
Bitcoin sinks after exchange pauses withdrawals - singhit
http://news.cnet.com/8301-1023_3-57618543-93/bitcoin-sinks-after-exchange-pauses-withdrawals/
======
haakon
This guy went to Tokyo to "protest" at Mt. Gox' offices, staying in their
lobby for days until he met key people at the company. No way to know if there
is any causality, but soon after he talked to them, they halted BTC
withdrawals. "I think [I] just witnessed MtGox die today."
[http://www.reddit.com/r/Bitcoin/comments/1x9gue/my_protest_a...](http://www.reddit.com/r/Bitcoin/comments/1x9gue/my_protest_at_mtgox_offices_5_to_7th_february/)

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TheAnimus
I think the biggest fault with bitcoin is the name, coin.

People like coins and cash to be liquid, stable, and ultimately not a ponzi
scheme (by this I mean growing by an ever slowing amount, that gives added
value to those who mined early and held, punishing any sizeable withdrawal,
dividends paid only due to more outside money coming to the fund..).

Too many people have taken to investing in it with the attitude that it always
rises, yet in a classic characteristic of a bubble backed entity it doesn't
take much to crash the value of the asset.

~~~
jafaku
This is no different than gold coins.

And it doesn't matter what "people are used to", they will still see value in
it eventually, just like they did for thousands of years before the central
banks took over and started messing everything up, including our education. No
wonder nobody understands that just a few centuries ago, private money was
already a thing.

~~~
acjohnson55
Not everyone has such glowing memories of private money:
[http://en.wikipedia.org/wiki/Company_scrip](http://en.wikipedia.org/wiki/Company_scrip)

~~~
jafaku
Private money is obviously not the problem in those cases.

It's like saying "Not everyone has such glowing memories of gold", and you
link an article that talks about inhumane working conditions in gold mines.

~~~
acjohnson55
Yeah...well...now that you mention it, that is a major downside of having gold
play a crucial role in the world economy.

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ck2
That's not why the price is sinking.

It's sinking because Russia banned bitcoin yesterday.

[https://news.ycombinator.com/item?id=7197173](https://news.ycombinator.com/item?id=7197173)

Exchanges are losing liquidity because too many people selling on the news,
hence amplifying the price drop.

~~~
eterm
__Exchanges __should not be affected by a loss of liquidity, if exchanges are
well managed then a dip in liquidity would just be expressed as a wider margin
between their bid and offer prices. The exchanges themselves should have no
"skin in the game" and should not be affected by price fluctuations or by
liquidity.

That's with a lot of _should_ though, and there's little to no transparency in
the bitcoin community to suggest whether any or all of those things are
fulfilled in the exchanges currently being operated.

~~~
higherpurpose
Agreed. I think only companies like Coinbase lose money in such situations
because they keep their Bitcoins stored away.

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ucha
Bitcoin value didn't sink. The exchange rate on MtGox took a dip from $930 to
$760 between yesterday and now but on other exchanges like Bitstamp it may
have gone from $790 to $750.

The rate on MtGox was higher than on other exchanges because it was hard to
get cash out of MtGox. Hence if you had money on it, the easy way to get it
out was to buy bitcoins, transfer them to another wallet and sell them on a
more liquid exchange like Bitstamp or btc-e where USD withdrawals are quick.
This created too much buy pressure on MtGox and this pressure faded when they
made it hard to even withdraw bitcoins. That explains the crash on MtGox but
its amplitude was nowhere as large as on other exchanges who by the way handle
larger transaction volumes now.

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hentrep
Is this not being overblown since it only really pertains to BTC on MT. Gox?
Since yesterday the Coinbase price has gone from $800 to $670 to $750. Given
the typical volatility of BTC and the apparent rebound in price on Coinbase,
I'd hardly consider "Bitcoin sinks" as being accurate. Perhaps the title
should read "Bitcoin on Mt. Gox sinks..." or "Bitcoin lists as Mt. Gox pauses
withdrawals".

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pyalot2
How about, prices start reflecting true market sentiment without a huge
manipulator artificially propping prices up on its own make-believe exchange
that doesn't allow withdrawals and reports fantasy trades?

