Silk Road forums

Discussion => Security => Topic started by: Ensine99 on August 22, 2012, 03:38 am

Title: Artificial lowering of BTC price
Post by: Ensine99 on August 22, 2012, 03:38 am
Just thought that you guys would like to know that there is someone Intentionally lowering the buy price on MTgox (where SR gets the weighted average from)
He keeps putting in sale orders of .01 BTC after a large buy pushes up the price say from 9.8 -> 9.95 this guy comes in with his .01 order and pushes it on the highest current buy (which tends to be just under the old buy price) so instead of BTC pushing up like it should after a large buy it just pushes down. so the 9.95 immediately resets to 9.8.  >:(
Its not the same guy who dumped 12k BTC on friday but hes almost as annoying.
Just thought I'd let everyone know.
Edit: the live books can be found here: http://bitcoin.clarkmoody.com/
Title: Re: Artificial lowering of BTC price
Post by: wolverine434 on August 22, 2012, 07:35 am
Thanks for pointing this out.

I had a feeling this kind of manipulation would go on in an unregulated market such as bitcoin.

Too bad the SEC won't do a thing to stop it either. Bitcoin isn't a security recognized by the SEC, it's not even considered a currency to them (because it has no backing).

The most you could do is fight fire with fire, or use this information to make some cash yourself.
Title: Re: Artificial lowering of BTC price
Post by: HowardRoarke on August 22, 2012, 07:36 am
ironically the same thing goes off in the real markets..
Title: Re: Artificial lowering of BTC price
Post by: NeutronMan on August 22, 2012, 01:06 pm
this wouldn't do anything except lower the bid-ask spread and sr doesn't get the bitcoin value from gox anyway
Where do SR get the btc price from?
Title: Re: Artificial lowering of BTC price
Post by: Ensine99 on August 22, 2012, 01:23 pm
this wouldn't do anything except lower the bid-ask spread and sr doesn't get the bitcoin value from gox anyway
]
SR does get the BTC value from gox, multiply your coins by the current weighted average (+/- 0.05% due to lag)
As for it not doing anything, it prevents gains in the market. and forces drops in sale prices. people coming in to sell BTC will see the last price at 9.81 or whatever which looks like market is being determined by buyers. but really demand is greater then supply currently. as a result people see the market value and put in orders based around it ie. market is 9.8 sell at market, when in reality the sell price is 9.9, it also throws off buyers who will post market orders and then see a 10-20c price jump from what they were expecting to pay.
Title: Re: Artificial lowering of BTC price
Post by: NeutronMan on August 22, 2012, 01:44 pm
Is this what it's supposed to look like? My browser displays it like that.

{"JPY": {"7d": "888.10", "30d": "913.57", "24h": "801.15"}, "USD": {"7d": "11.04", "30d": "10.63", "24h": "9.96"}, "AUD": {"7d": "11.50", "30d": "10.34", "24h": "9.74"}, "CHF": {"7d": "10.48", "30d": "10.65"}, "RUB": {"7d": "318.84", "30d": "333.75"}, "timestamp": 1345642204, "THB": {"7d": "419.11", "30d": "398.13", "24h": "328.04"}, "SLL": {"7d": "2779.27", "30d": "2609.00", "24h": "2472.06"}, "DKK": {"7d": "59.29", "30d": "63.67", "24h": "63.27"}, "BRL": {"7d": "26.84", "30d": "23.58", "24h": "22.26"}, "CAD": {"7d": "11.17", "30d": "10.55", "24h": "10.06"}, "GBP": {"7d": "7.43", "30d": "6.97", "24h": "6.45"}, "NZD": {"7d": "15.22", "30d": "14.24", "24h": "14.80"}, "PLN": {"7d": "37.80", "30d": "35.94", "24h": "34.39"}, "CNY": {"7d": "74.74", "30d": "68.97", "24h": "64.37"}, "SEK": {"7d": "76.21", "30d": "72.62", "24h": "67.67"}, "SGD": {"7d": "14.53", "30d": "14.69", "24h": "12.66"}, "HKD": {"7d": "110.26", "30d": "83.24"}, "EUR": {"7d": "9.36", "30d": "8.71", "24h": "8.23"}}
Title: Re: Artificial lowering of BTC price
Post by: Ensine99 on August 22, 2012, 03:09 pm
Is this what it's supposed to look like? My browser displays it like that.
Yes, first it lists the currency then in brackets {7day: "Weighted average over 7 days", 30 day: "Weighted average over 30 days", 24 Hours: "Weighted average over 24 hr"}
although its much nicer to view it here: http://bitcoincharts.com/markets/currencies/
Image of trades w/ deflation orders highlighted: http://xfq5l5p4g3eyrct7.onion/view.php?image=68d1c86dd1db678536cf6bca8f7eddf4.png
Title: Re: Artificial lowering of BTC price
Post by: jameslink2 on August 22, 2012, 10:22 pm
Just thought that you guys would like to know that there is someone Intentionally lowering the buy price on MTgox (where SR gets the weighted average from)
He keeps putting in sale orders of .01 BTC after a large buy pushes up the price say from 9.8 -> 9.95 this guy comes in with his .01 order and pushes it on the highest current buy (which tends to be just under the old buy price) so instead of BTC pushing up like it should after a large buy it just pushes down. so the 9.95 immediately resets to 9.8.  >:(
Its not the same guy who dumped 12k BTC on friday but hes almost as annoying.
Just thought I'd let everyone know.
Edit: the live books can be found here: http://bitcoin.clarkmoody.com/

