Are we being played?

[WoodCollector]

This is purely a thoughts and speculation thread, i really dont care what the price of BTC is as i never hold too much for very long, usually as fast as i get it, it goes out to purchase wood from forum members. I have done millions of dollars of business this way, and never lost a penny. Its the way bitcoin was intended to be used.

It occurred to me this morning that bitstamp, one of our leading exchanges needs to buy 19,000BTC to pass its next audit, it then occurred to me that about 70% of the "weak hands" who bought in above $600 have already panicked and sold months ago. so i had an Occam's Razor moment, and i would like to hear some thoughts as i feel if this is the most likely explanation and it has some validity that now would be a good time for me to buy in bulk for the coming weeks purchase orders for wood. 

If bitstamp uses some of its cold storage to slowly drop the price of bitcoin, or even manipulates its algorithms to do so, then the price of BTC falls. Yes its a risky play, but from a business standpoint it makes sense to do so. If your on a sinking ship, almost anything seems better than doing nothing and drowning. As of about 20 minutes ago, that 5 million USD worth of bitcoin they lost would have only cost them about 2.7 million to buy back. If they can drive the price down to $145 a coin, then they have the cash liquidity in reserve by proof of their last audit to buy back the stolen coins and could pass an audit within a day. It is most likely that given the theft, customers are going to demand a solvency audit soon so it makes sense that they would crash bitcoin artificially to get their coins back. If BTC does not fall to $145 a coin, then Bitstamp does not have the cash liquidity to buy back the coins and become solvent again and they will surely collapse under the coming months.

I have always operated on the Occam's Razor side of bitcoin as 90% of the speculation i see in the media is nothing more than attempts at manipulation and misinformation. So please share your thoughts, am i way off base here? Even though it is the most logical explanation with the least variables, instead could it really be that there are hoards miners really willing to operate at a 30% loss just to be able to keep dumping coins for that 30% loss? Without going out on a limb on some crazy conspiracy theory rant is there really any other logical explanation besides Bitstamp is playing us like a heard of sheep?

Thanks for your thoughts 

[Chang Hum]

It's interesting you say this, I'm not sure if I agree with you on the methology they could have been using and I'm also not sure what that would be but... it's very odd to see a large spread between exchanges on high volumes of sales as occured today, if I remember correctly vast amounts of bitcoins were dumped on bitstamp to the point where stamp was around $160 whilst btc-e was around 188 (about 15%) in fact non of the other exchanges were tanking any where near as hard.

The reason I say it's odd is because it makes no sense for a large bitcoin holder to sell in such a way as it's trivial to move bitcoins to multiple exchanges and sell at the same time thus eliminating the need to lose anywhere near like 15% relative to market value on other exchanges.

A holder then only has to wait until they feel the market is going to settle for the next 20 minutes to convert the USD back into Bitcoin and send it back to the exchange they have bank accounts set up with.

[sgbett]

Some say, for market reversal a capitulation event is needed. Before now, selloffs have looked a bit like that, but I think they have fallen short because too much bullish sentiment has prevented the full wash out.

Nobody (there are exceptions, I'm talking general sentiment) expected it to go below the prior bubble's ATH, and so it inevitably had to.

What happened in the last 48 hours looks much more like the capitulation bottom that people would say indicates a change in direction.

It looks like it satisfied the calls of the EW proponents. Its in the ballpark of what the most bearish (serious) forecasters were saying. It has decent volume this time, and the recent low was in the region of a 90% drop from the previous ATH.

It looks like standard human emotions driving market behaviour. I don't think a nefarious manipulator is needed to explain anything, as tempting as it is to believe such things.

Thats just my 2bits.

[BittBurger]

It looks like standard human emotions driving market behaviour. I don't think a nefarious manipulator is needed to explain anything, as tempting as it is to believe such things.

