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Author Topic: The Manbearwhale Conspiracy  (Read 2619 times)
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bassclef
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October 02, 2014, 11:13:27 PM
 #1

Those of us who have watched the ticker tape recently have probably noticed something a little odd, however not unprecedented in Bitcoin's history. We look on with raised eyebrows as the orderbook is filled with coins on the sell side while large market orders wipe out existing buy orders, driving the price downward. In the past, large buy and sell orders have dominated digital currency markets and are a well-known manipulation tactic. We won't get into that too deeply here, but rest assured it does exist and saavy (and not-so-saavy) traders often use them to their advantage. Not only do large walls tip the scale of supply and demand in the trader's favor, but they act as psychological manipulation as well: Buyers who see a BTC1000+ sell wall at the top of the orderbook will not believe the price will go up; furthermore they will feel powerless to do anything about it as that trader obviously has a larger bankroll. On the other hand, this manipulation puts a portion of the trader's coins at risk while revealing their tactics to the observant competition. It is a two-way street.

Market manipulation in traditional markets occurs by the big players. Here, Jim Cramer, former Goldman Sach's employee, admits to this (http://www.youtube.com/watch?v=gMShFx5rThI). For a short primer on manipulation in the digital currency markets, one needs to look no further than The Book of Wolong (http://pastebin.com/cqM71kes), written by an experienced trader who was responsible for the original Dogecoin pump and subsequent dump. Anyone who has traded altcoins has seen this playbook in action time and time again. Riding the coattails of these deep-pocketed traders and exiting trades before they do is rule number one. Knowing this, suggesting that manipulation is part of normal market activity is incorrect in many cases, especially with small market cap coins that have low liquidity and no real-world use. Trading altcoins, although highly risky, is useful for those who are curious about some of the greedier, nefarious players in these markets and what tactics they employ.

Bitcoin is more resistant to manipulation than altcoins due to its higher market cap, but experienced traders know that it does occur from time to time. With this in mind, we can focus again on the topic at hand. Who is the mysterious player that has pushed the market down recently? Unfortunately we will probably never know for certain. Whether it's one trader with deep pockets, a miner cashing out, a group of investors accumulating cheap coins on a private IRC channel, or simply an early adopter cashing out to buy a Porsche to impress his girlfriend, his actions on the market have been effective enough to raise the eyebrows of more than a few and cause further investigation.

What is certain is the story that their activity tells on the ticker tape. Here's what I have noticed so far on Bitstamp.

  • The player sells at major technical and psychological support levels (400, 380, 375, 360)
  • The initial sign that he is working is a large market sell, in the neighborhood of BTC500-800. Sometimes they are split up into smaller orders, but they tend to occur within seconds of each other. This snaps up all of the buy orders immediately below the market price.
  • Some time later come smaller market sells, on average 10 times less than the original market sells. These increase sell pressure and are intended to fool traders that a downtrend is imminent.
  • Smaller traders eventually join in, effectively pushing the price down further.
  • No evidence of buying or microbuying once the price evens out lower. He may be doing this on another exchange or OTC.

I've also noticed that when the price gets to a certain level, additional sales happen almost simultaneously. I saw this when the price level broke 370--instantly hundreds more coins were sold in two separate orders to push down further. Here's my half-baked theory: Either this player has one helluva trigger finger or he is using a bot. As someone with experience running algorithmic traders, the repeated strategy, "random" size of orders, and speed at which they are executed suggest that it is very possible. Just program it to wait for certain conditions in the orderbook, sell random amount x between z and y based on market price, wait a while, then sell x/10 as long as the price continues to drop. Give it a huge bankroll and let it go. The bot controller could analyze the market and set desired resistance levels for it to break while simultaneously shorting the market on other exchanges.

I am not one to believe conspiracy theories. This could be me overthinking in what is essentially a powerful bear market. I am one, however, to obsess about things that interest me, watch closely and gather evidence. I consider myself an honest and moral person. In an unregulated market I believe manipulation tactics should be called out and profited from. There is no doubt in my mind traders will figure out how to profit from whatever or whoever is causing this downward pressure on the market until this player becomes unprofitable. I have seen evidence of this already, indicating that those who can be fooled by this activity, have been. One thing is for sure, that another larger player is always off stage left, waiting patiently for his entrance.
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October 02, 2014, 11:22:56 PM
 #2

I have gotten that feeling too. I always point to the psychological aspect of the market... Even for me its painful to see the price go down as it is... granted, I have not really bought much, most of my BTC is/was from mining.

What gets me more is how it can be profitable to mine at these prices. I know hash cost a ton now, as it always has.... your return is very limited.

