigged?  Arbitrage bots don't explain it.


I think that I can explain it.  The Price stickiness at just under $5 (i.e. price drops to just below $5 per btc, and then recovers) imlies that there is a hidden buy order at around $4.90. (or more likely a bot) There is no way for us to know how big this buy order actually is, but assuming that it's actually just one major player iwth the buyorder, the past several months have already shown that it's someone well heeled & with a tolerance for risk.  It could be just about anyone with a couple million dollars in their petty spending account, but there is one particular billionare that comes to mind for me.  If correct, it means that someone is quietly both supporting bitcoin & intentionally damping voltility; perhaps with a /exchangecompanion sell order at $5.10 or so, thus range bounding the price.  Obviously if true, both the buy and sell orders are delayed execution type orders which would be likely if the intent is to suppress voltility and not invest per se, because it gives other speculators a chance to soak up the price movements before the bigwig's bot kicks in.  This makes sense for any major player with the funds to be able to dominate this little market, because it would not only allow said bigwig to quietly build up a substantioal amount of bitcoin wealth over time, without sending the price to the moon; it also allows the bigwig to profit later because suppressing voltility is what helps the (more risk adverse) small business type economy to mature.  Eventually, it then becomes in the bigwig's own interest to remove the top limit and leak the info that said bigwig has been investing in bitcoin; thus permitting the btc price to double or triple on that news alone.

Think about it, if the news came out today that some semi-famous investment billionare was buying bitcoins; say perhaps one that has a history of picking major tech/Internet winners while young, who had a well known and strong libertarian streak, who was highly tolerant towards risks (a venture capitalist, perhaps), a history in the online currency/money markets and a well-known connection to the cutting edge of the Interent; then the 'hangers on' that follow investors like that one would flood into bitcoin in short order, thus sending the exchange price back towards it's record in short order.  Said billionare then sells half his accummulation of bitcoins at four or five times the price he bought them for, restablelizes the price at a higher price point, makes a killing and still has a fortune left in bitcoin.  And bitcoin also gains withthe suddenly public knowledge that bitcoin has the very kind of backing that detractors claim that it does not because that isn't explicit.

In your example there is a huge player who has a buy limit order below $5 and a sell limit order above $5.  In this example the investor would lose money in an effort to dampen volatility.  An imbalance between the number of selling orders and buy order executions would result in losses.  Running an imbalance over time almost a given.   To prevent this from ruining his ability to make a profit he needs to be able to see beyond the order book.  He needs inside information.   


If a big player wants enter this market a better strategy is simply accumulating bitcoins with small buys over time.  Market trading is too thin to do otherwise.   Moving the market that much would be risky.   Better than accumulation on exchange whose purpose is price discovery would be over the counter buying at wholesale prices.  There's a substantial over the counter market.  Even if he got a large amount of bitcoins selling at 5x would be difficult due to fact that the market depth is so thin.  He wouldn't have to sell much before exhausting demand, dropping price, and reducing the value of his remaining holdings. He would want to wait until the size of the market had increased to the point that unloading would not cause a big splash.

Hidden orders wouldn't help much.  They are not that well hidden.   Traders can test the waters with market order.   They'll notice if an order fills at a price that isn't listed.

Bitcoin is risky regardless of trading strategy.  For a big player it comes down to a  buy and hold proposition, a highly risky one. 

Big players know market manipulation when they see it.  They are not going to get in this market while schemes are in place.  That may be accounting for the weak volume on Mt. Gox.  Big players know trading on this exchange is worse than trading on the stock market of a third world country.   The lack of credibility is very damaging and is retarding growth.   

One thing that we know from is history is that every market that has been created has had to deal with manipulation and insider trading. Somebody is always going to find a way to rig the market somehow.  But then at some point they get busted and then we figure out how to prevent people from doing that again.   It would be nice if we could catch these people and expose them now so we could move ahead. 

All of this devolves down to one thing.  Centralization vs. Decentralization.  Bitcoin is designed to be decentralized which is why it is so attractive. No more man in middle picking everyone's pocket.   Centralization of bitcoin through a monopolistic exchange spoils everything.  It allows cheaters to steal from everyone. 

We prevent this from happening in centralized fiat exchanges with tight regulation, regulators wielding big sticks while looking at every move, and transparency so participants can see everything that's happening.  All of this is so that people can trade on an equal playing field.  That will not work for bitcoin because it is contrary to what bitcoin is about.   

Mt. Gox is the connection between the fiat world and the bitcoin world.  The amount of wealth that bitcoin represents is a drop in the ocean compared to wealth denominated in dollars.   The problem is that there is a stranglehold between the fiat world and the bitcoin world.  The bitcoin economy can't grow until money can flow freely between the two worlds.   


