Manipulation by unregulated exchanges to generate fees

[cbeast]

Volume has been very low for a long time. This must have affected the revenue of the exchanges, especially after the runup last November. With low volume is less people paying trading fees. Since there was already a trending decline, it was probably seen as an opportunistic time to do the reverse. This time causing an unexpected panic would increase the volume. They are probably using bots and buying up cheap bitcoins to boot. I have no idea if this is a reasonable hypothesis, but it does provide symmetry.

[Bit_Happy]

The beauty of a free market is that the prices will find their "correct level" even if unregulated exchanges are attempting to manipulate. For example, if they are using bots to buy up cheap coins, then this is a chance for others to also place orders and Buy while the prices are so low.

[franky1]

OP is half right..
but i have found tryng to get in and out $10k is a headache du to AMLKYC. thus the whales dont touch exchanges, its all done privately.

last year mtgox was doing 170k coins volume, with btc-e being its closest competitor.. now btc-e is doing 10% of last years volume.

thus its the regulated exchanges that dropped volume. and now most order lines are just dust amounts.. it only takes 200 coins to move the markets $75.

btc-e is the prime example. there are 3 main players, one with a bot that has LOTS of orders of 0.011btc, another with 0.0212 and then a wall order that sits at 200 coin that does the main big movements. its had this pattern for many many weeks.

and everyone else blinding sheep follows the manipulation even if they lose out..

if everyone ignored the exchanges of manipulation and only sold on localbitcoins when they needed to get real fiat, and sold at prices of their own personal and actual costs.. you would see a healthier bitcoin price valuation

[1Referee]

Volume has been very low for a long time. This must have affected the revenue of the exchanges, especially after the runup last November. With low volume is less people paying trading fees. Since there was already a trending decline, it was probably seen as an opportunistic time to do the reverse. This time causing an unexpected panic would increase the volume. They are probably using bots and buying up cheap bitcoins to boot. I have no idea if this is a reasonable hypothesis, but it does provide symmetry.

After all, it's a business.

I'm not 100% sure they do this, but I would do so for sure to generate extra income.

Smart traders know when to buy and sell, these heavy swings are much welcome for me as I benefit from it and others as well.

Market manipulation is no big deal for me.

[franky1]

thus the whales dont touch exchanges

I'm not sure what your definition of whale is, but I've seen multiple million dollar and multiple thousand bitcoin walls on some of these exchanges.

shrimp=under 1btc
smallfish= under 20btc
shark= under a couple hundred coins
killer= whale under 1k coin
whale= 1k+

ive seen multiple players that combine in any 30 minute segment of charts to be at a 1000 coin per segment status. but a single order/person, is usually a shark and a school of shrink floating around multiple orders

[BTCmoons]

The beauty of a free market is that the prices will find their "correct level" even if unregulated exchanges are attempting to manipulate. For example, if they are using bots to buy up cheap coins, then this is a chance for others to also place orders and Buy while the prices are so low.

I think the OP is implying that exchanges are essentially "naked shorting" bitcoin which is causing the price of bitcoin to fall. The OP is hoping that the price falling will cause more people to trade in a panic, which would cause the price to fall even further.

I personally do not think this is the case as exchanges would need to take on huge risks to do this and each exchange does not have a huge influence over the market so if one exchange was doing this then it would likely not be successful in manipulating the price.

[cbeast]

The beauty of a free market is that the prices will find their "correct level" even if unregulated exchanges are attempting to manipulate. For example, if they are using bots to buy up cheap coins, then this is a chance for others to also place orders and Buy while the prices are so low.

I think the OP is implying that exchanges are essentially "naked shorting" bitcoin which is causing the price of bitcoin to fall. The OP is hoping that the price falling will cause more people to trade in a panic, which would cause the price to fall even further.

I personally do not think this is the case as exchanges would need to take on huge risks to do this and each exchange does not have a huge influence over the market so if one exchange was doing this then it would likely not be successful in manipulating the price.

