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

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vivekd
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.

~~~
jacques_chester
> _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...)

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

~~~
devin
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.

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jarym
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.

~~~
davidgerard
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.

~~~
antonvs
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.

~~~
village-idiot
The nominal market cap of BTC right now is about $129 billion. A $40m trade
represents about 0.03% of the reported market cap. That a trade that small
would cause the market to crash by double digit percentage points is
absolutely a sign of a thin market.

Also, the slow speed of price propagation isn’t a sign that the market is
thick, it’s a sign that the market is inefficient.

~~~
logicchains
>That a trade that small would cause the market to crash by double digit
percentage points is absolutely a sign of a thin market.

It was only the market on a single exchange, Bitstamp, which is extremelly
illiquid compared to the largest exchanges. The problem was that Bitmex, a
much more liquid exchange, bases the settlement price of its popular perpetual
Bitcoin swap on an index of just two exchanges, Bitstamp and one other, so
manipulating the price on illiquid Bitstamp also screws with the price on
liquid Bitmex.

~~~
village-idiot
I agree that Bitmex basing its settlement price on two less liquid exchanges
is a bad thing. Personally given the number of margin traders being force
liquidated, I suspect that BitMEX likes the lack of liquidity.

However, if the issue was only a thin market on Bitstamp, the price
fluctuations would have remained localized to Bitstamp and the futures market
on Bitmex. But instead the price for bitcoin dropped by about $1k across the
board, which to me signals thin markets everywhere.

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m3kw9
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

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manojlds
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.

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davidgerard
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](https://twitter.com/whalecalls/status/1129931343838814208)

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singularity2001
When I read 'crashed' I didn't expect a 100% increase in two months
[http://bitcointicker.co/stamp/btc/usd/24hr/](http://bitcointicker.co/stamp/btc/usd/24hr/)

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

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klim_bim
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.

