Topic: Price stickiness at $5 USD/BTC? - page 3. (Read 9746 times)

There's been a lot of talk about how market stabilization like this can't happen without insider information. I don't think that's necessarily the case. I'm reminded of someone mentioning on this forum about research that was done on predicting market movements with high accuracy (80%+) based on the frequency of individual words used on different forums. I would not be at all surprised if someone was putting that to use to keep the market stable and making profit on the side.

Of course, it looks like the dam just burst during the past few days. Regardless, I'm curious to see if we'll return to a comparably stable position once the price stops going up again.

I also think that someone doing this is very good for Bitcoin in the long term. Heavy instability will cause a lot people to avoid Bitcoin markets.

My eyes are on the Bitcoin growth in China. Historically, they love to bet speculatively on anything.

You tell about one billionare, but there could be many. That would make the price jump again.

Think about a strict anticyclic trader. This stabilizes the price, and will lead necessarily to a win (a normal one, not quick or large). It makes profit from others market manipulation, and is usable with any amount of money.

in which order?

No it's not.  You're just not understanding.

To varying degrees, many are and have in the past.  I'm talking about a computer program implimenting a standard speculation stragedgy.


A billionare doesn't need to colude with anyone in order to defend the peg in a $40million market.  By definition, his resources are already unlimited within the trading range of $5+-.10.  The only way the market maker stands to lose in this scenario is if the natural price shoots towards zero and he ends up owning all of it.  After which there is no more market to make.

It's not theft buck, it's how currency markets are supposed to work.  There are a dozen small nations in South America that openly & deliberately 'peg' their local currencies to the US $, and this is exactly how they do it.



the scammers are undermining confidence in the market.  no one wants to play in a market they know will rob them.   we will regain some market confidence when the scammers are caught and exposed


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You assume that this invovles some kind of fruad.  I'm telling you that it doesn't require that.  All it requires is one person with the resources to buy the entire market and the apparent willingess to actually risk that occurring.  He can defend the price floor until the last bitcoin is his.  What he cant do forever is defend the high end forever.


That's a different subject altogether.

Nonesense, all he needs is enough funds to be able to buy out the entire market, which would be exceedingly easy to do for any billionare willing to do it.  If the bot is set up to buy (with resources at least as large as the whole market, which is effectively limitless for this tiny market) at $4.90 with a delay of several hours, he can accumulate bitcoins for $4.90 or sometimes less without dramaticly affecting the volume adjusted price.  By selling at $5.10 (again, with a delay) he sells them at $5.10 or more.  The delay exists to 1) let smaller players soak up the price movements in order to stretch out his funds and 2) to obscure the presence of a "wall".  The only way for said player to lose money in the near term is if 1) everything goes sour in a hurry and he ends up buying all the bitcoins in existance at that price level (as in a major security hole is found in the protocol that cant be fixed, unlikley at this point) so that volume goes to zero because he already has them all and there are no buyers or 2) the price movement that wants to trend lower overwhelms his funds.  If the top end of the bot is ever overwhelmed then the investor still makes money in the process of defending the top end of his target trading range.  Not as much as he could have if he let the top end seek it's market price, granted, but he can't lose money by buying at $4.90 and selling at $5.10 even if he doesn't have the resources to defend the peg.  Perhaps the top and bottom aren't rigid price points, but percentages.  There are major market makers in the commodities markets that do things on the stock market this way to prevent (or profit from) 'buy the rumor, sell the news' type panic movements.  The goal of such a bot isn't primarily to profit from price movements, although it generally does except in extreme conditions.  It's primary goal is to suppress voltility for a time to permit the market to mature as well as develop a 'safe' reputation; and the profit taking occurs in the long run.  It's speculation taken to a long view.


That is functionally what the bot does.  Perhaps the bot is  set up to set aside 5% of the coins it buys on dips, so tht if the high end of the bot is ever overwhelmed (selling 95% of all teh coins it's accumulted) then the bot owner still has the las 5% to take full profits from once the market price has found it's new home.  Set the bot up again with a new trading range, rinse repeat.  Again, the only way the investor stands to lose under this scenario is after the whole bitcoin market grows bigger than he is.  Any investor knows how big he wants to be, few are going to get caught off guard in this sense.


This is true, and exactly what I said the long term goal would have to be.  Did you bother to read it?


So?


It only takes one big market maker to do the job.  If others come along later a see that some bigwig has already set up his system, maybe they do look for another market, but so what?  Again, this is a long view speculation, the speculation being that the bigwig is betting on the long term success of bitcoin.  Isn't that what we all are doing?  The suppression of voltility imply mimics a larger & mroe mature currency market, which is what small businesses want to see before diving in. By encouraging these small businesses to dive in, the invetor wills his prediction to become reality as the market really does mature under his watch and voltility really does stableize just as the bigwig is ready to withdraw his deliberate support and start to take his profits.  Notice it's not in his best interest to take all his prifits in any particular time frame.


We actually don't want that.

