
What's Happening with Bitcoin Prices - kristopolous
https://medium.com/@kristopolous/heres-what-s-happening-with-bitcoin-a4a11e0f835b
======
smaili
> Ever wonder why Coinbase takes about a week to “process” the sell?

I've actually always wondered this. What were to happen if the moment I click
_Sell_ , the price is $10K but when it's "processed", the price at that time
is $1...would the USD I receive be based at time of click or time of
processing?

~~~
captainmuon
There is not one single price, but many offers at different prices and
volumes. The exchange doesn't sell or buy bitcoins, they just connect sellers
and buyers (and handle the transactions). The price you see is the best
current offer for the amount you are selling, I think. Usually, it changes a
little, but yeah you are not guarenteed that price. If, at the time your order
comes in, nobody wants to sell for $10K, but only $1, that is what you get.

This is why most (all?) exchanges have the option of buying/selling at market
price ("best" price, I could imagine there is some protection included though
so the order doesn't go through if there is more than X% price difference), or
with a limit (where you say "sell X BTC, but I want at least $Y per BTC).

~~~
kristopolous
They do at least a 0.5% spread + 1.5% fee. So the price listed if you are
buying, it's at least 0.5% higher and if you're selling it's at least 0.5%
lower. Which means if you're trying to "flip" as in buy low and sell high, you
need to see at least a 4.1% or so increase to just break even. Sometimes their
spread will be over 1% in both directions.

Btc usually operates in practice on a 0.5% spread or less.

There's a reason why the only name we know from the gold rush is Levi Strauss.
The real money is in the facilitators of the rush, not in the prospecting.

------
cantrip
Anyone speculating about what's going on with Bitcoin without at least
mentioning Tether is out of the loop.

~~~
robbyt
I'm out of the loop. What's the deal with tether?

~~~
eximius
Issue Tether (it is issued, not mined), trade Tether for Bitcoin, BTC price in
Tethers increases, due to stated and believed peg of Tether to USD, BTC raises
in USD price due to arbitrage executioners.

More details:

[https://seekingalpha.com/article/4129543-bitcoin-one-way-
go-...](https://seekingalpha.com/article/4129543-bitcoin-one-way-go-
true#/comment-76992585)

~~~
samsonradu
Failing to understand how you could peg Tether to the USD and have people
believe you. I was under the impression that pegging to a currency is
something only a _very_ big player, with close to unlimited resources can
achieve, see People's Bank of China, Swiss Bank etc. Among others, you have to
defend the currency against speculators and that requires a lot of capital.

Even the Bank of England failed to maintain the peg to the German Deutschmark
some years ago. Can someone with more knowledge in the FX market area explain
this better?

~~~
StavrosK
You can peg tether to the usd simply by offering to always exchange one tether
for one usd and vice versa, no?

~~~
tehlike
The problem is, sonfar they issued north of 800m with no proof of reserves,
and no professional audit to support their claims.

~~~
samsonradu
That s the thing I don’t get, how do they “issue” tether? Because if one says
they peg it to the dollar then it must follow the dollar’s inflation.
Otherwise somebody is at a loss because there s more tether value than usd or
viceversa, even if they were fully transparent and fair.

Edit

Unless of course tether is not a store of value in any way and just a fancy
name for a dollar.

~~~
tehlike
The way it works is, i go to exchange a, and tell them hey i have this
cryptocurrency and i have enough cash to back it up. People can withdraw money
from me using these.

If you do not verify my claims, you think this is a great idea, because now
you can transact with usd(t). Formally these exchanges only used cross-coin
exchanges.

Now this is not a problem as long as you have _enough_ money to support
withdrawals on an ongoing basis. Nobody knows you dont have enough cash to
support all issued tokens, because seemingly, everything works nicely. With
the recent hype, money keeps flowing. Until a mass withdrawal happens.

~~~
samsonradu
But why do I want tether in the first place? Why bother switching back and
forth at all? I don’t see why would I want to hold tether.