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dclusin
Could you please elaborate on your fantasy trades remark? I was aware of Mt.
Gox fiat issues, and now the BTC hold. Were they accused of booking fictitious
trades?

~~~
pyalot2
Gox had a huge gap in its price to other exchanges. This gap came to be
because Gox replaced USD with Goxdollars (a kind of currency that only exists
inside of Gox). Therefore arbitrage was not capable of closing this gap,
because Goxdollars could not be converted to USD.

If you are trading Bitcoins for Goxdollars, that's fantasy trades.

However this novel introduction of Goxdollars was now consequently followed by
the introduction of the Goxcoin which marks the migration complete. Goxcoins
cannot be converted to Bitcoins. However you can now trade Goxcoins vs.
Goxdollars.

All trades on Gox are now pure fantasy. Seeing as Gox is the Magic the
gathering exchange, I find this strangely appropriate.

~~~
Anderkent
>If you are trading Bitcoins for Goxdollars, that's fantasy trades.

Uh, no, it's real trades. That's the same argument as 'IF you're trading USD
for BTC, it's fantasy trades!'

~~~
TacticalCoder
It's not the same argument...

I can buy food and cars and real-estate properties with USD. I can also buy
BTC with USD which I can use to order stuff online or which I can use to
convert back to USD... To buy food, cars and real-estate properties.

The point GP is making is that once things make it into Gox, they can't get
out: your USD become "Goxdollars" and your BTC become "Goxcoins".

I don't know if Gox is going to resolve the issue but, in any case, it's
certainly not the same argument.

As of now you can't buy anything else than Goxdollars/Goxcoins with
Goxcoins/Goxdollars. Hence the "fantasy trades".

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boyaka
I thought the price was going down because of the news that Apple is
"blocking" bitcoin apps (aka the bitcoin apps were breaking the App Store
rules)

[https://news.ycombinator.com/item?id=7193327](https://news.ycombinator.com/item?id=7193327)

~~~
erichurkman
It's probably a combination of the effects of Russia's "ban," Apple's
"blocking," and MtGox.

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jliptzin
Bitcoin is antifragile. It always seems to bounce right back from bruises like
this.

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EGreg
And then it bounces back

~~~
bdcravens
Mt. Gox didn't say they were resuming withdrawals, only that they had an
announcement to make. There will definitely be a market reaction based on what
they say (or if they instead keep silent, it'll likely be perceived as
negative).

Also note that Mt. Gox tends to trade at a 10-15% premium to other exchanges,
since most fiat currencies take weeks if not months to withdraw. Right now
it's like 3%, and overnight, it actually dropped BELOW some exchanges. It'll
be interesting to see what happens when things get back to "normal". Will Mt.
Gox's premium return? Will it return in the form of the market discounting
other exchanges?

It's scary that such a poorly run operation (what they have right now is
essentially a software bug, due to not accounting for a types of BTC
transactions; but they've crashed due to volume and have been hacked, to say
nothing of the actions taken against them) can influence the price so
strongly.

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Haywain
Question: How easy is it for, say, a minority of large holders to stave off
drops in value? For instance, if I am holding ~250k BTC and notice an oncoming
sell-off, how easy would it be for me to trade back enough in order to
reinstate confidence on an exchange?

Is it a viable enough scenario to make it plausible? I'm not a BTC holder, so
I'm curious as to how easy the market is to "prop up" in short term panics
like this.

~~~
ye
It actually doesn't take much to move BTC price up or down.

For instance, buying 16.6K BTC on Bitstamp would move the price to $2000.
Selling the same amount would move the price to $360.

[http://bitcoinity.org/markets/bitstamp/USD](http://bitcoinity.org/markets/bitstamp/USD)

~~~
eterm
It would move the buy price to $2000, but in theory the sell price wouldn't be
moved and so there would simply be a large margin until liquidity improved.

If no one is willing to buy a bitcoin for $700 right now, there's no reason to
think anyone would be willing to buy a bitcoin for $700 even if you were
offering $2000 for any bitcoins on the market. Of course people aren't
rational and you might catch out people ignorantly trying to follow a graph
they don't understand.

This is in part why it is irresponsible for exchanges such as mtGox to report
a single "price" for bitcoin, they should always report the current prices as
a tuple of (Offer, Bid) prices.

~~~
ye
> _This is in part why it is irresponsible for exchanges such as mtGox to
> report a single "price" for bitcoin_

No, it's not. They are reporting the price of an actual trade, where buyer met
the seller. At that point the spread is effectively zero.

~~~
eterm
The spread is only zero instantaneously however, and is much more open to
manipulation than (bid, offer) is.

In reality all three should be reported together when one is as they are all
very important.

~~~
ye
The whole market depth is very important. Should they report thousands of
numbers now?

Just because there's a buy bid at $700 for 1BTC and a sell bid at $703 for
200BTC, doesn't make these two prices equivalent or equally important.