Thank you for the link! That is very interesting to watch.

You are right, it is an automated process that appears to have a .0000X shift in value up and down but seems to artificially maintain the price at about 9.8 it jumps around 9.8032X with listings of .01btc which if you tried to transfer across the bitcoin network would end up being .005 btc due to the fee for small amount transfers.

Wonder what exactly is going on, are the forcing the price to stay at a given point or are they gaming the system with the .01btc sale knowing the person buying it will pay half in transfer fees.
Title: Re: Artificial lowering of BTC price
Post by: AnOn.edu on August 22, 2012, 11:56 pm
Just to clarify, ALL currency markets are unregulated. Granted, if your trading via an exchange, depending on the country, the exchange itself is regulated but the Forex markets are not regulated.  If you think this little trading Stratagy on Mt. Gox is manipulative you should check out the charts when the Swiss set a ceiling on the Frank earlier this year. The Forex mkts will be manipulated by CB's and the bitcoins market will be manipulated by big players, but it's all the same - how you hedge your ass.

I would find it interesting if Mt. Gox is renting out network backbone space to traders. Don't think for a moment there won't be blackbox trading in bitcoins if there is ever much liquidity.
Title: Re: Artificial lowering of BTC price
Post by: Ensine99 on August 23, 2012, 12:35 am
Just thought everyone might like to know. It appears the guy who was forcing BTC down has stopped.  ;D
Onwards and upwards my bitcoins!
Title: Re: Artificial lowering of BTC price
Post by: AnOn.edu on August 23, 2012, 12:52 am
There is an old (semi-true) joke among traders.  The IQ of your average Forex trader is about 130.  The IQ of your average bond trader is about 100.  The IQ of your average equities trader is, on a good day, 60.  If you're going to be playing in currencies, bitcoin/USD.EUR/ETC, you better realize your swimming in deep waters.
Title: Re: Artificial lowering of BTC price
Post by: TheBusiness on August 23, 2012, 02:29 am
Surely they are just doing us a favor and keeping the price hovering around 10 USD to make it easier to convert to street prices in your head :)
Title: Re: Artificial lowering of BTC price
Post by: Ensine99 on August 23, 2012, 08:22 am
Surely they are just doing us a favor and keeping the price hovering around 10 USD to make it easier to convert to street prices in your head :)
Or you could just change your settings on SR and have everything displayed in dollars.
Title: Re: Artificial lowering of BTC price
Post by: edar on August 23, 2012, 03:20 pm
Just thought everyone might like to know. It appears the guy who was forcing BTC down has stopped.  ;D
Onwards and upwards my bitcoins!
the brits are selling  ;)
Title: Re: Artificial lowering of BTC price
Post by: CharasBros on August 23, 2012, 04:44 pm
Just thought everyone might like to know. It appears the guy who was forcing BTC down has stopped.  ;D
Onwards and upwards my bitcoins!

does not seams so
Title: Re: Artificial lowering of BTC price
Post by: Ensine99 on August 23, 2012, 06:02 pm
Just thought everyone might like to know. It appears the guy who was forcing BTC down has stopped.  ;D
Onwards and upwards my bitcoins!