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October 02, 2014, 11:40:51 PM
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I've also noticed that when the price gets to a certain level, additional sales happen almost simultaneously. I saw this when the price level broke 370--instantly hundreds more coins were sold in two separate orders to push down further. Here's my half-baked theory: Either this player has one helluva trigger finger or he is using a bot.

This is called stop-loss. Bitstamp now has native support for this, both regular and trailing. You can set a market sell to trigger if the price drops below a predetermined threshold. The stop-loss orderbook is not visible to the public.

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October 03, 2014, 12:11:45 AM
 #4

I've thought this for a while. my money is on big players cooperating to suppress the market to the end of mass accumulation.
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October 03, 2014, 12:13:56 AM
 #5

I've also noticed that when the price gets to a certain level, additional sales happen almost simultaneously. I saw this when the price level broke 370--instantly hundreds more coins were sold in two separate orders to push down further. Here's my half-baked theory: Either this player has one helluva trigger finger or he is using a bot.

This is called stop-loss. Bitstamp now has native support for this, both regular and trailing. You can set a market sell to trigger if the price drops below a predetermined threshold. The stop-loss orderbook is not visible to the public.

But couldnt this be manipulated? As in, push the price down to see if it gets triggered? In a way that is like setting up a sell wall to see if others will be willing to sell under that set price you put up.

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October 03, 2014, 12:24:34 AM
 #6

But couldnt this be manipulated? As in, push the price down to see if it gets triggered? In a way that is like setting up a sell wall to see if others will be willing to sell under that set price you put up.

I'm not sure if that counts as manipulation, rather than making a quick buck from people who put a lot of money in a stop-loss. It's a regular course of business, you see it in every stock market.

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October 03, 2014, 12:51:25 AM
 #7

I had been considering a theory which seems to match some of what was posted in the OP.

Lets start with a few axioms (open to debate, sure, but for now just roll with it)

- BTC still has massive growth potential
- There exist players with deep pockets who recognize this growth potential
- These traders intend to profit from the next run up in price, as we have seen in the previous bubble/crash cycles

Okay, so how to achieve profit from this?

1) Set up agreements with large mining operations (or any other players with large amounts of BTC, looking to liquidate) - Agree to buy x amount of coins per week at spot market rate. This works out well for the miners as they won't be subject to slippage as they try to cash out

2) Take a percentage of these newly aquired coins and sell on the exchanges in order to drive the price down

3) Next week, your OTC purchased coins are cheaper due to the lower market price Smiley

4) Continue until you have accumulated a nice sizeable position

5) Now flip the switch and employ tactics to drive the price back up. Miners will stop selling and start holding in anticipation of higher prices, thus lowering supply therefore price continues to rise exponentially

6) Dump into the hype for tidy gains. Precipitate a mass sell-off, shake out weak hands

7) Repeat steps 1 - 6


Would this work?
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October 03, 2014, 01:34:44 AM
 #8

I've also noticed that when the price gets to a certain level, additional sales happen almost simultaneously. I saw this when the price level broke 370--instantly hundreds more coins were sold in two separate orders to push down further. Here's my half-baked theory: Either this player has one helluva trigger finger or he is using a bot.

This is called stop-loss. Bitstamp now has native support for this, both regular and trailing. You can set a market sell to trigger if the price drops below a predetermined threshold. The stop-loss orderbook is not visible to the public.

What if you were a big player colluding with the exchange?  Does not the exchange have this information? Open Source Decentralized Exchanges are going to play a very important role when developed
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October 03, 2014, 02:11:59 AM
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Interesting Post Thanks
bassclef
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October 03, 2014, 04:02:48 AM
 #10


1) Set up agreements with large mining operations (or any other players with large amounts of BTC, looking to liquidate) - Agree to buy x amount of coins per week at spot market rate. This works out well for the miners as they won't be subject to slippage as they try to cash out

2) Take a percentage of these newly aquired coins and sell on the exchanges in order to drive the price down

3) Next week, your OTC purchased coins are cheaper due to the lower market price Smiley

4) Continue until you have accumulated a nice sizeable position

5) Now flip the switch and employ tactics to drive the price back up. Miners will stop selling and start holding in anticipation of higher prices, thus lowering supply therefore price continues to rise exponentially

6) Dump into the hype for tidy gains. Precipitate a mass sell-off, shake out weak hands

7) Repeat steps 1 - 6

Would this work?

I would think individuals approach mining operations for accumulation purposes all the time, so yes, in theory.

