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Bitcoin Tops $50USD on MtGox

mtgox.com

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Re: Bitcoin Tops $50USD on MtGox

#41

Post by habosa »

Permit wrote: post #24
habosa wrote: post #16

Is there any exchange where I can short sell bitcoins? Besides the fact that this will almost definitely be a profitable strategy in the near future, it would seem that allowing both short and long positions would create market stability. Most securities exchanges allow both short and long positions.

Short selling Bitcoins would be an incredibly risky move on your part. There are no financial regulations in place to prevent market manipulation. You used to be able to short sell on Bitcoinica and there were some really questionable margin calls that took place.

Can you elaborate? I'm not too familiar with the bitcoin market, just viewing it from a normal (amateur) financial perspective.

Re: Bitcoin Tops $50USD on MtGox

#42

Post by josephagoss »

frisco wrote: post #37

Don't listen to the "it's out of control" or "is very due for a crash because it's rising so quickly" stuff. It comes down to a very simple test: do you think that there are significant reasons Bitcoin would or would not gain acceptance as a mainstream currency? A few reasons I can think of why it would: * The current banking system is inherently insecure. If you have an account number and a routing number (written o…

I think the "max block size" issue is one of the biggest ones at the moment. Oh and the censorship of S.Dice sets a terrible precedent too.

Re: Bitcoin Tops $50USD on MtGox

#43

Post by mrb »

unix-dude wrote: post #26

Really interesting stuff. I was expecting a crash or at least "return to normal" in that period where the price jumped to around $25 (before a mini-crash to like $16, and then the subsequent takeoff to the 40s). Personally, I dont think they're worth $50, but heck, thats a horrible reason for you not to buy them. A more objective reason not to buy now is that there are people holding thousands of bitcoins. If a few o…

You are incorrect. When the "price fell to zero" in June 2011, it was the result of bogus trades from a hacker: http://blog.zorinaq.com/?e=55 No one had enough bitcoins to crash the price that low for real.

As of today there are so many bids on MtGox alone that selling 100k bitcoins is barely sufficient to crash the price to the low $30s. Anybody owning that much is obviously long on bitcoin. It will take a lot more than a "few large holders" to crash the price to $30 or below. It would take a massive market panic.

Re: Bitcoin Tops $50USD on MtGox

#44

Post by trotsky »

_delirium wrote: post #36
trotsky wrote: post #32

Earlier quoted context omitted.

I'm far from a bitcoin bull, but shorting a market that's gained 500% in a few months is suicidal.

Shorting a market that's recently undergone a significant price spike is actually a quite common strategy, betting that it's a temporary anomaly and will revert to the long-run trend. I have no idea whether it's a good strategy here, but it's hardly unusual. In fact, it's probably the common case: you short-sell things that you think are over-valued, and things that have undergone rapid escalations in price where you…

"Markets can remain irrational a lot longer than you and I can remain solvent." - John Maynard Keynes

Two things you're not taking into account: 1) There are no fundamentals in the bitcoin market and 2) Margin calls

Based on the price action of just the last few months, it's easy to imagine you might need to cover for BTC at $250 or more (log trend), yet your max upside would be $50.

Re: Bitcoin Tops $50USD on MtGox

#45

Post by T-hawk »

habosa wrote: post #16

Is there any exchange where I can short sell bitcoins? Besides the fact that this will almost definitely be a profitable strategy in the near future, it would seem that allowing both short and long positions would create market stability. Most securities exchanges allow both short and long positions.

This comes up on most Bitcoin threads, and you'd think a google search could answer that, but the results are pretty unclear. Apparently Bitcoinica used to but no longer exists. The lack of a direct answer would suggest no, unless someone here chimes in otherwise.

Shorting isn't possible within the Bitcoin protocol itself, since there's no mechanism for the lender to compel the short-seller to cover and return the borrowed bitcoins. And Bitcoins are usually not kept in custody with a broker that could lend them, since doing so would defeat the purpose of the protocol in the first place, that only you can spend your coins. (Any lending or any other means of paying a bitcoin is spending it as far as the protocol is concerned.)

