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An anatomy of Bitcoin price manipulation

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Re: An anatomy of Bitcoin price manipulation

#271

Post by arcticbull »

benreesman wrote: post #94

Eh 20-ish years ago the shit happening on Island and Archipelago would blow most people’s minds. Undocumented, conditional, non-displayed order types. Routine wash trading. Shear-but-don’t skin multi-venue arbitrage. The ECNs were the Wild West. Smoke-filled dark pools. Island and Arca are NASDAQ and NYSE now. But Ben, US equities have intrinsic value unlike this BTC garbage! Well unless they pay no dividend, have du…

> But Ben, US equities have intrinsic value unlike this BTC garbage! Well unless they pay no dividend, have dual-class share structure, and IPO without a profitable quarter. What’s a share of SNAP entitle you to exactly? Ah right, you think someone will buy it for more.

Folks always levied these criticisms about Apple. So long as the company is growing and can do better re-investing the capital in itself, it should do so. Companies intentionally avoid creating profits to avoid paying taxes, electing instead to re-invest that capital tax-free. The idea of going public without a "profitable quarter" is meaningless if they could just be profitable at will.

Apple has paid over $1B in dividends to Warren Buffet alone since he took his stake, and returned just around $100B to investors last year between $85B in buybacks and $15B in dividends.

Buying shares you are paying for a combination of the present intrinsic value and your estimation of its future assets and cash flows. That doesn't mean your appraisal of these future outcomes are correct, and that's the risk.

But equities are fractional ownership stake in businesses whose value increases through non-investor participants. You know, customers? That's the difference between a positive-sum game and a zero-sum game like futures and options, or a negative-sum game like crypto assets. With especially proof of work crypto assets, value is constantly being removed by external participants, rather than added.

Yes traditional assets are mired in garbage behavior, but that doesn't mean that crypto is better - far from it. Decentralization makes it borderline impossible to control the behavior of bad actors while providing essentially zero material value to anyone beyond a few edge cases. And as usual, folks mention there will be some crypto folks who create value left behind after some wash-out. 14 years later, zero value created. It is true that not all equities are good investments (of course), in the fullness of time, zero crypto token investments as we see today will ever be good investments.

Re: An anatomy of Bitcoin price manipulation

#272

Post by lend000 »

While I appreciate the amount of work that went into this article, there are at least 50-100 potential current "news" stories in the crypto space at any given time. It's easy to find one that correlates with price movements after the fact, but more or less impossible to do so with forward testing. Virtually no successful crypto trading firms are using real time news data as a centerpiece of their trading, because news has almost no impact (contrary to popular belief and the assertions of this article), especially compared to equities. Elon Musk's tweets, which ostensibly should matter least for fundamental value, are probably the biggest drivers of capital, albeit only in the short term. See [0].

And then the part about "suspicious" orders on the book before the liquidation cascade. Come on. Amateur crypto traders are reinventing religion, where mysterious unknown "whales" are the gods, pulling all the strings.

[0] https://en.wikipedia.org/wiki/Data_dredging

Re: An anatomy of Bitcoin price manipulation

#273

Post by setr »

lend000 wrote: post #272

While I appreciate the amount of work that went into this article, there are at least 50-100 potential current "news" stories in the crypto space at any given time. It's easy to find one that correlates with price movements after the fact, but more or less impossible to do so with forward testing. Virtually no successful crypto trading firms are using real time news data as a centerpiece of their trading, because new…

> And then the part about "suspicious" orders on the book before the liquidation cascade. Come on. Amateur crypto traders and outsiders are reinventing religion, where mysterious unknown "whales" are the gods, pulling all the strings.

Sounds like something a whale would say…

Re: An anatomy of Bitcoin price manipulation

#274

Post by cobertos »

wpietri wrote: post #121
benreesman wrote: post #94

Eh 20-ish years ago the shit happening on Island and Archipelago would blow most people’s minds. Undocumented, conditional, non-displayed order types. Routine wash trading. Shear-but-don’t skin multi-venue arbitrage. The ECNs were the Wild West. Smoke-filled dark pools. Island and Arca are NASDAQ and NYSE now. But Ben, US equities have intrinsic value unlike this BTC garbage! Well unless they pay no dividend, have du…

I truly appreciate your experience and cynicism here. People who haven't worked in financial markets have a hard time appreciating how deep the muck can get. Which makes them especially valuable suckers for the unregulated markets.

Still remember going to a crypto meetup and met an older guy who worked at Arthur Andersen (auditor of Enron). Told me "you know what those Oak Doors stand for right? Your financial secrets never leave the firm."

Was blown away

Re: An anatomy of Bitcoin price manipulation

#275

Post by pcurve »

The "Bart" pattern had me in stitches because there has been similar stock meme among Korean individual traders mocking strange price actions and doing technical analysis using cartoon characters to figure out the best entry/exit points.

https://m.blog.naver.com/kwonhs225/222201971395

Pretty hilarious.

