You have it right that automated trades make up at least half of most trades on MtGox, but I believe you are wrong on motivation. They are not doing it to keep MtGox relevant. The trade initiators, be they human or robotic, are mining MtGox. You see, Gox, being the first exchange with several API options is a gold mine of poorly written bots run by early adopters with massive coin stashes. The trick is maximizing the Bitcoin you get out of them before you ramp the price once again. Of course, as a programmatic trader who understands this dynamic, you can overweight your buys to compensate when the risk of bullishness is too high. The tighter we coil here, the more buy pressure we will see if we break up.
All that goes a bit over my head, but I understand the principles of frustrating buying power in order to give upsurge added momentum when you finally take the flood gates away. Problem with what is happening now at Gox is that the automated trading is in complete denial of the prevailing market sentiment. Gox charts are screaming break out whereas everywhere else is saying break down. As you know, whenever a minority is in denial of the aggregate sentiment in a market then it generally means bad news for them..........or perhaps not in a ring fenced market like Gox where people who want to get liquid have no option but to buy Bitcoins at inflated price and take a haircut converting them on respectable exchanges such as Bitstamp.....my brother done just that today as it happens swallowing a 14% hit in the process.
