Topic: Something is wrong. We cannot just gloss over the $100 sell - page 2. (Read 7869 times)

I believe this is not accurate - at least not for Bitfinex. I had limit buy orders executed well and was watching it happen and stay at 100buy vs 600sell for several minutes. The platform appeared to be working and intact during this time. So, the "flash-crash" was not a matter of seconds, but rather at least minutes.

You are 100 % wrong since this happened on BTC-e AND Bitfinex simultaneously. In both cases down to a price of 100 / 102 $

This is not just a 'mistake'.

Very good points. Exceptional 

Some were suggesting that MtGOx or parts of their core owners is/are directly involved - to rebuy coins cheaply and thus avoid going over the cliff.

What is your thought on this? Thank you.

If bitcoin drops to 100 again, im pretty sure alot of people will buy a few more bitcoins
Sp yea the coins are getting rebought. Maybe not back to Original level, but they will be bought.

>Implying they'll ever dump it for dollars (of which they have infinite).

Probably gox. Seen a couple posts saying they allow fiat withdraw now, if they were insolvent this could be how they got the money. Of course, this theory would imply that they are now insolvent in btc instead.

Everyone is assuming all the trades were at arm's length, which they may not have been. If a broker has an order to sell at $500 if the price gets to it (a stop order), and you own a certain % of the orderbook, it is in your interest to fill your own orders down to a certain point, then bid for the offered coins. Yeah, some people got cheap coins at the expense of the large trader, but he was able to score the majority at $110.

It works because few people have large standing orders in the $200-$500 range, the only reason you would get filled is when you don't want them.

I think the issue we all keep ignoring is the broken trade matching systems these exchanges use. There have been posts from people on btc-e and bitstamp who did not have their limit orders executed even with the price moving through them. The same thing has happened on gox in the past, thats why we see big sells plow down through the order book and the price instantly recovers because of all the missed orders and orders placed during the execution of the large sell. These trade matching systems are broken and need to be rewritten or replaced with real off real off the shelf systems. We get lag in an exchange because of this as well, each transaction appears to be handled on an exclusive or semi-exclusive basis. Momentum locks up the db, limit orders do not get fully filled, traders can not react, market makeing bots can not update their orders, and we get a mini flash/lag crash. We need exchanges that operate like real financial market exchanges, written by people with experience in them or at least learning from their mistakes.

Indeed. Being liquidated is the risk of leveraging. If you choose to use leverage be very sure to do it safely.

Could have been generosity, if I had 10,000 + coins and wanted to fill some dreams.... why not?  Chances are if I did have 10,000 + BTC I paid single digits or less for them, why not spread the wealth and take a huge profit at the same time.  Not worried.

The sell-off had nothing to do with the use of bitcoin as a currency.  Bitcoin is worth the same today as it was yesterday.  Two factors caused a financial event for speculators:  A false PR report by a broken company, Mt. Gox, and leveraged long positions facing margin calls.  You may recall the same thing happened to the stock market in 2008.  Perhaps the NYSE has immature infrastructure that means the U.S. dollar is not ready for prime time?  Unlike the stock market, bitcoin resumed normal pricing within hours. 

Everything is working as intended, here.  Except of course for Mt. Gox.

Most sensible post here.

To the OP, you're entire premise is based on the idea that no one who has accumulated 5,000 coins would be "dumb enough" to panic sell them.  Which is a completely faulty premise.

Here's what I wrote elsewhere the other day, "Even if they were an old hand, you have to remember that doesn't necessarily make you terribly wise... a lot of kids in their late teens/early 20's probably mined thousands of coins a few years ago.  Just because they got lucky and heard about bitcoin very early, doesn't mean they necessarily know wtf they're doing.  It just means they were in the right place at the right time."

It doesn't take an economic genius, or even someone particularly savvy, to mine a shit ton of bitcoin back in the day.  It just took someone who stumbled upon it at the right time.  So the idea that someone who has 5,000+ bitcoins couldn't panic and make a bad decision or a mistake is a bad premise to start with.

I like the logic of the doom people...

Whale would be too smart to dump all those coins at once and tank the market.  They lost millions of dollars, something's up!

