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Venture Capitalist Tim Draper Wins Bitcoin Auction

dealbook.nytimes.com

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Re: Venture Capitalist Tim Draper Wins Bitcoin Auction

#11

Post by ewillbefull »

chollida1 wrote: post #10

Wow, looking at the order book of bitstamp [1] through the eyes of someone who lives in the world of market microstructure is eye opening:) There are huge holes everywhere in the order book and the liquidity at each offering level seems to be completely without reason. I just spent 20 minutes applying the sort of algorithms that'd we'd normally run on each stock to make markets in it and it can't detect any real patt…

There are a lot of amateur day traders in the bitcoin community who just wing it. I'd say weird patterns you find are probably because of that.

Re: Venture Capitalist Tim Draper Wins Bitcoin Auction

#12

Post by computer »

chollida1 wrote: post #10

Wow, looking at the order book of bitstamp [1] through the eyes of someone who lives in the world of market microstructure is eye opening:) There are huge holes everywhere in the order book and the liquidity at each offering level seems to be completely without reason. I just spent 20 minutes applying the sort of algorithms that'd we'd normally run on each stock to make markets in it and it can't detect any real patt…

I think one reason is that many people in the bitcoin market are unsophisticated compared to your normal market traders.

But also, Bitcoin is an asset all by itself. You can't hedge it against other assets, like you can do with corn or tech. You can't easily short it. So, there's no "true" reasonable price range like with most assets, and no normal influences on the price. It's basically truly a bubble of hot air everybody is bidding on, except with the hope that the bubble will never burst, and be used as currency.

Re: Venture Capitalist Tim Draper Wins Bitcoin Auction

#13

Post by hueving »

pmorici wrote: post #7
phantom784 wrote: post #5

Earlier quoted context omitted.

I'm surprised. What would be the reason to pay more than the market rate to get these coins?

If he had bought that many on the open market it would have driven the price up by a large amount. Just go look at the current order book on Bitstamp.net one of the major exchanges. There are only about 5k coins on offer and many of those are for prices well above market. https://www.bitstamp.net/market/order_book/

That's a terrible indicator. Unless the guy was a complete moron, he wouldn't just submit an order to the market to buy 30k coins at the market price. It would be trickled over the process of a couple of weeks.

By your same logic, the coins he bought are hardly worth anything because if he tried to sell them it would just crash the price. There is only about 5k worth of buy orders in the book at the moment.

In fact, if he paid above market price, it would be in his interest to make sure the number got 'leaked' to encourage rampant speculation to drive up the price beyond what he paid.

Re: Venture Capitalist Tim Draper Wins Bitcoin Auction

#14

Post by dustcoin »

mkngrm wrote: post #4
skizm wrote: post #2

Anyone see for how much?

No exact figures have been released, but based on other bidder's input, the assumptions are that his bid was well over the market price.

The bidders who announced they did not win specified bids in the $400-$500 range. Draper likely won with a higher, but still below market, bid.

Re: Venture Capitalist Tim Draper Wins Bitcoin Auction

#15

Post by dave_sullivan »

lowlevel wrote: post #3

Regardless, he managed to buy without driving the market price up too much.

No, he didn't buy it on the open market as this was essentially a private transaction between two parties. What it means is there's now someone trying to sell (instead of hoard) bitcoins worth $what_he_paid_for_it + %target_return.

That will have an effect on the price, but he's not going to dump them and drive the price down because he paid a lot for them and wants to make a return (unless there's some kind of panic in bitcoin and he just says screw it). Kind of interesting actually.

At the very least, bitcoin is going to be a data driven economists wet dream for years to come.

Re: Venture Capitalist Tim Draper Wins Bitcoin Auction

#16

Post by VMG »

chollida1 wrote: post #10

Wow, looking at the order book of bitstamp [1] through the eyes of someone who lives in the world of market microstructure is eye opening:) There are huge holes everywhere in the order book and the liquidity at each offering level seems to be completely without reason. I just spent 20 minutes applying the sort of algorithms that'd we'd normally run on each stock to make markets in it and it can't detect any real patt…

Look over at http://www.reddit.com/r/bitcoinmarkets. The "analysis" there will probably make you laugh and cry at the same time.

Re: Venture Capitalist Tim Draper Wins Bitcoin Auction

#17

Post by modeless »

chollida1 wrote: post #10

Wow, looking at the order book of bitstamp [1] through the eyes of someone who lives in the world of market microstructure is eye opening:) There are huge holes everywhere in the order book and the liquidity at each offering level seems to be completely without reason. I just spent 20 minutes applying the sort of algorithms that'd we'd normally run on each stock to make markets in it and it can't detect any real patt…

As someone who doesn't live in the world of market microstructure, what kinds of patterns or justifications did you expect to see?

Re: Venture Capitalist Tim Draper Wins Bitcoin Auction

#18

Post by mkngrm »

dustcoin wrote: post #14
mkngrm wrote: post #4

Earlier quoted context omitted.

No exact figures have been released, but based on other bidder's input, the assumptions are that his bid was well over the market price.

The bidders who announced they did not win specified bids in the $400-$500 range. Draper likely won with a higher, but still below market, bid.

There were also bidders who put in bids much lower than that, how does that mean he wasn't above market?

Do you have a link to those other bidders' claims?

Re: Venture Capitalist Tim Draper Wins Bitcoin Auction

#20

Post by danielweber »

dave_sullivan wrote: post #15
lowlevel wrote: post #3

Regardless, he managed to buy without driving the market price up too much.

No, he didn't buy it on the open market as this was essentially a private transaction between two parties. What it means is there's now someone trying to sell (instead of hoard) bitcoins worth $what_he_paid_for_it + %target_return. That will have an effect on the price, but he's not going to dump them and drive the price down because he paid a lot for them and wants to make a return (unless there's some kind of panic…

Do we know his plan to sell them? It's what I would do, but has he stated his intent?
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