Topic: Here's how the Gox debacle plays out over the next few days (Read 1939 times)

It would be hard to do that because I use a relatively small number of exchanges. At any given time I'm selling 150+ BTC so I can't go just anywhere with that. I can only provide you with the following info that I've built through experience:

1 - In my experience the number of people that want to SELL BTC is MUCH, MUCH higher than the people that want to BUY BTC. And the amounts vary greatly too. So, my theory is that some exchanges are only surviving because they use OTHER exchanges to balance their books. These are known as counter-parties. So I would be careful with smaller exchanges (like CampBX) because at some point they must use a counter-party. If they use MtGox as their counterparty (which surely some exchanges must do) then watch out! Very dangerous.

2 - Regardless, dont trust any exchanges. Even the solid ones I mentioned above (like Tradehill and Coinbase) I would ALWAYS move my funds back to my bank account. It didn't matter to me if it just needed to sit there overnight because I knew I wanted to withdraw again tomorrow, ALWAYS get your funds back the same day. Theres too many potential reasons for these exchanges to close overnight (regulatory, financial, etc) to leave any money just sitting there. Just doesn't make any sense to me.

3 - Stop reading the nonsense about how BTC is the next big thing that will equalize society, bring peace, suck your dick, etc, etc. That is all nothing but fantasy. BTC is a pure speculative tool, its all just a game of smoke & mirrors, nothing more. Realize that it can end at any time and you CAN and WILL lose money at it. I compared my BTC transactions (and I've done a lot of them!) to moving nitroglycerin (1) you do it just a little bit at a time (2) you know EXACTLY where you're going to put it once you have it and then (3) you head back to safety (USD) as quickly as possible.

Seems like you have done quite alot of research and have experience in exhanges ... Can you make a list, that in your opinion, a list of exchanges likely to fail

Thats a good question and I don't know the answer to that, I have had very few dealings with campbx, their volume is usually not high enough for me. But in my prediction above I did say that at least one exchange would fail. I don't have any basis for the answer, but if I were to rank all of the exchanges and their likelihood to fold in this debacle, CampBX would be very close to the top of the list.

will campbx survive?

That last line is solid advice. It boggles my mind the people (clients) that are calling for "patience" with gox. How many more red flags do you need?

You got it right. On July 4th, Mt. Gox made an announcement that they were "resuming withdrawals." Well, sort of. They say: The new system is just now getting under way, so there is still a back-log of withdrawals that we need to process. Our team is working hard to increase transaction speeds, but there is approximately a two-week back-log we need to overcome. It will take a few weeks to get back to normal, and we thank you for your patience during this time.

They're still delaying withdrawals. Any automated system should be able to process a few hundred, if not a few thousand, transactions per hour. If they were legit, they would be caught up in a day. But they want weeks to catch up.

That's an indication that Mt. Gox is short of cash. They can keep their scheme going if they slow down withdrawals so that more money is coming in than is going out. This is exactly the kind of behavior seen just before Madoff's fund went under.

If you have cash in Mt. Gox, get it out now. If they're legit, it won't hurt Mt. Gox. If they're not...

Yes they've always had spread problems. However, I find that most of their trading is done via API so there's people out there "watching" Tradehill waiting for the right prices. My approach to Tradehill is to post orders, leave them for 12 hours. If it doesn't fill in that time, I use another exchange. I've had about an 80% fill rate on Tradehill.

Not all arbitrage happens across exchanges. All you have to do is find a motivated seller.

My limit was 300 btc at one point, but they took it away.

To arbitrage using coinbase, the spread between exchanges have to be wide enough. The spread was good last week when the spread was as large as 9 points, some people probably make out like a bandit, but you need to happen to have enough fund sitting at the right place.

There's something to be said for an exchange that charges enough of a fee to make money just running the exchange.  They might be honest. An exchange with very low fees has to make their money some other way. Most of the other ways involve crime.

Well, Tradehill is updating now, but the spread is huge:

Last: $ 75.01
Bid: $ 70.02
Ask: $ 91.97

Monthly Volume: 11,946 BTC (Is that for July, or the last 30 days?)

I don't want to give away too much in case it was a special arrangement, but lets just say that not everyone's limits are the same on Coinbase

The fee is high, no doubt about it, but its all relative. I was OK with the fee given (1) my own arbitrage methods and (2) the time value of money of being able to have it in my account relatively quickly with little worry. Coinbase is solid, I have no qualms about them holding $10,000+ of my money and that peace of mind is worth a fee to me. I have tried to get my fee reduced based on volume and that was not a possibility unfortunately 

Its true that Tradehill has web site problems. I've gone back & forth with them on this many times. But when they are working, they can handle some large deals and, in most cases, they wire transfer funds the same day. Again, IF, you get an account with them, it can be worthwhile.

Problem with coinbase is the 50 btc limit and 1% fee.


No serious trader going to pay 1% fee of each transaction.

What's going on with Tradehill? Seems the site has been down now for a while. (last price: $100)

I'm also looking for an alternative exchange to MtGox..

I know people hate the fees, but Coinbase is pretty solid. I've done quite a bit of business with them (seriously, A LOT of business) and they've never let me down. If you can get an account with them (and that's a big IF) Tradehill has also treated me right. I have a good account manager there and they have never failed to send me a bank wire on time.

+1.


I also think that the whole LTC in July announcement was meant to create a distraction to take the attention off of the freezing of USD withdrawals.


What are the exchanges that you deal with?

Recall that I am the OP on the topic on what would happen if Gox missed the deadline. That seems to have happened and panic is starting to set in. Gox has dropped about 25% in the last 24 hours. I'm also the same poster that wrote that the FinCen registration was red herring designed to make you feel good but had no substance. That also seems to be increasingly true. Here's how the rest of the story plays out:

You don't give bad news when everyone is listening. So they are waiting for the 4th of July holiday in the US to announce that they are unable to re-start USD withdrawals and "need more time". Panic will continue to settle in as sellers become desperate to find buyers. Price will continue to go down. Since BTC has little utility, price will be ruled by pure psychology and panic - so Big Round Numbers (BRN) will apply. BTC will try to maintain 75 but will fail. Next stop is 50 and it will stay there for a little bit (a little bit in BTC time, which is to say, just a day or two). After that, it will plummet down within 48 hours to 25 and I predict that it will hold 25 for a little bit. From there, who knows? BUT, in that process, I will expect that at least one exchange will announce their closure as a direct cause of Mt Gox. It wont be the exchanges that I do business with because I've already researched this out But I do expect to see at least one exchange close their doors as a result of this massive mess.