Can I buy a can of coke with it directly? What if the coke seller is a bit
skeptical of tether and asks for 1.2 tether instead of one usd, just to play
safe. Isn t this pressure applied to the exchange rate?

~~~
tehlike
You mean, instead of USD? Because most exchanges cannot and does not support
withdrawals - they are virtual.

~~~
samsonradu
But every tether "issued" is basically a dollar printed out of thin air if
we're to trust Tether that it has the same value isn't it?

> Because most exchanges cannot and does not support withdrawals - they are
> virtual.

Can you elaborate? I'm not familiar with these exchanges, really curious. You
mean exchanges accept cash for coins and don't allow withdrawals? :)

~~~
antonvs
He means they don't support withdrawals of fiat currencies like USD or EUR.
Many crypto exchanges only support withdrawal of crypto currencies.

To allow deposit or withdrawal of fiat, exchanges tend to have to comply with
international banking regulations, which requires a great deal of paperwork.
As a result, only a few exchanges offer this - examples are Coinbase,
Bitstamp, Bitfinex, Kraken.

Before Tether existed, you couldn't buy or sell dollars or Euros on a pure
crypto exchange. That's a big limitation.

Among other things, Tether allows you to trade in USD on these crypto-only
exchanges.

Basically, one problem Tethers solve is allowing exchanges to operate more
completely without regulatory oversight. As such, the limitations in their
transparency may be acceptable to many users, who know that they're not
operating in a regulated market and are willing to accept some risk for doing
that.

------
thisisit
In case someone is wondering about Tether, there has not been new coins for
about a week now:

[https://omniexplorer.info/lookupadd.aspx?address=3MbYQMMmSkC...](https://omniexplorer.info/lookupadd.aspx?address=3MbYQMMmSkC3AgWkj9FMo5LsPTW1zBTwXL)

~~~
gt_
Interesting. What happens if, say, Bitfinex runs out?

~~~
thisisit
Runs out of what? If you mean Tether. They can keep doing "grant token" as
long as they want.

I will be publishing a blog on the market schemes of different token soon as
there seem to be a lot of hype.

~~~
gt_
The difference between “new coin” and “grant token” is eluding me here.

~~~
thisisit
"Grant token" is the command for generating new token/coin.

~~~
gt_
OK. Maybe i am assuming there have been no new Tether tokens because the
“granter” decided not to grant anymore, but it has actually been a market
response?

I am wondering... if they can grant new tokens, why havent they? Lack of
demand?

~~~
thisisit
Maybe market response, maybe due to increase focus from people on the
"granter" account. It can be n-number of things.

~~~
gt_
I understand. Thanks. I was assuming things!

------
exclusiv
Bitcoin succeeding is a very bad thing for the banking cartel. Is it possible
that some big powers are ramping it up so they can crash it violently?

~~~
tehlike
Every crash is followed by another rise.

The idea is out. Bitcoin may die, but another will thrive.

~~~
exclusiv
Perhaps, but an epic crash of the most well-known brand, a death spiral in
investor confidence and the ensuing media reports would kill not only Bitcoin
but potentially any other cryptocurrencies. Legislation could follow to block
or at least pigeonhole any other crypocurrencies into a really niche market.

------
sAbakumoff
[https://99bitcoins.com/obituary-stats/](https://99bitcoins.com/obituary-
stats/)

~~~
kristopolous
Thanks, this is about general markets however. I've been trading BTC since
2011.

Doesn't matter if it's tulip bulbs, baseball cards, bitcoins, houses, or
dotcom companies, markets operate on similar principles and talking about the
market dynamics doesn't say anything about the asset in question.
Cryptocurrency is a viable means of exchange and the technology is great and
all but that doesn't change the rules or mechanics of the marketplace. It
isn't magic.

~~~
sAbakumoff
Personally I inclined to trust Ronnie Moas who likes saying this about BTC:

>>if you try to trade this you WILL get smoked; charts are bullshit and do NOT
apply here; stop jumping on and off the train, you look foolish

But at the same time investing only the funds that I can afford to lose.