Such an exchange could exist, if it established its own trustworthiness outside of the Bitcoin protocol. It would have power to spend depositors' bitcoins on their behalf, like a bank for fiat currency does, but unlike a bank there is no higher authority such as a government to appeal to if the bank breaches its trust. The exchange would have to do something really really compelling to entice Bitcoin depositors and earn their trust. This set of problems would appear to be deep enough that a Bitcoin short exchange does not currently exist.

Re: Bitcoin Tops $50USD on MtGox

#46

Post by Lerc »

oscilloscope wrote: post #18
pokpokpok wrote: post #11

Earlier quoted context omitted.

how many is a large amount? 1000?

Here's a list of the top 100 large wallets from Dec, 2011. The biggest wallet then had 447785 BTC. Anyone have an updated list? http://bitcoinreport.appspot.com/

Do any of the largest Wallets have known owners?

I found https://bitcointalk.org/index.php?PHPSESSID=h72gmr1luhb169j1...

which shows that the top two wallets are gone now and the 80,000BTC Wallet has grown to 111111.11

The top 400 goes down to about 3,000BTC. A bunch of those could be the former largest ones broken up.

Re: Bitcoin Tops $50USD on MtGox

#47

Post by gojomo »

josephagoss wrote: post #42
frisco wrote: post #37

Don't listen to the "it's out of control" or "is very due for a crash because it's rising so quickly" stuff. It comes down to a very simple test: do you think that there are significant reasons Bitcoin would or would not gain acceptance as a mainstream currency? A few reasons I can think of why it would: * The current banking system is inherently insecure. If you have an account number and a routing number (written o…

I think the "max block size" issue is one of the biggest ones at the moment. Oh and the censorship of S.Dice sets a terrible precedent too.

Do you have a reference link about what you mean by censorship of Satoshi Dice?

Re: Bitcoin Tops $50USD on MtGox

#48

Post by JoshTriplett »

habosa wrote: post #16

Is there any exchange where I can short sell bitcoins? Besides the fact that this will almost definitely be a profitable strategy in the near future, it would seem that allowing both short and long positions would create market stability. Most securities exchanges allow both short and long positions.

If you really want to bet on BTC going down, you might consider a put option, rather than short selling. You can bet that a financial instrument will go down without borrowing money to do so and risking a potentially indefinite loss. You can always let a put option expire, and just lose the fee you paid for it. And right now, you shouldn't have any trouble getting people to accept such a put option, because most people want to bet on BTC going up.

Re: Bitcoin Tops $50USD on MtGox

#49

Post by nikcub »

habosa wrote: post #41
Permit wrote: post #24

Earlier quoted context omitted.

Short selling Bitcoins would be an incredibly risky move on your part. There are no financial regulations in place to prevent market manipulation. You used to be able to short sell on Bitcoinica and there were some really questionable margin calls that took place.

Can you elaborate? I'm not too familiar with the bitcoin market, just viewing it from a normal (amateur) financial perspective.

if you didn't understand what he said then you shouldn't be short selling

Re: Bitcoin Tops $50USD on MtGox

#50

Post by joezydeco »

shredfvz wrote: post #39
arasmussen wrote: post #10

It's literally doubled in a month. This is out of control.

Facebook's market cap is $63,000,000,000. If the market cap of Bitcoin were just 10% of Facebook, each Bitcoin would be worth about $500. 1% and it's about $50. Can a global financial system conceivably give the world just 10% of the value of Facebook? Because just ten percent ... and one BTC is $500. Oh, but clearly society demands Farmville, you say? Clearly we don't need a new financial system ... more than we nee…

The supply of Bitcoin is ridiculously tiny. Only 11,000,000 in total are in circulation today, let alone available for purchase on the market.

Bitcoins can be divided to 8 decimal places at the moment (it could be expanded). So instead of 1.1e7 units, isn't it 1.1e15 units?

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