From what we know about human nature there will always be thieves and parasites.  Since there is no human solution we will need another technical solution that removes the human element and makes Mt. Gox irrelevant.  Bitcoin fixed a big problem with peer to peer decentralization.  Its not clear what the next step is.  There have been academic papers that describe how a decentralized exchange might work.  It's not certain those ideas will work in practice. 









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May 25, 2012, 11:34:54 PM
 #49



In your example there is a huge player who has a buy limit order below $5 and a sell limit order above $5.  In this example the investor would lose money in an effort to dampen volatility.  An imbalance between the number of selling orders and buy order executions would result in losses.  Running an imbalance over time almost a given.   To prevent this from ruining his ability to make a profit he needs to be able to see beyond the order book.  He needs inside information.  


Nonesense, all he needs is enough funds to be able to buy out the entire market, which would be exceedingly easy to do for any billionare willing to do it.  If the bot is set up to buy (with resources at least as large as the whole market, which is effectively limitless for this tiny market) at $4.90 with a delay of several hours, he can accumulate bitcoins for $4.90 or sometimes less without dramaticly affecting the volume adjusted price.  By selling at $5.10 (again, with a delay) he sells them at $5.10 or more.  The delay exists to 1) let smaller players soak up the price movements in order to stretch out his funds and 2) to obscure the presence of a "wall".  The only way for said player to lose money in the near term is if 1) everything goes sour in a hurry and he ends up buying all the bitcoins in existance at that price level (as in a major security hole is found in the protocol that cant be fixed, unlikley at this point) so that volume goes to zero because he already has them all and there are no buyers or 2) the price movement that wants to trend lower overwhelms his funds.  If the top end of the bot is ever overwhelmed then the investor still makes money in the process of defending the top end of his target trading range.  Not as much as he could have if he let the top end seek it's market price, granted, but he can't lose money by buying at $4.90 and selling at $5.10 even if he doesn't have the resources to defend the peg.  Perhaps the top and bottom aren't rigid price points, but percentages.  There are major market makers in the commodities markets that do things on the stock market this way to prevent (or profit from) 'buy the rumor, sell the news' type panic movements.  The goal of such a bot isn't primarily to profit from price movements, although it generally does except in extreme conditions.  It's primary goal is to suppress voltility for a time to permit the market to mature as well as develop a 'safe' reputation; and the profit taking occurs in the long run.  It's speculation taken to a long view.

Quote

If a big player wants enter this market a better strategy is simply accumulating bitcoins with small buys over time.  Market trading is too thin to do otherwise.   Moving the market that much would be risky.  


That is functionally what the bot does.  Perhaps the bot is  set up to set aside 5% of the coins it buys on dips, so tht if the high end of the bot is ever overwhelmed (selling 95% of all teh coins it's accumulted) then the bot owner still has the las 5% to take full profits from once the market price has found it's new home.  Set the bot up again with a new trading range, rinse repeat.  Again, the only way the investor stands to lose under this scenario is after the whole bitcoin market grows bigger than he is.  Any investor knows how big he wants to be, few are going to get caught off guard in this sense.

Quote
Better than accumulation on exchange whose purpose is price discovery would be over the counter buying at wholesale prices.  There's a substantial over the counter market.  Even if he got a large amount of bitcoins selling at 5x would be difficult due to fact that the market depth is so thin.  He wouldn't have to sell much before exhausting demand, dropping price, and reducing the value of his remaining holdings. He would want to wait until the size of the market had increased to the point that unloading would not cause a big splash.


This is true, and exactly what I said the long term goal would have to be.  Did you bother to read it?

Quote

Hidden orders wouldn't help much.  They are not that well hidden.   Traders can test the waters with market order.   They'll notice if an order fills at a price that isn't listed.

Bitcoin is risky regardless of trading strategy.  For a big player it comes down to a  buy and hold proposition, a highly risky one.  


So?

Quote
Big players know market manipulation when they see it.  They are not going to get in this market while schemes are in place.  That may be accounting for the weak volume on Mt. Gox.  Big players know trading on this exchange is worse than trading on the stock market of a third world country.   The lack of credibility is very damaging and is retarding growth.  

It only takes one big market maker to do the job.  If others come along later a see that some bigwig has already set up his system, maybe they do look for another market, but so what?  Again, this is a long view speculation, the speculation being that the bigwig is betting on the long term success of bitcoin.  Isn't that what we all are doing?  The suppression of voltility imply mimics a larger & mroe mature currency market, which is what small businesses want to see before diving in. By encouraging these small businesses to dive in, the invetor wills his prediction to become reality as the market really does mature under his watch and voltility really does stableize just as the bigwig is ready to withdraw his deliberate support and start to take his profits.  Notice it's not in his best interest to take all his prifits in any particular time frame.