does not seams so
New 24 Hour high as of this morning: 10.25 up from 10.099
Both the weighted average and daily average are improving as well.  :)
That being said, the weekend is always a shaky time for BTC  :-\
Title: Re: Artificial lowering of BTC price
Post by: edar on August 23, 2012, 07:20 pm
bet ya  0.5  it goes down :o
Title: Re: Artificial lowering of BTC price
Post by: Ensine99 on August 24, 2012, 07:01 pm
bet ya  0.5  it goes down :o
I won't hold you to the bet, but care to check the price today? new high of 10.613, average is over 10 again.
I expect a drop over the weekend due to a lack of demand when people don't have access to adding new funds. but it'll still be higher then during the artificial lowering
Title: Re: Artificial lowering of BTC price
Post by: edar on August 24, 2012, 10:49 pm
hope so  :)
Title: Re: Artificial lowering of BTC price
Post by: wolverine434 on September 10, 2012, 11:24 pm
What makes the BTC market so dangerous (and lucrative for those that know how to push a market around) is that volume is pretty thin for BTC's. If you have a couple hundred thousand bucks you could literally dicate the entire direction of the BTC price.

You could put in a series of bigger sell orders and create panic... then buy at the bottom in bits and pieces.

This happens in the stock market too. But traders that do it generally pick smaller volume stocks, so they have the largest bang for their buck

It''s harder to do in larger markets for, say, the Yen, or Dollar, or most other genuine currencies.

But not impossible - George Soros is known for making pver a billion by "Breaking the Bank of England (BOE)" and making a shit ton of cash as the British Pound lost value when the BOE gave up supporting the currency.
Title: Re: Artificial lowering of BTC price
Post by: xdjx on September 10, 2012, 11:38 pm
Cheers for the heads up mate.

Seems to be quite a few people trying to manipulate the bitcoin market price atm, as long as SR'ers keep there eyes on the exchange prices and volumes they should be able to avoid a massive loss during a crash by knowing that a large amount is/just got sold cheap or that a large investor is artificially pushing the prices down
Title: Re: Artificial lowering of BTC price
Post by: sqlinjection on September 11, 2012, 07:30 am
What makes the BTC market so dangerous (and lucrative for those that know how to push a market around) is that volume is pretty thin for BTC's. If you have a couple hundred thousand bucks you could literally dicate the entire direction of the BTC price.

The volume is thin, but not that thin.

You'd need a fair amount of money to push the BTC rates around in any significant way.

For the curious: http://mtgoxlive.com/orders <-- move the cursor along the lines to see the projected price and volume bought/sold needed to drive the price to that level. As you can see, a $200,000 sell order will only drive down the price by around 50 cents.

Of course it's all relative. A $200,000 forex sell order on something like EUR/USD will barely lower the price by a few pips. So yes, people with a few million bucks could drive the price down (or up) a few dollars. Your average joe shmoe can't.

(For those curious, here's some random numbers. The current average is $11.13. An $800,000 buy order (or combination of orders) will raise the price to ~$12.25 and a 80,000BTC sell order will lower the price to ~$8.88).
Title: Re: Artificial lowering of BTC price
Post by: Ensine99 on September 11, 2012, 09:52 am
This thread no longer really applies, also the most accurate way of looking at the bitcoin market is through
http://bitcoin.clarkmoody.com/
it updates more often then the live graph, and has the open order books.  8)
Title: Re: Artificial lowering of BTC price
Post by: edar on September 11, 2012, 01:22 pm
Its all becoming a bit of a joke  ;D
Title: Re: Artificial lowering of BTC price
Post by: sWEED on September 11, 2012, 08:18 pm
This is good info. i have been trying to look for patterns a bit had a little luck, but it is crazy out there. i think i will get a new mining machine soon when the new ones come out in Oct. looks like a good investment. risky but good profits
Title: Re: Artificial lowering of BTC price
Post by: pine on September 11, 2012, 08:44 pm
There is an old (semi-true) joke among traders.  The IQ of your average Forex trader is about 130.  The IQ of your average bond trader is about 100.  The IQ of your average equities trader is, on a good day, 60.  If you're going to be playing in currencies, bitcoin/USD.EUR/ETC, you better realize your swimming in deep waters.

Currency traders, those who aren't getting paid to obtain blocks of currency for some government/corporation etc, are some of the dumbest smart people I know.

In fact, it's worse for currency traders than it is for equities traders, they blow up their accounts on a regular basis since they are in a zero sum game at best and must rely heavily on borrowing to obtain leverage.

Coming up with sophisticated equations and graphs, don't trump what the basic arithmetic of markets is. But people who become traders in general aren't going to let an awkward fact get in the way. Much like our present day Marxists, they have very complex ideas which don't quite interface with reality, but for which they have every explanation. Warren Buffet used to dabble in this business himself, but gave it up when he realized that his explanation essentially was able to fit two exactly opposite outcomes. Then he realized this was essentially numerology, a pseudo-scientific activity.