I think that I can explain it.  The Price stickiness at just under $5 (i.e. price drops to just below $5 per btc, and then recovers) imlies that there is a hidden buy order at around $4.90. (or more likely a bot) There is no way for us to know how big this buy order actually is, but assuming that it's actually just one major player iwth the buyorder, the past several months have already shown that it's someone well heeled & with a tolerance for risk.  It could be just about anyone with a couple million dollars in their petty spending account, but there is one particular billionare that comes to mind for me.  If correct, it means that someone is quietly both supporting bitcoin & intentionally damping voltility; perhaps with a /exchangecompanion sell order at $5.10 or so, thus range bounding the price.  Obviously if true, both the buy and sell orders are delayed execution type orders which would be likely if the intent is to suppress voltility and not invest per se, because it gives other speculators a chance to soak up the price movements before the bigwig's bot kicks in.  This makes sense for any major player with the funds to be able to dominate this little market, because it would not only allow said bigwig to quietly build up a substantioal amount of bitcoin wealth over time, without sending the price to the moon; it also allows the bigwig to profit later because suppressing voltility is what helps the (more risk adverse) small business type economy to mature.  Eventually, it then becomes in the bigwig's own interest to remove the top limit and leak the info that said bigwig has been investing in bitcoin; thus permitting the btc price to double or triple on that news alone.

Think about it, if the news came out today that some semi-famous investment billionare was buying bitcoins; say perhaps one that has a history of picking major tech/Internet winners while young, who had a well known and strong libertarian streak, who was highly tolerant towards risks (a venture capitalist, perhaps), a history in the online currency/money markets and a well-known connection to the cutting edge of the Interent; then the 'hangers on' that follow investors like that one would flood into bitcoin in short order, thus sending the exchange price back towards it's record in short order.  Said billionare then sells half his accummulation of bitcoins at four or five times the price he bought them for, restablelizes the price at a higher price point, makes a killing and still has a fortune left in bitcoin.  And bitcoin also gains withthe suddenly public knowledge that bitcoin has the very kind of backing that detractors claim that it does not because that isn't explicit.

reminds me of mid-2000....   well, that was more like quadrupling position on some nasdaq garbage.  went from 50% down to ~10% down.  that's when i decided i shouldnt be throwing darts anymore


bitcoinica used "play" bitcoins 

Very interesting thread.

I would have expected the price to go higher now that shorting is closed on Bitcoinica.

Waiting to see what reward drop brings us. Hopefully $10 at least

If you're right, he eventually won't be able to hold it back and it will skyrocket very quickly.  If that happens and he defaults at the same time you can say you were right.  Until that happens, you are just making yourself look like a conspiracy theorist.  Also, look a little wider.  While USD/BTC might be holding close to 5, EUR/BTC is trending up since the Euro is falling relative to the dollar.  Other NonUSD currencies also show a similar uptrend.  Big things are happening in the wider markets, and for BTC to hold $5 and not fall like stocks, metals, commodities, and other currencies is impressive.

that mount is accrued from "thousands."  Even though he's not getting much for each trade the volume makes up for it.  

It's called penny shaving or salami slicing

also:


from https://bitcointalk.org/index.php?topic=63933.0;all

edit:

mtgox fee reduction is a problem...  that limits the game to large players

kinda hard to imagine that much money squeezed from gox' market, though.

honestly that makes quite a bit of sense at first glance.

https://bitcointalksearch.org/topic/m.915349

Pirate said :



That is consistent with what we have been talking about.  A spike would break through a ceiling or floor he had set up.

I've been wondering whether pirate is involved as well. The one confusion is that he mentions local customers, and if he's doing bitcoin HFT to profit off of volatility (thus smoothing it out) then I don't understand why he would have local customers... but this is probably explainable.

-s

Possible.  He just stated it's in his interest to prevent sharp upswings: https://bitcointalksearch.org/topic/m.915349

could the sticky-maker and insider perhaps be this guy? https://bitcointalksearch.org/topic/a-day-in-the-life-of-a-pirate-82849

I think with 100k a trader could manipulate it into this pattern for a short period of time.  Like you said, just smack it around.  Long-term it doesn't work.  There's no way he could pull this off for more than a week.  It doesn't take much capital to break resistance levels.    Since it wouldn't take much capital to exhaust his offerings we should have seen a price breakout by now.  You can look at the cumulative depth chart see how little capital it would take to move the price wall outside the trading range.  In addition to starting capital, the trader would need inside knowledge.

http://bitcoincharts.com/markets/mtgoxUSD.html

I think people with balls are making stands.  We got VCs and other big shots who are getting in.  Bitcoin attracts headline news every day.   Events are occurring that should result in big moves by making herds of traders sell or buy at once on a major news headline.   Whoever is on the side of these trades most be a big, big player with knowledge, more knowledge than public indicators provide. Everyone can see bullish and bearish indicators which means all that information is "priced in" at any given time.    This trader needs inside information to make this scam reliably profitable.    He would also need a lot of capital at his disposal.  He needs enough ammunition to control an entire market.