What percentage of their mined coins they sell, now that is the question. Miners don't exactly advertise with flashing neon signs. They also don't sell 100% (some are long term holders) and tend to be engineer-types. While they understand the protocol and its future implications very well, they are less comfortable with personal relationships and would be rightfully careful about who they enter into a business deal with. Their need to stay anonymous is understandable. If it were me, I would much rather sell to someone like Barry Silbert of Second Market than someone I've never heard of with plans to crank the market down for his own profit. And if I ever suspected that something like that might be happening (and making my entire investment worth less in the process) I would end the deal immediately. Come to think of it, miners and speculators have very opposite personality types.

Like I said, no market scheme can work forever once other players pick up on it. I think he may try for another few pushes downward but if "the player" can only coax the beast to move a few dollars down, there's not much point. Manipulation is a risky venture and only works if you are in absolute control. The moment that comes into question, you stop in order to protect profits.  
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October 03, 2014, 04:14:01 AM
 #11

I had been considering a theory which seems to match some of what was posted in the OP.

Lets start with a few axioms (open to debate, sure, but for now just roll with it)

- BTC still has massive growth potential
- There exist players with deep pockets who recognize this growth potential
- These traders intend to profit from the next run up in price, as we have seen in the previous bubble/crash cycles

Okay, so how to achieve profit from this?

1) Set up agreements with large mining operations (or any other players with large amounts of BTC, looking to liquidate) - Agree to buy x amount of coins per week at spot market rate. This works out well for the miners as they won't be subject to slippage as they try to cash out

2) Take a percentage of these newly aquired coins and sell on the exchanges in order to drive the price down

3) Next week, your OTC purchased coins are cheaper due to the lower market price Smiley

4) Continue until you have accumulated a nice sizeable position

5) Now flip the switch and employ tactics to drive the price back up. Miners will stop selling and start holding in anticipation of higher prices, thus lowering supply therefore price continues to rise exponentially

6) Dump into the hype for tidy gains. Precipitate a mass sell-off, shake out weak hands

7) Repeat steps 1 - 6


Would this work?

+1

All the parameters of this very thing happening.

There is a shadow market, within Bitcoin right now that trades a HIGH volume of BTC off exchange.

Market makers, miners, hedge funds, whales, however you want to call them.

They are squeezing this BTC fruit for every drop of its juice.

Consider : The INSANE hash rate we have been running at for the past few months.

There are more hashing farms than ever being booted. It has become an absolute arms race for mining technology, development & deployment. Mining farms are generating top tier VC money  and these millions are probably a fraction only of private investment.

Some here are suggesting there is no demand for these coins. I am certain of this being absolutely false.

In fact this chart is a very insightful to that regard



OTC transactions are at near all time high.

Hopefully it ends soon. I believe it will. Miners will hit a wall. Another hype cycle will come again, I can feel it picking up right now after a very a slow summer.


"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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October 03, 2014, 04:25:04 AM
 #12

I would think individuals approach mining operations for accumulation purposes all the time, so yes, in theory.

What percentage of their mined coins they sell, now that is the question. Miners don't exactly advertise with flashing neon signs. They also don't sell 100% (some are long term holders) and tend to be engineer-types. While they understand the protocol and its future implications very well, they are less comfortable with personal relationships and would be rightfully careful about who they enter into a business deal with. Their need to stay anonymous is understandable. If it were me, I would much rather sell to someone like Barry Silbert of Second Market than someone I've never heard of with plans to crank the market down for his own profit. And if I ever suspected that something like that might be happening (and making my entire investment worth less in the process) I would end the deal immediately. Come to think of it, miners and speculators have very opposite personality types.

Like I said, no market scheme can work forever once other players pick up on it. I think he may try for another few pushes downward but if "the player" can only coax the beast to move a few dollars down, there's not much point. Manipulation is a risky venture and only works if you are in absolute control. The moment that comes into question, you stop in order to protect profits.  

I don't see how that can be true.

Its is economically unfeasible for miners to survive on this "market scheme".

Miners might be long term holders but they have had their own piece of the pie stashed away for awhile already.

The coins being minted presently. By industrial, VC funded, warehouse-type miners are most certainly all sold to Bitcoin brokers. It is perfectly reasonable to assume confidential supply agreement are being drafted everyday between miners-brokers-private buyers. I'm sorry to say but it is pretty likely Barry Silbert is one of these brokers who will sell to any private party willing to pay his price. Please don't fool yourself into believing there is such a thing as an agreement between these market participants not to dump the price.


"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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October 03, 2014, 05:18:42 AM
 #13

I would think individuals approach mining operations for accumulation purposes all the time, so yes, in theory.