Somebody with complex ideas... doesn't follow that they are actually a smart person. I could memorize random prime numbers 100+ digits in length for a couple of years, and although that would make for an amazing memory for prime numbers, it'd also be pretty darn dumb.

The only way to *consistently* make money on a currency market is to commit some kind of crime or fraud. The rest is luck.

On the other hand... getting people to pay you for this... is pretty darn smart...
Title: Re: Artificial lowering of BTC price
Post by: wolverine434 on September 12, 2012, 12:06 am
You can definitely make money in the currency markets, it just depends on how well you know yourself and your investment aptitude.

Some people don't have the aptitude for short-term trading. If they don't realize it, they will lose everything. I for one had to move my investment horizon out longer-term before I found myself making money consistently.

As a result, i've made plenty of money betting the direction of a few currencies over the last few years. But I also took a much longer-term approach to it, and relied on very little leverage.

Leverage is a double edged sword. It's great when times are good, sucks when they are bad. Forex let's people get insane leverage 20 to 1 or more. Even the banks blew up when they started leveraging that much. a 5% move against you and you're smoked.

As for BTC, i don't really look at it as a serious money making opportunity long-term. I just quickly get in when I have to and then buy some goods off SR so i'm not left holding anymore btc.

I'd rather my investing dollars go into real currencies, stocks, and bonds : )
Title: Re: Artificial lowering of BTC price
Post by: pine on September 12, 2012, 12:33 am
I'd rather my investing dollars go into real currencies, stocks, and bonds : )

Non cryptographically backed assets? Ohhhhhhhhhhhh, controversial! ;)
Title: Re: Artificial lowering of BTC price
Post by: wolverine434 on September 12, 2012, 02:20 am
I'd rather my investing dollars go into real currencies, stocks, and bonds : )

Non cryptographically backed assets? Ohhhhhhhhhhhh, controversial! ;)

haha what can i say,  im the howard stern of investing :)
Title: Re: Artificial lowering of BTC price
Post by: sqlinjection on September 12, 2012, 04:22 am
This thread no longer really applies, also the most accurate way of looking at the bitcoin market is through
http://bitcoin.clarkmoody.com/
it updates more often then the live graph, and has the open order books.  8)

Clark Moody's BTC ticker is great, though his main site proudly proclaims "I love Jesus!" and while I don't want to turn this into a religious flamewar, I do have trouble taking seriously anyone who dedicates a large part of her/his life to the service of an imaginary being, anyone to whom faith is more important than fact, who is happy to condemn 70% of the world's population who do not believe in the Christian God to damnation in eternity for having the misfortune of being born in the wrong place and never learning about "the one true God", the people who think that dinosaurs are 6,000 years old and that fossils were placed on earth to test our faith. Why did I even bring it up? I'm sure there are a lot of wonderful practicing Christians on SR so I guess my point is that I'm a giant, misanthropic asshole. Still, at least I have the pleasure of knowing that I'm a correct giant misanthropic asshole.

Where was I? Oh right, fortunately I don't need to share his beliefs to use his ticker. Still, I prefer:

http://bitcoincharts.com/charts/mtgoxUSD#rg2zig15-minztgSzm1g10zm2g25zi1gMACDzi2gRSIzvzps

The ability to add indicators such as Parabolic SAR (great for knowing when to enter or exit the market), MACD (Moving Average Convergence/Divergence) as well as the R[elative] S[trength] I[ndicator] AND a shitload of others makes it a lot more useful to me.

I just wish someone was able to port Bitcoin onto the Metatrader platform (with margin and leverage) and you wouldn't be able to tear me away from my computer!

To anyone curious about starting daytrading (in BTC or regular fiat pairs) I highly recommend babypips:

http://www.babypips.com/school/

I can't stress enough how much of the technical analysis information can be directly applied to BTC. If you're curious about learning more re: trading bitcoins, start here:

http://www.babypips.com/school/support-and-resistance.html

In fact, the support/resistance levels lesson can be applied to anything. Just open the chart I linked to above or any company on finance.google.com and apply your newly-learned wisdom.

There's so much more that I could go into but this post is already too long. If you're curious just reply, if lots of people are curious I'll start a dedicated thread.

