Impact of a specific transaction on the coin price. How to calculate?

teosanru

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Quote from: Coinmass on November 18, 2021, 04:17:46 AM

Hi guys,

Is it possible to somehow approximately calculate what impact a specific buy or sell will have on the market cap / price?
For example, the price of a coin is $1, market cap $10M, some whale is dumping $500.000 or buys for $500.000. What price / market cap is it going to be after?

Thanks

It is possible for sure, but using pretty advanced quantitative analysis, also it would only depict the picture on a particular exchange not on all the exchanges which means, chances are price might just make a wick there and come back up as the rest of the exchanges don't have any dumping from any whale. The calculation could be done like this:
1. First ascertain the total amount of coins that person is willing to dump. let's say 500 BTC.
2. Now find some quantitative analysis of Order Book to search for liquidity at the different price levels, for example, there are people ready to buy 100 BTC at 60k, then a few with buy orders of 100BTC at 59.9k then you can go all the way until this 500 BTC you have gets over. This is the point price could drop in case the whale dumps his holding. Many people use this reconcile to confirm the support regions they have drawn on their charts.

Tytanowy Janusz

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Quote from: Coinmass on November 18, 2021, 04:17:46 AM

Hi guys,

Is it possible to somehow approximately calculate what impact a specific buy or sell will have on the market cap / price?
For example, the price of a coin is $1, market cap $10M, some whale is dumping $500.000 or buys for $500.000. What price / market cap is it going to be after?

Thanks

Price impact after big buy/sell order does not depend on marketcap. It depends on volume. Big real volume (not wash trading) attracts big market makers that fills orderbook and create liquidity.

Quote from: Coinmass on November 18, 2021, 07:28:56 AM

Thank you guys!

What, if it’s not on an exchange, but only on pancakeswap?

There is a simple math formula that calculate price based on number of tokes in liquidity pools. Simply - everyone that wants to add liquidity has to add same value in 2 tokens. For example 1000 USDT and 10 AVAX worth 1000USDT (price of avax - 100 USDT). If whale come and buy big chunk of AVAX his order suck AVAX from liquidity pool and puts USDT there. This changes the price to maitain same value of coins in 2 pools.

For example liquidity of BNB on pancake for 10 mln $ order (4.36% slippage):

But don't think that price will stay there for long because arbitrage traders will buy on pancake to sell on other exchanges.

Ararbermas

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Quote from: Coinmass on November 18, 2021, 04:17:46 AM

Hi guys,

Is it possible to somehow approximately calculate what impact a specific buy or sell will have on the market cap / price?
For example, the price of a coin is $1, market cap $10M, some whale is dumping $500.000 or buys for $500.000. What price / market cap is it going to be after?

Thanks

i think the depth in the exchanges is the only thing that can help you to determine or to see how the growth of the coin really performed, for example whose is really controlling the price, wherein if it's sellers or buyers because you can really see how both fighting using that depth graph, it's like a tug of war to be honest.. And some experts saying that every traders should look into it to determine movement of the price of the coin and yes it's very useful base on my experienced especially to prevent a massive fluctuation..

tbct_mt2

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Price is decided by the market. It can be decided by supply and demand but can be changed by manipulation, news, big transaction from old address.

Generally, a single transaction can not change or affect the market too much. But if it is a big one or comes from satoshi address, and is shilled on the news, social media, the effects can be very huge.

So it depends on what type is a transaction. Without its quantitative value, its origin, we can not guess about its effect.

mk4

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Quote from: Coinmass on November 18, 2021, 07:28:56 AM

Thank you guys!

What, if it’s not on an exchange, but only on pancakeswap?

Exchanges like PancakeSwap that use the automated market maker(AMM) model doesn't have orderbooks; so instead of price volatility depending on exchange depth, it will depend on deposited liquidity. If you didn't know, people can deposit liquidity(e.g. BNB and USDC of equal amounts for the BNB/USDC trading pair) on AMM exchanges so they can earn a share of the exchange's fees(mostly 0.025-0.3%). So the higher the trading pair's liquidity is in contrast to trading volume, the less volatile it will be.

Coinmass

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Thank you guys!

What, if it’s not on an exchange, but only on pancakeswap?

mk4

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What LoyceV said. It's going to be pretty hard to come up with a number based on marketcap, coin price, and transaction size alone, because it will mostly depend on the exchange's orderbook depth. If there aren't that much buy offers on the exchange's orderbook to snag up the coins that are going to be dumped, then expect a drop.

You can easily check the orderbook depth on most exchanges. Here's Binance's orderbook depth on BTC/USDT:

LoyceV

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Check the order book at an exchange: if someone dumps enough at market price, it might cause a flash crash. Buying or selling 2000 Bitcoin is enough to push Bitcoin up or down about $5000 on Bitfinex.
Just last month Bitcoin crashed 87% on Binance:

Quote

“One of our institutional traders indicated to us that they had a bug in their trading algorithm, which appears to have caused the sell-off,” Binance.US said in an emailed statement.

That means someone bought Bitcoin at $8,200 because someone sold a lot. It didn't happen on other exchanges though, and the price quickly corrected.

Coinmass

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Hi guys,

Is it possible to somehow approximately calculate what impact a specific buy or sell will have on the market cap / price?
For example, the price of a coin is $1, market cap $10M, some whale is dumping $500.000 or buys for $500.000. What price / market cap is it going to be after?

Thanks

Topic: Impact of a specific transaction on the coin price. How to calculate? (Read 109 times)