What percentage of their mined coins they sell, now that is the question. Miners don't exactly advertise with flashing neon signs. They also don't sell 100% (some are long term holders) and tend to be engineer-types. While they understand the protocol and its future implications very well, they are less comfortable with personal relationships and would be rightfully careful about who they enter into a business deal with. Their need to stay anonymous is understandable. If it were me, I would much rather sell to someone like Barry Silbert of Second Market than someone I've never heard of with plans to crank the market down for his own profit. And if I ever suspected that something like that might be happening (and making my entire investment worth less in the process) I would end the deal immediately. Come to think of it, miners and speculators have very opposite personality types.

Like I said, no market scheme can work forever once other players pick up on it. I think he may try for another few pushes downward but if "the player" can only coax the beast to move a few dollars down, there's not much point. Manipulation is a risky venture and only works if you are in absolute control. The moment that comes into question, you stop in order to protect profits.  

I don't see how that can be true.

Its is economically unfeasible for miners to survive on this "market scheme".

Miners might be long term holders but they have had their own piece of the pie stashed away for awhile already.

The coins being minted presently. By industrial, VC funded, warehouse-type miners are most certainly all sold to Bitcoin brokers. It is perfectly reasonable to assume confidential supply agreement are being drafted everyday between miners-brokers-private buyers. I'm sorry to say but it is pretty likely Barry Silbert is one of these brokers who will sell to any private party willing to pay his price. Please don't fool yourself into believing there is such a thing as an agreement between these market participants not to dump the price.

I was not aware there were VC funded mining operations. What incentive does this provide over buying coins directly?

I'm not necessarily saying that miners have any idea what is happening with the coins that they sell. But certainly they want the price to stay higher rather than lower, and you might do some blockchain investigating if you suspected it was true that clients were dumping coins, causing you to sell more of them to pay rent and utilities. The major exchange addresses are known.

But this is all speculation anyway. What is likely happening is that whales are swinging their large sacks of coin around to buy in cheaper.
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October 03, 2014, 08:56:06 PM
 #14

https://i.imgur.com/uIYoQ7K.jpg
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October 03, 2014, 09:02:29 PM
 #15

Our bitcoin consortium is still offloading a large quantity of coins. Be warned, final capitulation is still coming! We have thousands of coins to offload across bitstamp and other exchanges. Why hold onto your bitcoins if you know the price will continue to drop? Do the wise thing and sell now... cut your losses!

--Waren Bufet
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October 03, 2014, 09:14:47 PM
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Our bitcoin consortium is still offloading a large quantity of coins. Be warned, final capitulation is still coming! We have thousands of coins to offload across bitstamp and other exchanges. Why hold onto your bitcoins if you know the price will continue to drop? Do the wise thing and sell now... cut your losses!

--Waren Bufet

lol, still haven't learned how to spell your own name??  Cheesy
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October 03, 2014, 09:18:09 PM
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Funny.  Anyone truly dumping would be telling everyone to buy or hold so they can get a better selling price.  Anyone telling you to sell is simply trying to get a better buy-in price.
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October 04, 2014, 06:57:57 AM
 #18

I've also noticed that when the price gets to a certain level, additional sales happen almost simultaneously. I saw this when the price level broke 370--instantly hundreds more coins were sold in two separate orders to push down further. Here's my half-baked theory: Either this player has one helluva trigger finger or he is using a bot.

This is called stop-loss. Bitstamp now has native support for this, both regular and trailing. You can set a market sell to trigger if the price drops below a predetermined threshold. The stop-loss orderbook is not visible to the public.

What if you were a big player colluding with the exchange?  Does not the exchange have this information? Open Source Decentralized Exchanges are going to play a very important role when developed
That is the problem with stop loss orders stored on the exchange's servers - they are subject to manipulation if the information leaks out. Can you trust the exchange to keep this information private? Can you trust the exchange not to trade against you and run your stops to their own benefit? For now, it may be better to run your own program using APIs to implement stop loss strategies.
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October 04, 2014, 07:33:54 AM
 #19

We have thousands of coins to offload across bitstamp and other exchanges.

--Waren Bufet

And how did your consortium acquire these thousands of coins?
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October 04, 2014, 07:40:34 AM
 #20

We have thousands of coins to offload across bitstamp and other exchanges.

--Waren Bufet

And how did your consortium acquire these thousands of coins?

Part of our Berkshire Hathaway holdings, we acquired a company with a large amount of bitcoins on hand. As we have no need for this funny money, we developed a consortium to offload them onto exchanges including btcstamp. I only wanting to warn any of you here, since many have much money invested and should know what's happening.

--Warren Buffett
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