Re: An anatomy of Bitcoin price manipulation

#276

Post by somewhereoutth »

Bitcoin (and friends) is essentially a pyramid (edit: ponzai) scheme, where late entrants pay the 'returns' on early entrants - but with a technology layer that precisely and and publicly records each payin/payout.

In a way it is beautiful - the fraud is so transparent, and so technologically guaranteed to be transparent, that it becomes legitimised.

Almost as if robbing a bank would be ok if you made an appointment beforehand.

Re: An anatomy of Bitcoin price manipulation

#277

Post by wpietri »

freedomben wrote: post #270
wpietri wrote: post #233

Earlier quoted context omitted.

> look at the barriers that regulation throws against the average person to keep them from the most lucrative investments (like required accreditation) If anything, the accredited investor standard is proof that regulation doesn't favor the powerful. Taken as a whole, those aren't the most lucrative investments. They're the riskiest. The whole theory behind it is that if somebody is rich enough we won't try to protec…

> Taken as a whole, those aren't the most lucrative investments. They're the riskiest. I'm not an accredited investor but I did mountains of research on it years ago, and most of the time risk does correlate with reward. Also most of the most lucrative investments where people can get really rich are startup investments, which are off limits to most people who aren't already rich. There is definitely a ton of risk in…

Risk correlates with reward, sure. On a very general basis. But there are a ton of specific exceptions to that.

There's plenty of reason to think that opportunities to "get really rich" offered to unsophisticated people without a lot of money will be a big exception.

Just think of it from a startup's point of view. Would you want to take a lot of small checks from people who don't know what they're doing and for whom it's a major portion of their assets? I wouldn't, because it's always a bad idea for people to gamble what they can't afford to lose. I'd feel bad taking their money for something I know has a small chance of success. And just as a practical matter it's low return on effort.

The people who are most eager to take money like that? Idiots, goofs, and fraudsters who cannot get money from serious investors who know better.

In any case, the accredited-investor system already has certification-based exceptions: https://www.investor.gov/introduction-investing/general-reso...

Re: An anatomy of Bitcoin price manipulation

#278

Post by [deleted] »

TrackerFF wrote: post #237
shawabawa3 wrote: post #225

Earlier quoted context omitted.

I personally don't value nfts highly but I'm in a circle with lots of rich crypto early adopters - they absolutely would pay $100k for a bored ape and would consider it a bargain. It's a real status symbol, just in a niche you don't understand. I feel the same way about $100k Patel Phillipe watches but I don't hear everyone talking about how those are only wash trades The platforms where these nfts are sold usually c…

The main difference here is that those paying for a pointer to the bored ape, are paying just that. Nothing more. Anyone can copy that bored ape image, and use it as they want. If you pay $100k for a Patek, that's your watch. It's a physical item - the only way someone's going to steal it, is by physically stealing it from you. Of course, one can argue up and down whether or why a Patek is worth $100k. But IMO it's e…

[deleted]

Re: An anatomy of Bitcoin price manipulation

#279

Post by wpietri »

Tenoke wrote: post #218
wpietri wrote: post #208

Earlier quoted context omitted.

I look forward to seeing your math on that. But for a fair comparison you can't just look at "casinos to date" and "Bitcoin to date". After all, as Bitcoin proponents never tire of telling us, this is supposedly the early days.

Some of the most expensive casinos (just the building) to build are: Venetian Macau – $2.4 billion, Wynn Las Vegas – $2.7 billion, Resorts World Sentosa – $4.53 billion, Marina Bay Sands – $5.36 billion, CityCenter Las Vegas – $9 billion. That already likely costs more than the combined electricity used by Bitcoin so far, if it doesn't you can easily reach trillions by combining the costs of just Casino buildings. Mo…

Comparing the cost to build a casino with the raw electricity cost of Bitcoin is not so much an apple-to-oranges comparison as apples-to-tire-rims.

But if your point is that Bitcoin is basically a big casino, I agree. And I think we should regulate it like one.

Re: An anatomy of Bitcoin price manipulation

#280

Post by nightski »

freedomben wrote: post #267
mtremsal wrote: post #251

Earlier quoted context omitted.

> inflation is a highly regressive tax Is it? I think a takeaway from Piketty's book was that inflation was one of the rare factors that slowed down or reversed wealth inequality. Intuitively it would make sense that people drowning in debt benefit from (moderate) inflation, especially if low wages get bumped in the process.

Yes that's a great point, as long as debt interest rates are fixed, inflation is good for people in debt. It's especially great for most home owners, but home ownership is largely a middle-class luxury. But that said a lot of the really bad debt that poor people have is variable rate anyway (and usually outrageous) like credit cards, payday loans, etc. Re wages: they tend to be sticky. Wages will get bumped up but it…

It might make your debt cheaper but if you can't afford food & housing at your current wage then it doesn't really matter.
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