Quote
One thing that we know from is history is that every market that has been created has had to deal with manipulation and insider trading. Somebody is always going to find a way to rig the market somehow.  But then at some point they get busted and then we figure out how to prevent people from doing that again.   It would be nice if we could catch these people and expose them now so we could move ahead.  

We actually don't want that.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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May 26, 2012, 03:15:47 PM
 #50



In your example there is a huge player who has a buy limit order below $5 and a sell limit order above $5.  In this example the investor would lose money in an effort to dampen volatility.  An imbalance between the number of selling orders and buy order executions would result in losses.  Running an imbalance over time almost a given.   To prevent this from ruining his ability to make a profit he needs to be able to see beyond the order book.  He needs inside information.  


Quote from: MoonShadow

Nonesense, all he needs is enough funds to be able to buy out the entire market, which would be exceedingly easy to do for any billionare willing to do it.  If the bot is set up to buy (with resources at least as large as the whole market, which is effectively limitless for this tiny market) at $4.90 with a delay of several hours, he can accumulate bitcoins for $4.90 or sometimes less without dramaticly affecting the volume adjusted price.  By selling at $5.10 (again, with a delay) he sells them at $5.10 or more.  The delay exists to 1) let smaller players soak up the price movements in order to stretch out his funds and 2) to obscure the presence of a "wall".  The only way for said player to lose money in the near term is if 1) everything goes sour in a hurry and he ends up buying all the bitcoins in existance at that price level (as in a major security hole is found in the protocol that cant be fixed, unlikley at this point) so that volume goes to zero because he already has them all and there are no buyers or 2) the price movement that wants to trend lower overwhelms his funds.  If the top end of the bot is ever overwhelmed then the investor still makes money in the process of defending the top end of his target trading range.  Not as much as he could have if he let the top end seek it's market price, granted, but he can't lose money by buying at $4.90 and selling at $5.10 even if he doesn't have the resources to defend the peg.  Perhaps the top and bottom aren't rigid price points, but percentages.  There are major market makers in the commodities markets that do things on the stock market this way to prevent (or profit from) 'buy the rumor, sell the news' type panic movements.  The goal of such a bot isn't primarily to profit from price movements, although it generally does except in extreme conditions.  It's primary goal is to suppress voltility for a time to permit the market to mature as well as develop a 'safe' reputation; and the profit taking occurs in the long run.  It's speculation taken to a long view.

think about it another way.   what you describe is the financial equivalent of a perpetual motion machine. 
if it was this simple everyone with money would be doing it.   there is always someone bigger than you. the biggest player is the exchange itself.  it has the ability to counterfeit USD or BTC on the exchange.  it has infinite supply essentially.  symbols brought this up in an earlier post

Quote from: symbols
In a true market-moving demand situation, the bot's supply of bitcoin would be exhausted. A similar argument would result in exhaustion of dollars to buy with in a true market-moving supply situation. However, if the bot is colluding with the exchange, then the exchange can have effective unlimited supply/demand by 'printing money' in either mtgox usd of mtgox btc subject to avoiding a 'run-on-the-bank' and trying to balance out the accounts over time.

This scenario makes a strong argument for having exchanges operate on the bitcoin network so that at least the btc side of the exchange is subject to global auditing.

-s




Quote

If a big player wants enter this market a better strategy is simply accumulating bitcoins with small buys over time.  Market trading is too thin to do otherwise.   Moving the market that much would be risky.  


That is functionally what the bot does.  Perhaps the bot is  set up to set aside 5% of the coins it buys on dips, so tht if the high end of the bot is ever overwhelmed (selling 95% of all teh coins it's accumulted) then the bot owner still has the las 5% to take full profits from once the market price has found it's new home.  Set the bot up again with a new trading range, rinse repeat.  Again, the only way the investor stands to lose under this scenario is after the whole bitcoin market grows bigger than he is.  Any investor knows how big he wants to be, few are going to get caught off guard in this sense.

Quote
Better than accumulation on exchange whose purpose is price discovery would be over the counter buying at wholesale prices.  There's a substantial over the counter market.  Even if he got a large amount of bitcoins selling at 5x would be difficult due to fact that the market depth is so thin.  He wouldn't have to sell much before exhausting demand, dropping price, and reducing the value of his remaining holdings. He would want to wait until the size of the market had increased to the point that unloading would not cause a big splash.


