I've been thinking about the volume of BTC available on the exchanges - just those that BitcoinWisdom shows - because someone with enough money could drain all the current sell offers from all of them, converting about $60M into BTC and setting the current price to something much higher than their buy-in price. There is a significant number of people who have $60M in pocket change. Some problems with this scenario:
- On Bitfinex, no one can see how much BTC is waiting to be borrowed and sold to someone doing this, so they might be selling into a trap.
- They might have trouble making all those buys because many sellers would scramble to move their offers to a higher price
- These purchases might crash the exchanges on which they are made.
- At least on Bitfinex (about three times as much available as Bitstamp, the next largest), leveraged short positions backed by BTC will kick in more supply to buy as they get margin called.
- The purchase could drive an exchange out of business if it doesn't have the balance sheet we all assume it has.
- Who has $60M and the balls to try this?
That first problem is the one I haven't thought about enough. I guess you can short BTC on Bitfinex using only your USD balance as collateral, so if someone else with $60M did that, then these two rich people would just be having a pissing contest. That would be fun for me because I have a trade bot that makes profit off of volatility. OTOH, you can't short BTC unless there's someone out there willing to lend it to you, so the seller will be relying on strangers and paying them interest to play this game.
It figures. My sell order was at $296.62 missed the top by 52 cents. This keeps happening to me. Look people, we don't have a central bank so it's up to us day traders to keep the price stable enough for bitcoin to be usable as a currency. if it jumps up 10% in a day, sell. buy when it retraces 5%. don't let it rise too far too fast. It's unsustainable, draws in the wrong crowd and drives out more cautious investors.
I would be happy to see consolidation in this range for a few days before the assault on $300.
Remember, you have more money to buy the dips if you sell the spikes.
Thank you for providing this liquidity and stability, and I wish you every success with it.
I wrote a bot that maintains a dollar-value position in bitcoin for me using BitFinex margin trading. Speculators like to take risks and push the price around, so I like to absorb the fruits of their labor.