Human emotions about what?  Nothing happened. 100% of the people here and on Reddit were doing just fine 5 days ago.  Bitstamp back online, and all was well.  There was no horrible news.  All good news for the entire 2nd half of 2014 in fact.  There never is Horrible News when Bitcoin crashes.  Bitcoin is not a company, and the Bitcoin price is not a company stock.  Yet people *still* want to make Bitcoin Market a stock market, and apply to it all the psychological factors of a company stock.  There is no company.  And if the market was actually reacting emotionally to whats going on in the "company" of bitcoin, the price would be over $1,000 right now.  There has been nothing but good news, and growth in the infrastructure "out in the field".  So the claim that people are freaking out and bailing emotionally doesn't make sense to me at all.  This pool is very small, and very easily affected by large buys and sells.  When you see 1 entity repeatedly dumping $10,000 worth, knocking the price down a notch in 5 minutes, that says something.

There's a theory that this is BFS liquidating.  Or the alt coin hacker liquidating.  Or Bitstamp knocking the price down to get cheaper coins.

All of these are more feasible than some "traditional stock market" theory that down always means "loss of confidence".

Down almost never means loss of confidence with Bitcoin.  And up almost never means increased confidence either.

-B-

[blade87]

I think it is being played. But the end result is the same so it doesn't matter. Why? Because China led every single of this drops all the way down to the margin calls. I did not see BTCe, Finex, or Stamp lead any of them. It was always Huobi dropping $10 below every other exchange, with the rest then following.

[Chang Hum]

To be fair thinking about the methodology they could use if they were in a scrape is fairly simple when I think back to MTGOX, I don't think mtgox were trying this and were way to far in the shit in anycase but... Bitstamp could make vast sums of cash by simply announcing banking delays causing customers to poo themselves, convert their cash into Bitcoin at a massive premium (that would essentially be theirs) so they could flee to other exchanges or wallets.

[shirkan]

wow, this actually is a thread with some real discussion and brainwork going on. Thank you guys!

Back to the topic. Actually, I have the feeling that something really big is happening in the background and that the current price is heavily manipulated.
We'll probably know in a couple of weeks.

[sgbett]

It looks like standard human emotions driving market behaviour. I don't think a nefarious manipulator is needed to explain anything, as tempting as it is to believe such things.

Human emotions about what?  Nothing happened.  100% of the people here and on Reddit were doing just fine 5 days ago.  Bitstamp back online, and all was well.  There was no horrible news.  All good news for the entire 2nd half of 2014 in fact.  There never is Horrible News when Bitcoin crashes.  Yet people *still* want to make Bitcoin Market a stock market, and apply to it all the psychological factors of a company stock.  There is no company.  And if the market was actually reacting to whats going on in the "company" of bitcoin, the price would be over $1,000 right now.  There has been nothing but good news, and growth in the infrastructure "out in the field".  So the claim that people are freaking out and bailing emotionally doesn't make sense to me at all.  This pool is very small, and very easily affected by large buys and sells.  When you see 1 entity repeatedly dumping $10,000 worth, knocking the price down a notch in 5 minutes, that says something. Organic emotional selloffs of an ecosystem full of emotional people don't happen in 5 minutes with one sale.  Over and over.  

There's a theory that this is BFS liquidating.  Or the alt coin hacker liquidating.  Or Bitstamp knocking the price down to get cheaper coins.

All of these are more feasible than some "traditional stock market" theory that down always means "loss of confidence".

Down almost never means loss of confidence with Bitcoin.  And up almost never means increased confidence either.

-B-

Human emotions about price, there doesn't need to be a company, the same patterns happen in forex as the do in equities.

The sell off yesterday created more fear - breaching the ATH of the previous bubble is a big thing. Capitulation is when people finally give in to fear.

Human tendency to set stops at round numbers, I bet there was a whole stack of stops at $200. Those get hit, waterfall effect.

On the chinese chart it was Y1000, same thing.

Reacting the fundamentals of a 'stock' or in this case bitcoin, I agree the price would be different, thats what investors to. The price day to day is driven by traders.

Buffet's "voting machine/weighing machine" phrase applies here. Thats why I hold, I'm not interested in what some trader wants to give me for my bitcoin today whilst its the world champion in the unpopularity contest. I'll wait a while. See how things pan out.

[Torque]

It looks like standard human emotions driving market behaviour. I don't think a nefarious manipulator is needed to explain anything, as tempting as it is to believe such things.
Thats just my 2bits.