------
victor106
“Ever wonder why Coinbase takes about a week to “process” the sell? Or why
when you buy on other exchanges you’re debited instantly but when you sell it
takes a few days to be credited?”

“It’s mostly likely because these institutions don’t have the liquidity to
actually pay you. The important thing to realize is the exchanges aren’t
selling the Bitcoins on the open market nor are they transferring anything
between wallets when you sell.‘ “

Anyone here know if this is true?

The article is based on the above assumption. If it is Ian selling my bitcoin
NOW. THIS IS THE BIGGEST RISK I HAVE HEARD IN THE CRYPTO WORLD

~~~
spelunker
I mean, the exchanges aren't selling, sure, but it is a market... so when you
sell your bitcoin someone is putting up cash to buy it. I mean unless I don't
understand how these exchanges are functioning.

I have no idea why it takes a few days to process, however. I don't think the
fact that it can take a little while to "process" sells is because it's a
ponzi scheme though, that seems like a bit of a jump. I mean plain old ACH
transfers take a few days, does that mean that ACH is a ponzi scheme?

~~~
kristopolous
I'm not claiming any of them are. On the contrary, I'm saying there's a risk
that some of them could be partially operating like this and if they were, you
wouldn't be able to tell.

This is high risk. No kidding.

~~~
spelunker
I guess. They could also be inventing the buy side entirely and just taking
people's money. They also could be Nigerian princes who just really need my
SSN to access their family inheritance.

I still don't think selling "taking a few days" necessarily is evidence that
there is a ponzi scheme going on, though.

When I sell equities in my Schwab account, it takes two days to access the
cash. I'm pretty certain Schwab isn't running a ponzi scheme.

~~~
kristopolous
The idea is unlike having coins in a personal wallet, on an exchange you
effectively just have a claim card placed with a central authority. It's put
trust and centralization back into the system.

The claim card only needs to be satisfied when claims are made. Detaching the
claim from the asset and then reattaching when claims are made IS how the
exchanges work fundamentally.

Having 100% of the liabilities here is certainly possible but if you had only
20% of them, there'd be effectively no difference unless there's a market
panic.

And when/if that happens, I bet that not all 124 or so exchanges have 100% of
their liabilities on hand at the same time as the panic.

------
indubitable
I think the explanation is really simple. A couple of months back numerous
non-technical acquaintances began expressing interest in Bitcoin with a number
of them going on to purchase it -- completely independent of one another. I
doubt my anecdote is particularly unique. There seems to have been a huge
influx of "dumb money" on the heels of an exponential increase in media
coverage.

There is the possibility that I'm reversing causality here. In other words
that the media coverage increased following the increases in bitcoin, rather
than the opposite as I'm suggesting. But Google Trends along with the price
graph seem to support my suggested causality:

[https://trends.google.com/trends/explore?q=bitcoin](https://trends.google.com/trends/explore?q=bitcoin)

[https://www.coindesk.com/price/](https://www.coindesk.com/price/)

This just seems to be a huge influx of dumb money. If this is true, it's going
to lead to some interesting near future volatility. These sort of investors
are going to be more inclined to jump ship at what would normally be the tail
end of swings. They will see it as ' _the_ crash', race to get out, and create
a self fulfilling prophecy. Perhaps offering a great time for investment for
anybody who can accurately determine when the double dip decline is bottoming
out before a return to normalcy.

~~~
59nadir
Pretty much all of the money in Bitcoin was dumb from the get-go. These
weren't economists figuring out that something was under-valued or the system
could be gamed. It was people gambling back then and that's what's continuing
to happen.

Like you, I noticed an increasing amount of fairly oblivious people talking
about Bitcoin a while ago in our office and that's the most certain marker of
an impending crash, but in terms of there being smart money outside of huge
investors in the earlier days of Bitcoin I disagree. Developers that like to
gamble are not smart investors.