In stock trading, they call it naked short selling, in banking they call it fractional reserve, I call it counterfeiting. I'm not hoping anything, just saying that this is what Mt Gox model exchanges do. It's their nature. It's a flaw in their design. If one exchange starts to do this then others will follow because they are competitive. Free Market 101 rule #1: "if you find a flaw in the system, then exploit it."

[santaClause]

The beauty of a free market is that the prices will find their "correct level" even if unregulated exchanges are attempting to manipulate. For example, if they are using bots to buy up cheap coins, then this is a chance for others to also place orders and Buy while the prices are so low.

I think the OP is implying that exchanges are essentially "naked shorting" bitcoin which is causing the price of bitcoin to fall. The OP is hoping that the price falling will cause more people to trade in a panic, which would cause the price to fall even further.

I personally do not think this is the case as exchanges would need to take on huge risks to do this and each exchange does not have a huge influence over the market so if one exchange was doing this then it would likely not be successful in manipulating the price.

In stock trading, they call it naked short selling, in banking they call it fractional reserve, I call it counterfeiting. I'm not hoping anything, just saying that this is what Mt Gox model exchanges do. It's their nature. It's a flaw in their design. If one exchange starts to do this then others will follow because they are competitive. Free Market 101 rule #1: "if you find a flaw in the system, then exploit it."

In banking the bank has an asset (loans) that backs up the money that is owed to depositors.

I believe that Gox did not intentionally use a fractional reserve system (this is really not an accurate term because they did not have any assets to backup the bitcoin that is owed to customers.

I would also not so much call this a "flaw" as it would produce very little profit at best, however could very much blow up in their faces and cause huge losses, and the EV of this kind of activity is negative as the general concusses is that bitcoin will rise over time

[mbaeichapareiko]

Correct me if I'm wrong,

If the price drop is a result of trading bots manipulation as well as naked shorting,  (price manipulated the opposite direction of  mt. gox.)     then when the facts come in and this theory is confirmed, and we learn those coins shorting the price don't exist,  the price should bounce up radically.    We should see a price spike upwards.

[franky1]

thus the whales dont touch exchanges

I'm not sure what your definition of whale is, but I've seen multiple million dollar and multiple thousand bitcoin walls on some of these exchanges.

shrimp=under 1btc
smallfish= under 20btc
shark= under a couple hundred coins
killer= whale under 1k coin
whale= 1k+

ive seen multiple players that combine in any 30 minute segment of charts to be at a 1000 coin per segment status. but a single order/person, is usually a shark and a school of shrink floating around multiple orders

There is a 29k bitcoin sell wall on Bitstamp as I post this.

and id love to see bitstamps bank balance withdrawal sheet to see if the 29k results in an actual $5,950,000 withdrawal once eaten, and if bitstamp also had deposits to the same amount ealier or while the wall exists to be able to eat that wall.............

[cbeast]

I don't think it's necessarily Bitstamp. I've noticed a pattern for a few months. It was such a tight algo that I couldn't find a kink in it I could use without taking a risk. I figured it was just trying to trigger stop loss orders. This move surprised me because I think it is a good agent that just wanted to take advantage of the system from the inside without hurting the market too much. I think they went too far and some bigger fish decided to cause a panic.

[SF-Man]

Why are you thinking that way? Its Governments plan so stop the debate.

[rgenito]

Yes, but is regulation *really* the answer? I'm trying to help inspire the market to change this, and the first thing I implemented is 100% transparency for our service Wall of Coins. People directly buy/sell BTC with each other via cash deposits, and *all* of our deposit addresses are listed and GPG-signed on a separate server: https://deposits.wallofcoins.com

There's a link to the Wall of Coins Homepage from there (at the top) as well.

I believe if all markets post their deposit addresses, this transparency can verify whether or not *real* Bitcoin are being transacted. Wall of Coins is basically an "immediate coin withdrawal" system, so we don't hold onto any purchased coins. What do you guys think? I'm very interested in this topic...


edit: *our service