Meanwhile, they also shout that the FBI is going to dump all their coins at once and tank the market...

Hmmm, does anyone else see the silly logic here?

I think that the simplest explanation is good enough.  Someone had thousands of bitcoins sitting in his BTC-e account.  He reads the MtGOX release, undesrstands it to mean that Bitcoin is finished, so he rushes to sell it all, at any price, before other traders read that release and pull out all their bids.

Either him, or someone else who reasoned like him, had another large pile of coins at Bitfinex and did the same.

Actually many people did the same in all markets, that is why the price crashed.  The only difference is that no other panicker had as many coins as those two.

In that situation, a trader either gets convinced that bitcoin is finished, or dismisses the claim as absurd and believes that the bug will eventually be fixed and forgotten.  The latter will probably guess that others will panic and there will a temporary crash, but is confident that the price will rebound; therefore he will wait, and will buy when the price gets low enough.  The former can only conclude that the price is about to fall to zero and will stay there forever, so for him the most rational decision is to sell everything he can, while there are still traders who did not realize that.

Owning a lot of bitcoins does not turn one into an expert in bitcoin algorithms.  It is not even a proof of intelligence.

That dump was a loss only if the coins were bought for more than 200 $ or so.  If they were bought at 10$, the trader still made 2000% profit from his investment.  Sure, he could have made more, but that does not make him a loser.  (People who still hold bitcoins that they bought six months ago could have sold them for 1200$... )

As for the government, if they wanted to kill bitcoin they would simply declare it subject to SEC rules.  No assets, no revenue, no dividends? You cannot sell it.

As for the FBI-seized coins, I see no reason why the the government would not sell them through public auction, as required by law.  The money will go to the Treasury, so they will not go out f their way to get the best price.   At most, they will split the stash into a dozen separate lots to make the auction sufficiently competitive.  And they do not care at all about the effect of the auction on the price (which should be small anyway, given the number of coins in already in the market).   

I don't think you folks quite appreciate the psychology of the moment yesterday.

I was trading on BTE-e when that sell went through. I had BTC-e's trading page open in one Browser windows (Safari 5.1.10, MacbookPro 2009) and Bitcoinwisdom 5-minute chart in another.

Trollbox had been on hyper yellow alert all night due to waiting for the Gox announcement. When the announcement came through, there were a couple of minutes of general discussion before trollbox trollers started screaming that the Bitcoin protocol was broken. This rapidly became the concensus in a period of about 3-5 minutes of frenzy. At the same time, the price started plummeting from around 710 to 600 in the space of a few minutes. People were dumping like crazy - you can see it if you go to the 30m chart here http://bitcoinwisdom.com/markets/btce/btcusd - those 2 big red candles around 11 O'Clock GMT yesterday.

I managed to dump 1 BTC at around 610 (after frantically liquidating PPC and XPM just to get into some fiat) and just then I saw the price ticker on Bitcoinwisdom display $300, then $110 which lasted about 10 seconds. That kind of sealed it for me that BTC was "finished" but since I've only ever got a small amount on the exchange, I decided just to sit back, watch the show and accept whatever losses were coming my way.

Obviously the rest is history as it turned out, BTC wasn't broken and once this started filtering through, a buying frenzy began and it leapt back up to 620 in no time making it very difficult to get back in unless you placed orders about $30 above the current price to give yourself a few seconds lead time on the order book.

To me, the $100 trade was just a panic sell - plain and simple. Things were happening so fast that everyone was trying to offload faster than everyone else. The price dropped $150 in less than a minute so I'm not suprised that someone with a lot of BTC to offload might have simply been trying to minimise their losses by buying up everything left on the order book before the crowd did. The only way you can do that is to put your ask in very low and let the trading engine pick up all the remaining bids for you on the way down to that base price.

It really did look like it was potentially going to $100 (or zero) over the next 5 minutes.

I don't think there's any need for people to start turning themselves into an army of crypto-market Columbos over this episode when a perfectly plain explanation is staring us in the face.

just think harder guys, harder dammit!

Why do you need all that fiat at once suddenly? Why not slowly sell it on the exchanges, inconspicuously? A 75% loss is stupid, there are plenty of bulk buyers who'd pay cash and take a relatively small margin.