~~~
indubitable
I think there's major inherent value in Bitcoin. Or at least was. I enjoy
traveling and it's quite the pain with traditional banking. It ranges from the
small things like facing account locks (even after informing the bank you'll
be traveling) which take days to clear up, to getting absolutely gouged on
access to your money. If you want quick access to your own money then you'll
be facing artificially weakened exchange rates, fees on said exchange rate,
and then fees on top of fees because fees. To get reasonable access you need
to wire money which comes with annoying hassles, paperwork, delays, and then
you better hope you're not trying to get access to your money during the
weekend or a bank holiday.

And then the banks themselves also face countless rules and regulations which
result in more hassles to consumers. Happen to keep depositing just below $x
for whatever reason? Welcome to a suspicious activity report (for fear you may
be trying to dodge financial accounting reporting regulations) and having all
deposited funds confiscated until you spend tens of thousands of dollars
proving yourself innocent, because in finance innocent until proven guilty
apparently doesn't fly. And that's of course just one example among countless.

The current monetary system is pretty much awful. I thought (and think)
Bitcoin is the start of a change to this. In other words that it has inherent
value. The limits of that value are now being shown as transactional fees get
crazy, but the point of this is that I don't view Bitcoin as an arbitrary
commodity. It is a decentralized financial service.

~~~
59nadir
I think there is major inherent value in a decentralized currency and I think
the technology is neat. There will be more practical value in Bitcoin after
the crash when the speculative value has stopped being a factor.

------
thisisit
As much as I think there _might_ be a crash, so many things are wrong here:

> They don’t do technical analysis or are savvy enough to place limit orders.

I agree on limit orders but what is the fascination with TA. Not a day goes
about where someone in cryptocurrency uses some kind of chart mumbo jumbo to
prove a point.

> Ever wonder why Coinbase takes about a week to “process” the sell?

Simple answer - Settlements. Banks are not very fast. If someone was to refund
you now, you don't get the money in a day. They will always say, "money will
be credited back to you in 2-4 days".

There are so many additional reasons for this:

1\. Security. The amount of non-technical people going on the exchange is
huge. So they don't know if the sell was the right one or not.

2\. KYC - They need to ensure the buyers are following AML laws to ensure they
don't get sued later for helping drug dealers.

3\. Volume - The sheer volume of transactions which need to processed,
specially with KYC confirmations.

4\. Settlement - They can only pay someone if the buying party has sent the
money to them.

5\. Banks - Banks always know who is crediting the money. They might have put
extra checks for money coming from Coinbase, not to slow Coinbase down but
again to save their asses.

etc.

> Closing shop for a bit

The logic on this is so convoluted. If they keep the public price API is fast
because it doesn't need to handle additional requests. It is a simple fetch.

Additionally, if they keep the price API open it is just providing ammunition
to detractors.

Have you ever been in a stock market crash? Try that, your broker will freeze
up and stop responding. You will have a public price API to know what just hit
you.

~~~
kristopolous
Sure, there's honest and upstanding ways of explaining all of this. But
there's also billions of dollars being exchanged on opaque markets every day
so there's also the usual suspects that brings with it. In valley units,
that's a unicorn startup every hour.

Go check,
[https://coinmarketcap.com/currencies/bitcoin/](https://coinmarketcap.com/currencies/bitcoin/)
$24.1 billion in the past 24 hours

~~~
thisisit
And....your solution is to write an article claiming this is fraud?

So, if I use your logic - there is no disclaimer/disclosure on your holdings
ie there is opaque-ness. Hence, you have written this article to try and
spread FUD to cause market panic.

There is no room for honest and upstanding way to explain your actions.

~~~
kristopolous
Sorry if you read it that way. I was interested in talking about risks and
what _could_ be happening, not claiming anything as true. It's both within the
range of possible and has historical precedence.

------
patsmith
Take your best guess when Bitcoin will fall of the cliff:
[https://twitter.com/BitcoinPlunge](https://twitter.com/BitcoinPlunge)

