Topic: Stop selling mined coins privately - page 2. (Read 3396 times)

Miners that dump and dont save most of their gains will kill themselves when 1 btc is worth 10K.

Miners, stop selling privately.  Here is why it is not in your best interest:

-Miners typically need to sell their coin immediately as they have invested in equipment that expects a return

-There are deals for fixed liquidity privately. Where the miners can sell their coins outside the open market at a premium or at a guaranteed price range for a set period of time

-Those deals exist because there are market makers who profit immensely from pulling wool over the miners eyes

For example: the maker can buy 10,000 coins privately, which reduces the volume on the public order books. They can then “splash” the thinner books by selling 2000 coins; thereby bringing the price down. Now they can continue negotiating with miners stating that the market rate is $X - which is significantly lower than the market rate had the miners just sold on the open market. The makers are intentionally trying to keep volume off the open books so that they can keep the price low so that they can continue buying their coins low. Someone with $20,000,000 they want to invest in bitcoin would be able to acquire many more bitcoins by using the above methodology.

Miners that dump and dont save most of their gains will kill themselves when 1 btc is worth 10K.

Care to provide any examples? I haven't heard of such "deals". Any proof that what you describe is in fact happening on any significant scale?

-There are deals for fixed liquidity privately. Where the miners can sell their coins outside the open market at a premium or at a guaranteed price range for a set period of time

Depends really. It could be. People have done things like that often. Especially when there was less liquidity and the market was smaller. I don't know how effective such manipulation tactics are these days though.

Miners, stop selling privately.  Here is why it is not in your best interest:

-Miners typically need to sell their coin immediately as they have invested in equipment that expects a return

-There are deals for fixed liquidity privately. Where the miners can sell their coins outside the open market at a premium or at a guaranteed price range for a set period of time

-Those deals exist because there are market makers who profit immensely from pulling wool over the miners eyes

For example: the maker can buy 10,000 coins privately, which reduces the volume on the public order books. They can then “splash” the thinner books by selling 2000 coins; thereby bringing the price down. Now they can continue negotiating with miners stating that the market rate is $X - which is significantly lower than the market rate had the miners just sold on the open market. The makers are intentionally trying to keep volume off the open books so that they can keep the price low so that they can continue buying their coins low. Someone with $20,000,000 they want to invest in bitcoin would be able to acquire many more bitcoins by using the above methodology.

I don't claim I believe with certainty that this is going on, I am submitting that, if a large enough entity (or several) would plan to buy large amounts of coins, and have some patience, this would probably a scenario worth exploring. In terms of tax efficiency, waiting for the ETF would probably be the better choice, but in terms of price control, the method I described would in principle beat a fund that is, ultimately, positive feedback linked to the markets.

I disagree that miners would prevent this taking place. No disrespect to miners, they're the backbone of the network, but amateur miners seem to be not necessarily the most economically rational actors. Go look around in this forum how often the fall for the fallacy: 'It's sunk cost anyway, I'll let my outdated miners run as long as they produce coins', and how often more economically minded users need to tell them that the actual calculation needs to be based on total cost of future production of coins (mainly: energy costs) vs. number of coins bought at market for the same costs.

Larger mining operations are undoubtedly much more economically savvy, but I've argued over and over again that I believe that, with the increasing "professionalization" of Bitcoin and Bitcoin mining, short-term profit opportunity will probably outclass long-term speculative investment. In other words: large miners sell more than they hold, especially considering that we are currently nowhere near a new uncontested bull market (which means the ratio of sold vs. held coins can change if the market sentiment changes, and miners might hold more than they sell if they feel it's a sure thing price will go up.)

Finally, we have plenty of evidence that public market price as determined by on exchange trading is a major reference point for off exchange transactions (just one example: the SR coin auction, where every party that spoke on it refered to "the market price" as if it were the obvious metric). Binding a large mining operation to you in a mid to long-term contract, maybe even offering a premium (although, from hearsay, I've only heard of large holders being made sub market offers, off exchange), then using some fraction of the coins to strategically depress price, would seem like a very good strategy to me, and relatively risk free: if it works, market price stays low, and accumulation proceeds at a low cost. If it fails, and price refuses to be depressed, the account value of coins gained so far appreciates, which is a sweet little consolation price.

Arbitrage by miners could throw a spanner in the works of this mechanism, but profits would be comparably marginal: the goal of the accumulator is not to destroy the on-exchange price, just to keep a lid on it. For the arbitreur miner, the reward is small (sold his coins at market price, is able to buy them back slightly below perhaps), and more importantly: for the large operations, the initial problem would re-appear - what to do with a large amount of coins, when you in reality prefer to hold USD (by my assumption that professional mining operations are short-term opportunistic, and not long-term married to Bitcoin success).

It's a tragedy of the commons style scenario: presumably, miners would be better off selling directly on the exchanges, since the higher volume generated there would ultimately drive up price, but individually, they fear the risk of lower profits because of increased selling pressure on exchange, so they seek arrangements off exchange.

I'll say it one more time: The above is (motivated, I think) speculation. I make no claim this is necessarily happening. I only point out that I believe it is a possible, maybe even probable, mechanism taking place, accounting - at least partially - for the current stagnation period.

Depends really. It could be. People have done things like that often. Especially when there was less liquidity and the market was smaller. I don't know how effective such manipulation tactics are these days though.

It wouldn't be very smart to buy 10,000 BTC and then try to cause the price to fall in order to buy more at a lower price.