Topic: Notice how BTC value is rising, since Bitcoinica is gone? (Read 4111 times)

They went away some time before the hack. Market is maturing, thats all.

Some people say (I use that like Fox News to avoid libel) that Bitcoinica purposefully fluctuated the price with large amounts of buys or sells in order to knock people out of their highly leveraged trades.


Say there are 1000 people on Bitcoinica leveraged at 10:1 at 4.9 with enough Bitcoin to cover a drop of .2 BTC while there are 200 people leveraged at 10:1 to short at 4.9 with enough to cover a rise of .2. Bitcoinica jumps on MtGox and sells a buttload of BTC making the price drop to 4.6. All 1000 people just lost their positions and got Zhouted. Those 200 people start to get excited but what always happened? It shoots right back up. Bam, it is now at 5.0 and now Bitcoinica has 200 people leveraged at 10:1 at 4.9 to short while the price is at 5.0...another little bump up...bam, they get Zhouted.

Bitcoinica now has everyone's coins that they originally received with no payouts. They can now take those BTC and put it back into MtGox to put toward some even larger swings in price for the next victims.


Sure, not everyone was hedged at 10:1 and may have had more of a swing covered. Some may have even jumped off during one of the crazy swings at the right time and made a bit of money. But all they had to do was keep an eye on how much of a swing was necessary to make the most people lose leverage and strike when the timing was right.

Some people called these swings "the manipulator".


Am I against the concept of Bitcoinica and leveraged shorts/longs? No. I agree that it is healthy.

How have those big swings been since Bitcoinica went away?

Yes, the starfish appeared..


And everytime it appeared, it was a flashing lit up sign that said where everyone was going..  and abused in that manner


It didnt work folks..   it was a poorly implemented service...   Clearly..



Now with it gone, the market can move naturally..  and in a sense privately, with no crazy lit up flashing sign indicators for people to screw with

Since they started paying interest the starfish made only the most fleeting of appearances.

This exactly 

Did you guys all forget that bitcoinica did the starfish routinely..

Your all speaking as though bitcoinica worked like it was meant to, but it didnt..

Not even close...

Prices didnt move naturally in any direction due to the starfish.. 

In a perfect world.. yes it would have dampened, but its not perfect world, and bitcoinica snuffed raises in price due to the starfish..

Anyone that thinks bitcoinica worked as though it was intended is living in a dream world..

They started it on the 25th of May: https://bitcointalksearch.org/topic/ann-new-aml-policy-for-all-dwolla-users-82328

That's for dwolla deposit/withdrawal only, but that is (or was) a highly popular funding/withdrawal option for USD for US users.

If there was any truth to this, we would be witnessing a disaster now with Bitcoinica gone for weeks because the merchants can’t hedge via that bucket shop.

Instead, noone except a few gamblers even cares. Nothing really happened, so nothing of value was lost.

I agree that we need a good vehicle to go short Bitcoin though.

Agree, but with the caveat that damping the swings in the general market will probably boost the price in the long run from increased confidence, ease of planning and hedging.

When are they supposed to start this? I haven't been prompted by them to submit any identification.

Fact: Every single Bitcoin that got shorted had to be bought back at a later time.
Fact: Every single Bitcoin that got longed had to be sold back at a later time.

Result of those 2 facts: Bitcoinica's influence on the price can only be temporary. That is a fact. It's net effect will _always_ be zero in the long run.

What Bitcoinica _did_ provide was:
-Temporary downward pressure on rallies, preventing them from getting out of control. This may have effectively prevented Bitcoin bubble #2
-A way for businesses to hedge, protecting them from USD/BTC price swings when dealing in BTC. You don't have to be an economic genius to see the value in this. BTC will never appeal to serious businesses if they can't protect themselves against these kind of risks.

Bitcoinica was hiding volatility; not price.  If the market wants the price to rise, bitcoinica couldn't stop it.

In that sense, Bitcoinica damped not amplified.

I don't think that Bitcoinica created trends in prices, however, it amplified trends. If the price dropped $1, the margin calls and liquidation by Bitcoinica on the market would cause further drops. Volume also would be increased as margin trading gives traders more money to gamble with.

If the temporary inability to short is driving up prices, they will inevitably fall down again when somebody else sets up a large service that allows short selling.

Um, I am no troll.  I believe the rise in BTC is because they are gone, for now.  Until they get Kronos up and running and you idiots give them your money.

You guys really have no idea about the underworld of BTC.  Things go on you have no idea about.

Yeah.  I'd say price stability is better that constant fluctuations up and down.  How can someone really invest in the economy if the exchange is always in flux.  The rising price is good in the short term but increases the likely-hood of a big sell off and price drop in the future.  That said, I would agree with shockD, Mt.Gox AML/KYC issues and also could be from lag in people pulling assets from Bitcoinica and moving them to other exchanges.

What would bring you to that conclusion?

I'm not sure how many people are trolling here. Or if thats what this whole thread is.

Pure speculation here, of course, but it would also make sense that being required to submit identification to Mtgox in order to withdraw funds via dwolla has resulted in fewer sellers/sellers wanting to sell for a bit more due to the extra annoyance and potential security issues involved with sending scans of their ID to Mtgox.

I know I've stopped selling there as I'm not comfortable submitting scans of my identification to Mtgox.

But in turn, without shorts, a rally can extend further.