Quote from: Moonshadow
This is true, and exactly what I said the long term goal would have to be.  Did you bother to read it?

I clarified what you said so readers could better understand it.

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Hidden orders wouldn't help much.  They are not that well hidden.   Traders can test the waters with market order.   They'll notice if an order fills at a price that isn't listed.

Bitcoin is risky regardless of trading strategy.  For a big player it comes down to a  buy and hold proposition, a highly risky one.  


So?

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Big players know market manipulation when they see it.  They are not going to get in this market while schemes are in place.  That may be accounting for the weak volume on Mt. Gox.  Big players know trading on this exchange is worse than trading on the stock market of a third world country.   The lack of credibility is very damaging and is retarding growth.  


Quote from: Moonshadow
It only takes one big market maker to do the job.  If others come along later a see that some bigwig has already set up his system, maybe they do look for another market, but so what?  Again, this is a long view speculation, the speculation being that the bigwig is betting on the long term success of bitcoin.  Isn't that what we all are doing?  The suppression of voltility imply mimics a larger & mroe mature currency market, which is what small businesses want to see before diving in. By encouraging these small businesses to dive in, the invetor wills his prediction to become reality as the market really does mature under his watch and voltility really does stableize just as the bigwig is ready to withdraw his deliberate support and start to take his profits.  Notice it's not in his best interest to take all his prifits in any particular time frame.


we all want to see a more stable bitcoin.  we want that occur organically.  we don't want it to occur by allowing theft via market manipulation.  two very different things. 


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One thing that we know from is history is that every market that has been created has had to deal with manipulation and insider trading. Somebody is always going to find a way to rig the market somehow.  But then at some point they get busted and then we figure out how to prevent people from doing that again.   It would be nice if we could catch these people and expose them now so we could move ahead.  

Quote from: moonshadow
We actually don't want that.

the scammers are undermining confidence in the market.  no one wants to play in a market they know will rob them.   we will regain some market confidence when the scammers are caught and exposed





a lot of people have read this thread which means a lot of people are thinking about this issue.  someone will inevitably expose these people.   

in the long-term we need to devise something that obviates the need for an easily corrupted, centralized monopolistic exchange.

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May 26, 2012, 09:17:34 PM
 #51



think about it another way.   what you describe is the financial equivalent of a perpetual motion machine. 


No it's not.  You're just not understanding.

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if it was this simple everyone with money would be doing it. 

To varying degrees, many are and have in the past.  I'm talking about a computer program implimenting a standard speculation stragedgy.

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In a true market-moving demand situation, the bot's supply of bitcoin would be exhausted. A similar argument would result in exhaustion of dollars to buy with in a true market-moving supply situation. However, if the bot is colluding with the exchange, then the exchange can have effective unlimited supply/demand by 'printing money' in either mtgox usd of mtgox btc subject to avoiding a 'run-on-the-bank' and trying to balance out the accounts over time.

This scenario makes a strong argument for having exchanges operate on the bitcoin network so that at least the btc side of the exchange is subject to global auditing.

-s

A billionare doesn't need to colude with anyone in order to defend the peg in a $40million market.  By definition, his resources are already unlimited within the trading range of $5+-.10.  The only way the market maker stands to lose in this scenario is if the natural price shoots towards zero and he ends up owning all of it.  After which there is no more market to make.

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Quote from: Moonshadow
It only takes one big market maker to do the job.  If others come along later a see that some bigwig has already set up his system, maybe they do look for another market, but so what?  Again, this is a long view speculation, the speculation being that the bigwig is betting on the long term success of bitcoin.  Isn't that what we all are doing?  The suppression of voltility imply mimics a larger & mroe mature currency market, which is what small businesses want to see before diving in. By encouraging these small businesses to dive in, the invetor wills his prediction to become reality as the market really does mature under his watch and voltility really does stableize just as the bigwig is ready to withdraw his deliberate support and start to take his profits.  Notice it's not in his best interest to take all his prifits in any particular time frame.


we all want to see a more stable bitcoin.  we want that occur organically.  we don't want it to occur by allowing theft via market manipulation.  two very different things. 
It's not theft buck, it's how currency markets are supposed to work.  There are a dozen small nations in South America that openly & deliberately 'peg' their local currencies to the US $, and this is exactly how they do it.

Quote
One thing that we know from is history is that every market that has been created has had to deal with manipulation and insider trading. Somebody is always going to find a way to rig the market somehow.  But then at some point they get busted and then we figure out how to prevent people from doing that again.   It would be nice if we could catch these people and expose them now so we could move ahead.  

