Number go down: the single trade that crashed Bitcoin

https://davidgerard.co.uk/blockchain/2019/05/18/number-go-down-the-single-trade-that-crashed-bitcoin/

by davidgerard • 7 years ago

84 33 7 years ago

davidgerard.co.uk

jarym• 7 years ago

On BitCoin this type of behaviour seems quite easy to spot but it happens elsewhere too - eg the S&P E-Mini futures and probably the Nasdaq futures.

It takes remarkably few contracts to actually move the market - especially during the Globex session.

davidgerard5• 7 years ago

oh yeah - this sort of thing is rife on thinly-traded commodity and forex markets, especially if you think the regulators aren't paying much attention - you'll see Barts all over the place.

It's a symptom of just how thin trading is in crypto, even for the "biggest" one.

antonvs3• 7 years ago

I'm not sure "thin" is the right word here. It took something like 20 minutes for someone to dump nearly $40 million worth of Bitcoin, and after the dust had settled, the price had dropped less than 12%.

There are many other factors that lead to this sort of thing happening with Bitcoin, including the lack of regulatory oversight you mention.

zaroth• 7 years ago

Actually I’m kinda impressed someone put a market order to sell $30 million Bitcoin and the book filled it then and there.

Yeah it moved the price. That’s a pretty big trade for BTC. Would BTC have cleared $30 million in actual trading volume a few years ago?

Now the fun part, good luck getting the cash out of the exchange!

joering2• 7 years ago

Luck has nothing to do with it. Someone who is able to either buy or sell such amount in short period of time is not a first timer; they definitely have access to get that dough converted/moved out of computer systems into their banking account as flawlessly as they sold that $30MM in the first place.

Otherwise they would not have done such move at all.

londons_explore• 7 years ago

I suspect they are a first timer. There are lots of very rich amateurs in the bitcoin world.

A pro would at a bare minimum split it into a few thousand timed orders.

bubblewrap2• 7 years ago

Any reasons to expect that they won't be able to cash out? Why?

ChainOfFools• 7 years ago

amazing that a $30 million selloff translates to $21 billion market cap drop. held up by toothpicks

mrb• 7 years ago

«Now the fun part, good luck getting the cash out of the exchange!»

Err... There are traders easily withdrawing tens of millions of USD every single week on Bitstamp. Bitstamp isn't MtGox.

manojlds• 7 years ago

Ah so BitMex uses Bitstamp price (and Coinbase) - that's the link I was missing understanding price manipulation in Bitstamp and longs liquidated in BitMex.

klim_bim• 7 years ago

Someone should chart all the dates and amounts that journalists have claimed BTC has crashed in percent or points, add it up, and then show how they're reporting on trend that does not exist and is in fact the opposite of reality.

AznHisoka• 7 years ago

“The crypto blogs put forward all sorts of bad reasons — it’s capital flight from China! It’s Bakkt offering Bitcoin futures! It’s Flexa offering retail payments in crypto! It’s Microsoft experimenting with the blockchain! — even though this was really obviously a manipulated push like so many before.“

All reasons for the price to rise or drop are obvious in hindsight. I like to see pundits make these predictions before the price event. Better yet, buy or short sell BTC, make a screenshot and put your money where your mouth is.

thelasthuman• 7 years ago

So figure out when market manipulators are going to act? You'd have to be colluding along side them to know this.

devin• 7 years ago

I think you missed the point. All the poster is saying is that these crypto analysis people should actually attempt to predict price moves based on market forces instead of explaining movement in hindsight.

zwerdlds• 7 years ago

pundits have been pointing to market manipulation for a while

davidgerard5• 7 years ago

I have been saying this is how it works for a while, so I claim my "I told you so".

Better yet, buy

you wish

or short sell BTC

Shorting you can trust turns out to be something Bitcoin doesn't have yet.

codyb• 7 years ago

I think the author links to a post where they predicted this would happen during the upswing in the first few paragraphs actually.

m3kw9• 7 years ago

This is called pulling the stops, most trader has stops set by their borrowers. In this case is easy to pull the stops as a lot of people seem to use this thing to gamble

vivekd• 7 years ago

These fluctuations have been a part of Bitcoin for a few years now. And while most people think it's no big deal I think it's absolutely fatal.

It's fatal because bitcoin isn't supposed to be some kind of stock that you buy, sell and speculate on. It's supposed to be a currency and that's where it's supposed to get its value from. Unfortunately that's not how it's being used because unfortunately it's not a very good currency.

Nobody wants to use a means of exchange that fluctuates widely from day to day. No one wants to accept $ 1 in bitcoin for a loaf of bread if that $ 1 could be worth ten cents tomorrow. Currencies need to be stable for them to be usable as a means of exchange.

Unfortunately this sort of instability seems to be a feature of bitcoin rather than a bug. Unlimited anonymous transactions means the system will be easy to manipulate.

That said the dream of bitcoin could be one that saves humanity from the financial tyranny imposed by governments. This is particularly true for people who live in third world countries where governments play fast and loose with their currencies and their money can quickly become devalued.

It is also to an extent true for richer nations where government control of the currency led to things like the great depression the great stagflation of the 70s and heaven knows what ill effects it's causing today that economists of tomorrow will learn about.

It is clear to me that having independent currencies will result in a freer more prosperous world. I think what's needed is an alternative to bitcoin that is set up to actually work like a currency rather than a share or forex market with people buying currency that they don't plan to use.

I think the solution is to learn from paypal which also set out to create it's own currency and almost succeeded. Create an alt coin and brand it as a currency and have it be used that way. Maybe go to ebay top sellers or etsy top sellers and convince them to accept your alt coin. Have rules and tracking mechanisms in place to prevent manipulation of the money supply. And most importantly a widespread currency can't have anonymity. I'm not saying anonymity shouldn't be allowed in a currency. But widespread use of a currency requires being able to manually undo transactions that were done through fraud, the way banks and credit card companies can. This is why people tend to avoid making large payments in cash, they want a paper trail so it can be undone if necessary.

topmonk• 7 years ago

Do you think it would be possible to end up with two coexisting widely used currencies?

One currency like you say, traceable and hard to manipulate and another that preserves the anonymity that bitcoin provides but with a lot more fluctuation in the price? (Not to say that bitcoin is untraceable, but rather, suppose a currency with the same ideals of anonymity the creators held when they created Bitcoin)

jacques_chester2• 7 years ago

Have rules and tracking mechanisms in place to prevent manipulation of the money supply. And most importantly a widespread currency can't have anonymity. I'm not saying anonymity shouldn't be allowed in a currency. But widespread use of a currency requires being able to manually undo transactions that were done through fraud, the way banks and credit card companies can. This is why people tend to avoid making large payments in cash, they want a paper trail so it can be undone if necessary.

Regular money has basically all these features, plus the advantage of enormous institutional support (laws, systems, finance sectors, central banks, markets...)

singularity2001• 7 years ago

When I read 'crashed' I didn't expect a 100% increase in two months http://bitcointicker.co/stamp/btc/usd/24hr/

I guess they orchestrate one more (last) pump&dump hype cycle.

davidgerard5• 7 years ago

Well, that was quick. The next round of "Bitcoin: Moon or Toilet?" started this morning at 02:00 UTC, with a $1000 price pump. Why? Well, it coincidentally wiped out this short:

https://twitter.com/whalecalls/status/1129931343838814208

Number go down: the single trade that crashed Bitcoin

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