Help me to understand current BTC fluctuation

evoorhees

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Quote from: imanikin on March 06, 2013, 10:59:57 PM

My opinion is that the fluctuations and instabilitiy is caused first of all by the centralization of Bitcoin USD trading at MtGox.

That exposes the entire Bitcoin system to the artistry of every pump-and-dump team that operates at MtGox.

It's great for the professional speculators, but it's not good for the system as a whole.

However, given the usual human herd mentality this idiotic situation persists.

Serves everyone right who continue to perpetuate the trading centralization around MtGox. So, party on! Cheesy

You are completely misinformed about this. MtGox has actually been losing centralization since 2011. It used to comprise about 85% of the market, now it's probably around 60%

But even if everything centralized at MtGox, that still doesn't mean that price would become more volatile. It might indeed mean less volatility, because one larger market means greater liquidity and a smoother trading experience with lower spreads.

There's also nothing wrong with people gathering to one exchange for their trades. It is not efficient to have a million exchanges. Some degree of centralization is market-efficient and we should let the market make that determination (which it's doing).

Stn

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Quote from: imanikin on March 06, 2013, 10:59:57 PM

My opinion is that the fluctuations and instabilitiy is caused first of all by the centralization of Bitcoin USD trading at MtGox.

It happens exactly opposite because there is no centralization going on. Fiat money kept more or less stable because national banks uses their reserves to prevent currency move too much. Stable rate is important for everyday trade. There is none to do so with Bitcoin. It would jump and fall all the time if it would only speculation reasons. Hence it grows all the time.

Stn

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Quote from: rebuilder on March 07, 2013, 09:17:32 AM

Would you expect something as new and fast-growing as Bitcoin to have a stable exchange rate?

Oxymoron detected!

Mike Christ

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Quote from: Odalv on March 07, 2013, 05:22:29 PM

It will stop fluctuate when reach real value $1,000,000 USD / BTC.

This

Odalv

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It will stop fluctuate when reach real value $1,000,000 USD / BTC.

Piper67

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I'll help you OP: Bitcoin values fluctuate... live with it.

Odalv

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Quote from: imanikin on March 07, 2013, 04:34:42 PM

Quote from: piramida on March 07, 2013, 10:39:25 AM

This point is invalid, I am sorry. All exchanges are already artbitraged and have been for couple of years.
...
Welcome to the future where bots trade for us.

This point is not true; i am sorry. If they were really arbitraged that long, the volumes and spreads would tend to equalize, the cheaper exchanges would gain volume, etc. A 1000 exchanges would have to be all preloaded with fiat, because it's not as easy as B to move...

Welcome to the world where there is no exchange transparency, and MtG first and foremost has significant incentive to trade against itself.

Reasonable people can disagree on this though; if 70-80% of a "fully-decentralized" Roll Eyes

currency trading at 1 exchange is ok with you, then run with the herd and party on! Cheesy

I'm not sure there is 1,000 traders trading Bitcoin :-) now.

imanikin

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Quote from: piramida on March 07, 2013, 10:39:25 AM

This point is invalid, I am sorry. All exchanges are already artbitraged and have been for couple of years.
...
Welcome to the future where bots trade for us.

This point is not true; i am sorry. If they were really arbitraged that long, the volumes and spreads would tend to equalize, the cheaper exchanges would gain volume, etc. A 1000 exchanges would have to be all preloaded with fiat, because it's not as easy as B to move...

Welcome to the world where there is no exchange transparency, and MtG first and foremost has significant incentive to trade against itself.

Reasonable people can disagree on this though; if 70-80% of a "fully-decentralized" Roll Eyes

currency trading at 1 exchange is ok with you, then run with the herd and party on! Cheesy

rpietila

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The aggregate liquidity is not a tad greater if the volume were distributed in 10 exchanges, in fact, quite the opposite.

Quote from: imanikin on March 06, 2013, 10:59:57 PM

My opinion is that the fluctuations and instabilitiy is caused first of all by the centralization of Bitcoin USD trading at MtGox.

That exposes the entire Bitcoin system to the artistry of every pump-and-dump team that operates at MtGox.

It's great for the professional speculators, but it's not good for the system as a whole.

However, given the usual human herd mentality this idiotic situation persists.

Serves everyone right who continue to perpetuate the trading centralization around MtGox. So, party on! Cheesy

thezerg

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barbstap, you are the perfect candidate to lose $ trading b/c you self-admit to not having much of a clue. My advice: Sell what you can't afford to lose now, but sell as little as possible. Forget about the rest, don't pay any attention to the market b/c you seem unable to handle the stress of the volatility. Check back 5 years from now; your coins will be worth either 0 or a LOT!

Consider your BTC investment a long term diversification -- currently all of your worth is likely denominated in your local govt currency or strongly tied to it (land inside your country for instance). If you own a worldwide currency like BTC, that is no longer true.

humanitee

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Quote from: SkRRJyTC on March 07, 2013, 01:22:15 PM

Quote from: humanitee on March 07, 2013, 01:21:15 PM

Because greed.

and fear.

