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Author Topic: Mt. Gox Market Manipulation Question  (Read 1635 times)
jerfelix
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May 24, 2011, 07:22:02 PM
 #1

I'm looking at Bitcoin Charts, and see a huge spike of buy orders at 6.50 BTC
See http://bitcoincharts.com/markets/mtgoxUSD.html for realtime, or http://www.flickr.com/photos/63348656@N08/5755403189/ for a screen shot.

Seems unusual that someone would put in a public buy order for 7000 units at a price of 6.50.  That's $45,500.

To me, that looks fishy.
I recently read an article about stock market manipulators who buy a small amount of shares, and then put in a HUGE public Buy order below the market price, so that other potential buyers will see it, and think that there's major support at a certain price (and therefore, the price is less likely to go down below that, so it's a safer bet).  And then the public (i.e. the suckers) bid up the price, while the scammer sells out at a higher price (and then cancels the low buy order).

The theory that I am posing is that perhaps someone wants the price to go up, so they have put in a huge public buy order at 6.50 (which they never intend to execute) and maybe a dark sell order at 7.50 or so.

Do you think I am being too paranoid?  I know there are manipulators out there.

At the same time, I am very impressed with the generosity of the Bitcoin community, as a newbie.  Guess it's life.  There are the takers, and there are the givers.  
In another thread, I posted my bitcoin address, because the faucet was broke and I am bitcoin-broke, and someone was kind enough to shoot me some coins!  
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silversurfer
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May 24, 2011, 07:34:59 PM
 #2

Yes, there are people playing these games.

I say get rid of dark pools.

That which is falling should also be pushed.
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May 24, 2011, 07:39:28 PM
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they better be ready to buy at 6.5 - if enough sellers come in at the same time, it will get there fast and they will be executed. Pretty dangerous way of trying to 'signal' the market.

I'd say it's more likely that person calculated an entry point at 6.5, wants to get the coins at that price, so rather than wait and nibble, they hope to catch a large downswing and get executed.


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May 24, 2011, 07:48:03 PM
 #4

I'm looking at Bitcoin Charts, and see a huge spike of buy orders at 6.50 BTC
See http://bitcoincharts.com/markets/mtgoxUSD.html for realtime, or http://www.flickr.com/photos/63348656@N08/5755403189/ for a screen shot.

Seems unusual that someone would put in a public buy order for 7000 units at a price of 6.50.  That's $45,500.

To me, that looks fishy.
I recently read an article about stock market manipulators who buy a small amount of shares, and then put in a HUGE public Buy order below the market price, so that other potential buyers will see it, and think that there's major support at a certain price (and therefore, the price is less likely to go down below that, so it's a safer bet).  And then the public (i.e. the suckers) bid up the price, while the scammer sells out at a higher price (and then cancels the low buy order).

The theory that I am posing is that perhaps someone wants the price to go up, so they have put in a huge public buy order at 6.50 (which they never intend to execute) and maybe a dark sell order at 7.50 or so.

Do you think I am being too paranoid?  I know there are manipulators out there.

At the same time, I am very impressed with the generosity of the Bitcoin community, as a newbie.  Guess it's life.  There are the takers, and there are the givers.  
In another thread, I posted my bitcoin address, because the faucet was broke and I am bitcoin-broke, and someone was kind enough to shoot me some coins!  

It's gone down to 3902 now, though there's also 2825 at 6.51. However, that's spread out over twelve separate orders - hover over the 6.50 and the 6.51 and you can see the separate orders. It's still possible that all the orders were placed by the same individual (though that seems unlikely), or one individual is spreading their large orders between other users' small orders, I guess.

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fadisaaida
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May 24, 2011, 07:53:29 PM
 #5

from this link : http://bitcoincharts.com/markets/mtgoxUSD_depth.html

u can see clearly that someone (or more trying to manipulate the market )

but as i see it the more people will use it the harder it will be for those people

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May 24, 2011, 07:54:58 PM
 #6

from this link : http://bitcoincharts.com/markets/mtgoxUSD_depth.html

u can see clearly that someone (or more trying to manipulate the market )

but as i see it the more people will use it the harder it will be for those people
I just don't see it, sorry! I can see the twelve orders around 6.50 and 6.51 that I identified above, but I'm not seeing anything out of the ordinary.

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barbarousrelic
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May 24, 2011, 07:55:26 PM
 #7

This is why I support requiring a CAPTCHA before any order is entered. A CAPTCHA would make it prohibitively slow enough to discourage anyone from entering orders they didn't want filled.

Do not waste your time debating whether Bitcoin can work. It does work.

"Early adopters will profit" is not a sufficient condition to classify something as a pyramid or Ponzi scheme. If it was, Apple and Microsoft stock are Ponzi schemes.

There is no such thing as "market manipulation." There is only buying and selling.
silversurfer
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May 24, 2011, 07:56:55 PM
 #8

This is how markets work.  Nothing sinister.

That which is falling should also be pushed.
jerfelix
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May 24, 2011, 08:06:06 PM
 #9

This is how markets work.  Nothing sinister.

Actually, in stock markets, you CAN get fined for the behavior that I described in my first post.  Such market manipulation is regulated.