The Average Joe pro-bitcoin investor may be emotional and twitchy, but traders and early adopters are not.  The Average Joe holders out there, even if there are tens of thousands of them, do not collectively have the extremely high volume of coins that we are currently seeing being dumped on the exchanges.  Only deep pocket whale traders and large miners would.  Some over-leveraged longs have been wiped out.  Also, we could still be seeing thousands of stolen coins from Mt. Gox and Bitstamp being liquidated.

[Deadstock]

A wise man once said "be fearful when others are greedy and greedy when others are fearful"

[tabnloz]

there may be multiple things going on (deflation of commodities, china going to stocks, miners folding etc) but these dumps are primed and timed. lots of 5k, 10k in intervals. groups of traders who have thousands on margin sytematically dump. i dont know what to call these geezers, but they are pro plungers for want of a better phrase.

[Btcshithole]

Let's assume you are being played. What you can do? Sue the bastard or what?

We traders/trollers never argue the legitimacy of a thing, we just follow it. If bitstamp want to play the market, just follow the direction it plays. Would it be a better way to deal with it?

[WoodCollector]

Let's assume you are being played. What you can do? Sue the bastard or what?

We traders/trollers never argue the legitimacy of a thing, we just follow it. If bitstamp want to play the market, just follow the direction it plays. Would it be a better way to deal with it?

I agree with you, that's why i asked the questions, if we are being played, then now would be a good time for me to play ball to save a little $ over the next few weeks for wood purchase orders.

[NotHatinJustTrollin]

"Buying the despair phase" works if fundamentals are good or if a big pump&dump scenario is possible/likely.

At this point in time, neither of them apply to BTC anymore.


Shit's going down like tulips.

[sgbett]

A wise man once said "be fearful when others are greedy and greedy when others are fearful"

I was thinking about this the other night, its really hard to know what others are thinking, because you only really know what you are thinking yourself.

I asked myself the question, am *I* fearful or greedy, and after thinking hard I realised it was really hard for me to tell. Throughout the last year, everyone's touted 'fear' as being prevalent. The idea that the selloff is through fear is probably a mistake (at first) because at the time we all knew it was a speculative bubble that had to burst at some point, and so if we know that then we know that although the selloff may create fear in time, it is not because of fear.

This for me adds some subtle distinction to the words above. It's not that you buy when people *are* afraid because thats been the case (increasingly as time has gone on) for the past year. You need to buy when people are selling because they are afraid.

Conversely, thats how you know when to sell the bubble top. People are always greedy, but you know its time to sell when they are only buying because they are greedy.

As it happens, I felt fear as the price continued to go down. I bought because, if i felt fear, then others must be afraid too. Now I realise that was too soon. I needed to wait until people were selling because of that fear. I've thought about selling before now, but on reflection I realise that was a 'greed' sell. Today when I went through the mental discussion of "maybe I should sell" I realised that today it was because I was afraid. Of course I will not, because it would be silly to deviate from the plan now.

As ever this is not advice to buy. This is just some thoughts on a famous WB quote.

I'm quite happy holding my own bags, thanks.

[redhawk979]

[Chang Hum]

interesting 2 Warren Buffet quotes have been used on this page twisted to mean the exact opposite of their intention with the aid of confirmation bias!

[DeadCoin]

https://www.youtube.com/watch?v=RK_g0H6Zs1M

[sgbett]

interesting 2 Warren Buffet quotes have been used on this page twisted to mean the exact opposite of their intention with the aid of confirmation bias!

so I should have waited till $1200 to buy? because that was what the real 'weight' is?

gotcha.

[Chang Hum]

interesting 2 Warren Buffet quotes have been used on this page twisted to mean the exact opposite of their intention with the aid of confirmation bias!

so I should have waited till $1200 to buy? because that was what the real 'weight' is?

gotcha.

  I don't think you have got me. I've got no idea what you think it means but it's this:

Voting machine = folly of the market: what's trending, who's popular, who's unpopular
Weight = The substance of a companies value determined by very real metrics such as revenue, profit, growth etc. not the public's silly opinion about its prospects in the short run (the voting machine).

Weight isn't applicable to Bitcoin so it's just a part of the voting machine