Happy trading!
Title: Re: Artificial lowering of BTC price
Post by: AnOn.edu on September 12, 2012, 06:00 am
sql,

If you're making money then good times to you but once the exchanges started renting space on the backbone of their network to HFT's and the big boys started moving the majority of their volume to the darkpools the game got too rigged for my taste.  That's actually one of the things that interests me about bc trading.

Remember that support and resistance only tells you about the psychology of the traders, not the market.  The technicals were flashing bull signs in Oct of '07 and bear signs after Lehman.  Damn those were great days to be short. 
Title: Re: Artificial lowering of BTC price
Post by: TheBusiness on September 12, 2012, 06:18 am
while I don't want to turn this into a religious flamewar, I do have trouble taking seriously anyone who dedicates a large part of her/his life to the service of an imaginary being, anyone to whom faith is more important than fact, who is happy to condemn 70% of the world's population who do not believe in the Christian God to damnation in eternity for having the misfortune of being born in the wrong place and never learning about "the one true God", the people who think that dinosaurs are 6,000 years old and that fossils were placed on earth to test our faith. Why did I even bring it up? I'm sure there are a lot of wonderful practicing Christians on SR so I guess my point is that I'm a giant, misanthropic asshole. Still, at least I have the pleasure of knowing that I'm a correct giant misanthropic asshole.

Haha.. +1 karma good man. The rest of your post was highly informative too! 
Title: Re: Artificial lowering of BTC price
Post by: pine on September 12, 2012, 06:53 am
I don't get it sqlinjection.

You don't believe in a God because you say there's no evidence? You have problems with them compartmentalizing their ideas, seeing it as irrational?

Fine. I agree. But technical analysis has no evidence for it whatsoever. It is as popular as it is incoherant, I can't find two tech analysts that agree on the same interpretation of data or who can distinguish between real data and randomly generated data.

Note to non stock market familiar newbies: Technical analysis is this numerology religion on the stock market that says you can use prior information on prices to make future predication.

This doesn't sound so bad as first.

Except it's been practiced for centuries and I cannot find any evidence that it works. Neither can most economists. It sound right. It is wrong, so far as we can tell.

Now, when I quiz technical analysts on this before, then they get mad and say I also belong to a religion: the efficient market hypothesis religion.

But you know, even though it is true that EMH cannot be proven to be true, at least EMH people are able to make certain kinds of predictions (not about making profits, but things like reaction times to information) and by and large they are shown to be broadly correct.

So, that to me is more scientific, being able to make a prediction and see if the results fit the idea.

I'm not claiming EMH is everything, not everything is explicable by it, but it is a powerful explanation for the big picture, much like evolutionary biology explains most, but not quite all, of specialization of species. Technical analysis seems equivalent to Lamarckian evolution to me.

But since I like to pretend I've an open mind, I'll give you a shot at arguing why technical analysis is a real thing and not a pseudoscience.
Title: Re: Artificial lowering of BTC price
Post by: wolverine434 on September 12, 2012, 06:56 am
sql,

If you're making money then good times to you but once the exchanges started renting space on the backbone of their network to HFT's and the big boys started moving the majority of their volume to the darkpools the game got too rigged for my taste.  That's actually one of the things that interests me about bc trading.

Remember that support and resistance only tells you about the psychology of the traders, not the market.  The technicals were flashing bull signs in Oct of '07 and bear signs after Lehman.  Damn those were great days to be short.

I completely agree with you.

I've never used technical analysis on its own. I've seen too many fake breakouts, and false breakdowns it's not even funny. Especially on day trading charts. That's why I position myself a little more longer-term. I look for fundamental trends I think will trend for a long time, use sentiment analysis to confirm how early I potnetially am, and then use technical indicators to time my entry and exit.

When I talk trends, i mean reallllly long-term trends.

Like, growth of touch panels, growth in long-term oil demand, the affect of credit deflation on the price of the dollar or the yen, etc...

I'll usually get into shorter-term trends when I see an extreme in investor psychology. So if everyone is buying and saying stocks are awesome, I look for the top and bet against it. Same on the flip side.

Truth is, i could talk about this stuff all day long. so i'll stop now : )
Title: Re: Artificial lowering of BTC price
Post by: wolverine434 on September 12, 2012, 07:03 am
But you know, even though it is true that EMH cannot be proven to be true, at least EMH people are able to make certain kinds of predictions (not about making profits, but things like reaction times to information) and by and large they are shown to be broadly correct.

So, that to me is more scientific, being able to make a prediction and see if the results fit the idea.