Truth.

SkRRJyTC

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Quote from: humanitee on March 07, 2013, 01:21:15 PM

Because greed.

and fear.

humanitee

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Because greed.

piramida

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Borsche

Quote from: haitispaceagency on March 07, 2013, 01:12:28 PM

because its not backed by gold or silver thats why it fluctuates more then the dollar and euro

I understand you spent last 70 years in a cave, but please catch up with humanity first

Start here: http://en.wikipedia.org/wiki/Fiat_money

01BTC10

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Quote from: haitispaceagency on March 07, 2013, 01:12:28 PM

because its not backed by gold or silver thats why it fluctuates more then the dollar and euro

?

haitispaceagency

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because its not backed by gold or silver thats why it fluctuates more then the dollar and euro

Elwar

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Viva Ut Vivas

Consider how a 100 million dollar sale would affect Bitcoin vs Microsoft.

Microsoft currently has about 8 Billion shares at about $28/share.

Bitcoin has about 11 million bitcoins at about $45/bitcoin.

A 100 million dollar buy/sell for Microsoft would create a fluctuation in price of 10 cents.

A 100 million dollar buy/sell for Bitcoin would create a fluctuation in price of $22.

Now consider that only around 2% of the total amount of Bitcoins is traded daily (could be similar for Microsoft). The amount needed to fluctuate that much is closer to $2 million.

(A quick check shows Microsoft up 16 cents for the day)

BitcoinBA

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Hey Barbstap...

The reason for today's big fluctuation is that in the early days of Bitcoin (2009 - 2011) it was very easy to mine or buy big ammounts of BTC - hundreds of thousands or even milions. That's how big owners came into place. Some of them didn't sell their BTC and are still holding it. It would be extremely expensive to buy such ammounts of BTC today.

From time to time those big owners sell some of their BTC for USD to have some money to spend (or retire forever) and they sell big ammounts such as yesterday - I think that was about 100 000 BTC. They could sell it step by step in smaller ammounts - they would earn more and wouldn't cause instability, but as they have small dicks and/or egos, they dump and hurt others.

Bitcoin has enormous potential of becomming an internet currency, has a lot of positive press and support of many people and merchants. It's still in it's early days but I wouldn't sell your BTC at all.

Thus it's price is only given by trust of people, when someone sells a lot, price goes temporarily down, and when someone buys a lot, price goes up.

Have a nice day...

piramida

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Borsche

Quote from: imanikin on March 07, 2013, 07:37:07 AM

I think it would be geometrically if not exponentially more difficult to simultaneously manipulate price discovery at 5-10 xchanges, rather than one.

This point is invalid, I am sorry. All exchanges are already artbitraged and have been for couple of years. Whenever price goes up at XYZ exchange, it is immediately reflected on all exchanges. If, for example, there is a huge sell wall at Gox and someone tries to buy through it on another exchange, he would immediately get fed coins by some bot at the Gox wall price (+margin), then the bot would buy the sold amount at Gox.

So, even if there are 1000 small exchanges, they would all play more or less in unison. The only problem with Gox is that it is big and that the technical side is lacking, so arbitrage can be delayed purely because trades can not be executed, as we've seen yesterday. But pump and dump across all exchanges - no, that would happen anyway at exactly the same difficulty level. Welcome to the future where bots trade for us.

hgmichna

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Quote from: barbstap on March 06, 2013, 09:14:56 PM

currently rates are too much fluctuating
what you suggest personally
as i don't have inner knowledge of btc
so i am not sure to hold btc or sell them?

Right now? Sell.

What we just saw and are still seeing is the second big bitcoin price bubble. It is now in the process of bursting, so we will see the bitcoin price essentially shrink over the next couple of months.

The underlying reason is the same as that of the first bubble. New inexperienced and often clueless "speculators" came into the bitcoin market and applied inappropriate methods like trend-following. They all lost their money the first time around, and the new breed that is active now will also lose their money and give it away to the serious speculators.

We have about four different layers of bitcoin holders:

Traders, who use bitcoin to pay for goods and services
Value keepers, who keep bitcoin for a long time in the hope that their value will appreciate
Speculators, who will use their bitcoins to stabilize the price, i.e. buy low and sell high, for a handsome reward
Clueless newbie "speculators", who will do just the opposite, i.e. buy high and sell low, and thus lose their money

The number of bitcoins actually used as a trading currency is only a small fraction of all bitcoins. Most of them are in the hands of people who want them to appreciate in value or who want to trade for a gain.

As already mentioned, the current price is excessive in the short run, so sell your bitcoins, as long as you can still get $40+ for one. Buy them back for $20 later. Perhaps keep some for the unlikely case that some millionaire comes in and buys bitcoin like mad.

Topic: Help me to understand current BTC fluctuation (Read 4519 times)