I could be wrong, but here's my source for this information:
http://www.lrb.co.uk/v33/n10/donald-mackenzie/how-to-make-money-in-microseconds

A spoofer might, for instance, buy a block of shares and then issue a large number of buy orders for the same shares at prices just fractions below the current market price. Other algorithms and human traders would then see far more orders to buy the shares in question than orders to sell them, and be likely to conclude that their price was going to rise. They might then buy the shares themselves, causing the price to rise. When it did so, the spoofer would cancel its buy orders and sell the shares it held at a profit. It’s very hard to determine just how much of this kind of thing goes on, but it certainly happens. In October 2008, for example, the London Stock Exchange imposed a £35,000 penalty on a firm (its name has not been disclosed) for spoofing.

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May 24, 2011, 09:38:28 PM
 #10

This is how markets work.  Nothing sinister.

Actually, in stock markets, you CAN get fined for the behavior that I described in my first post.  Such market manipulation is regulated.


Not really relevant.  Just because one market is regulated in a certain way, it does not follow that all other markets should be regulated the same way.

Also, the Bitcoin market is extremely risky.  It should go without saying:  Be Effing Careful. 

Andrew Vorobyov
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May 24, 2011, 09:47:33 PM
 #11

We must thank God someone has interest in manipulating the market...

smooth
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May 24, 2011, 09:59:42 PM
 #12

Other algorithms and human traders would then see far more orders to buy the shares in question than orders to sell them, and be likely to conclude that their price was going to rise.

That sounds like a dumb trading strategy. 
xf2_org
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May 24, 2011, 10:17:51 PM
 #13

As long as they are doing this with real money, there is nothing sinister about it.  Whether or not the order is filled, that person/bot is adding information to the market by risking their own money.

Right now, bitcoin and mtgox are such thin markets that you can "manipulate" the market simply by buying or selling a large amount of bitcoins.  One single VC or trader with an extra $100,000 (a small sum, to them) can easily cause a $1 or more price jump.

Don't stare too closely to the microgames played by humans and bots in the order book.  You will miss the forest for the trees.
jerfelix
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May 25, 2011, 12:05:07 AM
 #14

This is how markets work.  Nothing sinister.

Actually, in stock markets, you CAN get fined for the behavior that I described in my first post.  Such market manipulation is regulated.


Not really relevant.  Just because one market is regulated in a certain way, it does not follow that all other markets should be regulated the same way.

Also, the Bitcoin market is extremely risky.  It should go without saying:  Be Effing Careful. 



My point was not to encourage regulation - that was your addition, I think.  My point was along the lines of your last sentence. 

If you are making buy decisions by looking at the buy order log, keep in mind that those buy orders could be an attempt to fool you, and can be cancelled at any time.  They could be an attempt to signal to the masses that there is a demand that really isn't there (because the orders could be cancelled).  They could be an attempt to show support, so that a sell order can get a maximum value.  Be Effing Careful.

You will miss the forest for the trees.

You're right there.  My price target on Bitcoins is $147 per BTC. 
So if I buy it for $6 or $7, who cares about a buck!

Hey, I'm up to 5.19 BTC just from people's generosity. Once I get 1000 BTC, I'll explain my $147/BTC math, which is sure to drive the price up.   Wink  Yeah, I move markets, haha.

I'm trying to buy some Bitcoins, but it's still very hard!
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May 25, 2011, 01:48:31 AM
 #15

This is how markets work.  Nothing sinister.

Actually, in stock markets, you CAN get fined for the behavior that I described in my first post.  Such market manipulation is regulated.


Not really relevant.  Just because one market is regulated in a certain way, it does not follow that all other markets should be regulated the same way.

Also, the Bitcoin market is extremely risky.  It should go without saying:  Be Effing Careful. 



My point was not to encourage regulation - that was your addition, I think.  My point was along the lines of your last sentence. 

If you are making buy decisions by looking at the buy order log, keep in mind that those buy orders could be an attempt to fool you, and can be cancelled at any time.  They could be an attempt to signal to the masses that there is a demand that really isn't there (because the orders could be cancelled).  They could be an attempt to show support, so that a sell order can get a maximum value.  Be Effing Careful.

You will miss the forest for the trees.

You're right there.  My price target on Bitcoins is $147 per BTC. 
So if I buy it for $6 or $7, who cares about a buck!

Hey, I'm up to 5.19 BTC just from people's generosity. Once I get 1000 BTC, I'll explain my $147/BTC math, which is sure to drive the price up.   Wink  Yeah, I move markets, haha.

I'm trying to buy some Bitcoins, but it's still very hard!

If you buy at $6 instead of $7 you'll have ~16% more coins. Which is meaningful at $147000.

Play Bitcoin Poker at sealswithclubs.eu. We're active and open to everyone.
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May 25, 2011, 02:04:19 AM
 #16

If you are making buy decisions by looking at the buy order log, keep in mind that those buy orders could be an attempt to fool you, and can be cancelled at any time.  They could be an attempt to signal to the masses that there is a demand that really isn't there (because the orders could be cancelled).  They could be an attempt to show support, so that a sell order can get a maximum value.  Be Effing Careful.

Even executed transactions could be an attempt to fool you (though in that case they are at least somewhat expensive).
sandos
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May 25, 2011, 06:50:25 AM
 #17

Even if someone is manipulating the prices, if a few parties does this it will still stabilize prices, which is good? Wink
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