Key Post How to bet on Bitcoin falling

Leo

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Could you share the data from which you calculated your 95% wash trading? Thanks!

That issue has been widely reported in crypto and regular media outlets for months. I haven't seen anyone in the crypto industry challenge those reports.
 
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Gus1970

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That issue has been widely reported in crypto and regular media outlets for months. I haven't seen anyone in the crypto industry challenge those reports.
That is quite strange as wash trading is illegal, they would have shut down the exchanges if the media reports were substantiated by facts which they obviously were not.
 

tecate

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That's the nature of a purely speculation driven asset. ~95% of trades are washes,
Well, speculative for sure but probably going beyond speculative. I find these two commentaries very interesting.
Jim Reid of Deutsche Bank
Kristina Hooper, Chief Global Market Strategist with Invesco

Both not being asked about Bitcoin at all - but volunteering an insight as to how Bitcoin is being viewed in those circles as a safehaven trade. If anyone in their positions had brought up Bitcoin 12-18 months ago, the context would have been to ridicule it.

On the wash trade, yes Bitwise came out with a report on that a few months back (associated with their Bitcoin ETF application). It shouldnt surprise anyone - and with that out in the open, people can figure out the correct figures (there's an index now being referred to based on the more professional exchanges that have not been found to wash trade).

It's a nascent market - this sort of thing is to be expected. It's also just a drop in the ocean in terms of market capitalisation. These things will change.

However, let nobody be fooled as to where manipulation exists - because it exists anywhere people can get away with it.

Fresh off the press

These guys do it better. I'm sure they'll bring that game to the crypto space - as they're all in it now.
 

Leo

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That is quite strange as wash trading is illegal, they would have shut down the exchanges if the media reports were substantiated by facts which they obviously were not.
It is in the regulated markets, but Bitcoin is not covered by any such legislation. Some of the washes are quite blatent and can be followed in circular transactions. Some advocates are using is as a reason to encourage the broader crypto community to embrace a move towards regulation.
 

Gus1970

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It is in the regulated markets, but Bitcoin is not covered by any such legislation. Some of the washes are quite blatent and can be followed in circular transactions. Some advocates are using is as a reason to encourage the broader crypto community to embrace a move towards regulation.
Fair enough, where does the 95% figure come from, can you show me the numbers?
 

Leo

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Fair enough, where does the 95% figure come from, can you show me the numbers?
You can read Bitwise's findings here. A lot of it was as above circular trades between addresses on some of the less reputable exchanges. who they call out, along with naming 10 exchanges where they have observed no such patterns.

To Tecate's point above, the numbers they identify as genuine are actually pretty reasonable and typical of a functional market the full numbers including the washes 'would imply that 8.6% of all bitcoin was changing hands every day.'
 

Gus1970

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You can read Bitwise's findings here. A lot of it was as above circular trades between addresses on some of the less reputable exchanges. who they call out, along with naming 10 exchanges where they have observed no such patterns.

To Tecate's point above, the numbers they identify as genuine are actually pretty reasonable and typical of a functional market the full numbers including the washes 'would imply that 8.6% of all bitcoin was changing hands every day.'
Thank you
 

Brendan Burgess

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Hope you changed your stop.....
Bitcoin reached $13,000 this morning and seems to be gaining on average $1,000 ish a day.
The strength of this parabolic move is incredible, especially considering it’s a “worthless” asset!!
Thanks Landlord

On reflection, the stop is not that important. Had it gone over the $15,000 while I was sleeping, it would have just close out my trade. I would just have to start a new one in the morning. I would end up paying the costs of the trade, which are insignificant for a long term "sell and hold" strategy.

The value and ultimate destination of Bitcoin is zero. I can't forecast the path or the timeline to zero, but it will reach zero.

I sold at $14,400, so I have set my own personal limit at $24,400. If it reaches that, I will close my position and nurse my wounds and be raging when it later goes down to zero.

Let's say that there was some way of correctly calculating Bitcoin's inherent value. Let's say that this value one week ago was $X. Why is it worth 140%X a week later? What was the news item in the last week which changed the value of it?

Why was it $3,000 odd a year ago and $13,000 today? You could argue that Facebook's proposed stable coin has made the concept more mainstream.
 

Brendan Burgess

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~95% of trades are washes
Leo

That is very interesting. Could you explain what it means.

I heard an interesting quote recently, . "Bitcoin is just like gold. The main difference is that Bitcoin is more expensive to mine."

Brendan
 

Brendan Burgess

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The first one is my opinion.

The second is someone else's wisecrack.

They don't need to be squared at all.

Brendan
 

tecate

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The first one is my opinion. The second is someone else's wisecrack.
They don't need to be squared at all.
I thought you had mentioned it as you believed in the statement. I don't think it's anyone's wisecrack. Someone released a research paper late last year where their findings were that the energy input in Bitcoin mining is 2x that of Gold mining.
 

Brendan Burgess

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I thought you had mentioned it as you believed in the statement.
Hi tecate

I thought we had discussed extensively elsewhere why there is no comparison between gold which is worth something, and Bitcoin which is worth nothing. So I am surprised that you thought I believed in it.

Brendan
 

tecate

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I thought we had discussed extensively elsewhere why there is no comparison between gold which is worth something, and Bitcoin which is worth nothing. So I am surprised that you thought I believed in it.
Yeah, for that reason, I wanted to double check with you as I was surprised to see you list that statement. And we discussed it but we don't agree that gold is worth something yet Bitcoin is not :)
 

Leo

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That is very interesting. Could you explain what it means.
The accusation is that many of the less reputable exchanges are transferring bitcoin between addresses they own at high frequency in order to inflate the volumes of transactions going through their platform. The motivation for this is financial, there's millions on offer to the top exchanges to list new alt coins.
 

Gus1970

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The accusation is that many of the less reputable exchanges are transferring bitcoin between addresses they own at high frequency in order to inflate the volumes of transactions going through their platform. The motivation for this is financial, there's millions on offer to the top exchanges to list new alt coins.
Ah, so, if it is only the less reputable exchanges, then we must be talking only about a minimal fraction of the transaction volume, not 95%, which one is it?
 

Leo

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Ah, so, if it is only the less reputable exchanges, then we must be talking only about a minimal fraction of the transaction volume, not 95%, which one is it?
It's all in the doc. It is 95%, and they name 10 exchanges that don't engage in the practice. Why would you think that less reputable exchanges could only account for a minimal fraction of transactions? A simple review of reported exchange volumes would make that clear.
 

Gus1970

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So coinbase, kraken, robinhood and other big ones only account for 5% of the transactions? I just want to make sure i understand
 

tecate

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So coinbase, kraken, robinhood and other big ones only account for 5% of the transactions? I just want to make sure i understand
Have a read through this. This is all good news for the industry. All of this stuff is getting cleaned up as it matures.
 

Brendan Burgess

Founder
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38,130
The accusation is that many of the less reputable exchanges are transferring bitcoin between addresses they own at high frequency in order to inflate the volumes of transactions going through their platform. The motivation for this is financial, there's millions on offer to the top exchanges to list new alt coins.
Thanks Leo

But let me get this straight.

I own an exchange that is ranked 20th in terms of business.
So I put through a whole pile of matched deals so that I rise to no. 10 in the league.

Why would that inflate the price of Bitcoin though?
I do understand that I am trying to apply logic to a completely irrational business but is there any reasonable explanation for it?

Brendan
 
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