Quote from: moonshadow
We actually don't want that.

the scammers are undermining confidence in the market.  no one wants to play in a market they know will rob them.   we will regain some market confidence when the scammers are caught and exposed


[/quote]

You assume that this invovles some kind of fruad.  I'm telling you that it doesn't require that.  All it requires is one person with the resources to buy the entire market and the apparent willingess to actually risk that occurring.  He can defend the price floor until the last bitcoin is his.  What he cant do forever is defend the high end forever.

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a lot of people have read this thread which means a lot of people are thinking about this issue.  someone will inevitably expose these people.   

in the long-term we need to devise something that obviates the need for an easily corrupted, centralized monopolistic exchange.



That's a different subject altogether.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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May 27, 2012, 08:06:11 PM
 #52

So, the exchanges have been keeping a fairly tight band around $5/BTC, I'd like to hear opinions on how much you attribute this to the following factors:

4) Other factors, please describe...

-s

pure coincidence. I think we're going to see both $3 and $15 this year.


in which order?

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May 28, 2012, 11:54:47 PM
 #53

You tell about one billionare, but there could be many. That would make the price jump again.

Think about a strict anticyclic trader. This stabilizes the price, and will lead necessarily to a win (a normal one, not quick or large). It makes profit from others market manipulation, and is usable with any amount of money.

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May 29, 2012, 12:11:29 AM
 #54

My eyes are on the Bitcoin growth in China. Historically, they love to bet speculatively on anything.

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June 08, 2012, 09:17:45 AM
 #55

There's been a lot of talk about how market stabilization like this can't happen without insider information. I don't think that's necessarily the case. I'm reminded of someone mentioning on this forum about research that was done on predicting market movements with high accuracy (80%+) based on the frequency of individual words used on different forums. I would not be at all surprised if someone was putting that to use to keep the market stable and making profit on the side.

Of course, it looks like the dam just burst during the past few days. Regardless, I'm curious to see if we'll return to a comparably stable position once the price stops going up again.

I also think that someone doing this is very good for Bitcoin in the long term. Heavy instability will cause a lot people to avoid Bitcoin markets.
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June 08, 2012, 05:55:11 PM
 #56

There's been a lot of talk about how market stabilization like this can't happen without insider information. I don't think that's necessarily the case. I'm reminded of someone mentioning on this forum about research that was done on predicting market movements with high accuracy (80%+) based on the frequency of individual words used on different forums. I would not be at all surprised if someone was putting that to use to keep the market stable and making profit on the side.

Of course, it looks like the dam just burst during the past few days. Regardless, I'm curious to see if we'll return to a comparably stable position once the price stops going up again.

I also think that someone doing this is very good for Bitcoin in the long term. Heavy instability will cause a lot people to avoid Bitcoin markets.


No. We first need to reach $10 then we can stabilize.

Value of $5 is too low for what BTC offers IMHO. Only 5 times better than Bernanke ? No way !
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June 08, 2012, 07:28:13 PM
 #57

Value of $5 is too low for what BTC offers IMHO. Only 5 times better than Bernanke ? No way !

haha, lol. Reminds me of a friend who last year (pre-parity), when I said: "bitcoin will reach parity with the us dollar soon" said: "No way, it cannot be better than the dollar".

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June 08, 2012, 09:56:06 PM
 #58

Value of $5 is too low for what BTC offers IMHO. Only 5 times better than Bernanke ? No way !

haha, lol. Reminds me of a friend who last year (pre-parity), when I said: "bitcoin will reach parity with the us dollar soon" said: "No way, it cannot be better than the dollar".

He obviously doesn't understand the arbitrariness of the dollar.

https://www.bitcoin.org/bitcoin.pdf
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June 15, 2012, 10:09:05 PM
 #59

I love the conspiracy theories in this thread.  You people can make conspiracy theories involving the lint in your dryer!

Anyways, anything over a .25 increase a month on the major exchanges make me nervous. We, as the bitcoin community, are still suffering social punishment over the $30 peak last year.  Now, we deserve all the criticism we got for it, but if it happens again then it would really do some damage to BTC future.

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June 15, 2012, 10:18:05 PM
 #60

I love the conspiracy theories in this thread.  You people can make conspiracy theories involving the lint in your dryer!

Anyways, anything over a .25 increase a month on the major exchanges make me nervous. We, as the bitcoin community, are still suffering social punishment over the $30 peak last year.  Now, we deserve all the criticism we got for it, but if it happens again then it would really do some damage to BTC future.

Not really.

I can't wait to go to $10 and I bet others who bought last year at like $15 too.

For the record, I only bought at $0.58 back in May 2011 and sold at highs.

I can only feel sorry for the fools buying at $17 or $15 last year.

Can we have another bubble, PLEASE !?
 
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