I'm not claiming EMH is everything, not everything is explicable by it, but it is a powerful explanation for the big picture, much like evolutionary biology explains most, but not quite all, of specialization of species. Technical analysis seems equivalent to Lamarckian evolution to me.

But since I like to pretend I've an open mind, I'll give you a shot at arguing why technical analysis is a real thing and not a pseudoscience.

I don't really believe in EMH.

Sure, the markets are partly efficient, but there's too much human psychology and emotion involved for the market to be completely efficient. We see extremes in sentiment all the time, and these extremes are never rational. They also determine how people invest.

There was nothing rational or efficient about overpaying for a profitless dot com, or buying a house in the ghetto for $350,000 and hoping to flip it in the next six months.

It's at these extremes when the market is most innefficient, and as an investor, when you spot those moments, you can make a killing when the trend reverses back  to the "mean."

Either way, I do know people who make money using purely technical indicators, but they always rely on some kind of sentiment, and fundamental factors as well. So it's never purely technical charts.

Title: Re: Artificial lowering of BTC price
Post by: AnOn.edu on September 12, 2012, 07:20 am
@Pine,

I agree with you about the astrology-esc nature of technical analysis (have you seen the charts that go crazy into fractals and music? They might as well be using a ouija board), however, like I mentioned, there is some good data on the very basic resistance/support levels as a function of price psychology.  People cleave hard to the price points they've bought and sold at. 

Now when you start talking about EMH that's where I'll break with you big time.  Read "This Time it's Different" by Rogoff and Reinhart, especially their academic paper, and from a historical standpoint, 800 years of markets blowing themselves up, the idea of efficient markets is absurd.  Tulips, 1873, 1907, 1914, 1929, the Swedish banking crisis, Iceland, Long-Term Capital Man, dot com bubble, 2007 until now.  Rent seeking behavior combined with leverage combined with the mob mentality will always cause financial markets to self destruct. 

Now if you removed debt/leverage from the equation, including debt based money, as well as fractional reserve banking (which even Friedman argued for) then I think the EMH would have more solid footing.
Title: Re: Artificial lowering of BTC price
Post by: pine on September 12, 2012, 08:57 am
Thing is, is that bubbles and busts may not actually be irrational. Don't dismiss the idea immediately!

I don't think of EMH in the way some people do, as in "The Price Is Always Right" philosophy, which is a misguided interpretation of the very basis of the conceptual framework of EMH in my opinion. It's like saying Evolution is the survival of the fittest, it's a soundbite, a too drastic simplification, not a real piece of information.

My view is that EMH is about "global level efficiency".

To use an analogy, in globalization there are winners and losers, but the net effect of globalization is greater output for less input i.e. GDP growth. This is despite the obvious fact that jobs and entire industries, maybe even whole countries are devastated by global competition, which gives a highly misguided impression of the big picture that many people find hard to get their heads around mainly for psychological reasons, which is why the national socialists capitalize on this despite the greater egalitarianism that globalization brings. Define irony, there it is. Globalization implies the rise of Fascism, there's an ugly idea.

Similarly, these "inefficiencies" people claim to see in EMH are actually local, not global. Not only that, but these local occurrences are highly transitory and peculiar in nature, by which I mean it is nearly always impossible to find the liquidity to make genuine trades to exploit those arbitrage possibilities, most EMH 'inefficiencies' written about in whitepapers are retrospective, which does not improve my opinion of the economists who write them.

We understand of course there is somewhat of a strange paradox that is difficult to fully articulate (that there are reasons why certain whitepapers won't be published...), but I think all participants in the markets can intuitively see the phenomena I mean even if they describe it using completely different language.

A good example of this is the concept of Value. The truth is that if EMH was completely true i.e. strong form efficiency, then people like Warren Buffet would be out of business.
The truth is also that if EMH was completely wrong, then Buffet's stock would never have had a northward bias in the first place.

This points to efficiency being a global phenomena. It is like when you stamp down into a puddle of water, the sides may surge upwards, but the main story is that a volume of air has mostly displaced a bunch of water in the middle. The droplets rain around, touching off little minor versions of the stamping of the puddle, but this information is completely junk, it is just a tiny mirror of a huge movement that is invisible.

So something much stranger is going on, and it's not necessarily even weak form EMH either, I think it's a much more hairy thing, I look forward to the new economic theories in the 21st century, I think we're in the path of a huge upset or two that may not appeal to anybody in either camp.

In particular I am struck by the convergence of the studies of Artificial Intelligence and Market Efficiency. I think I see a future where we see a New Synthesis between these fields of scientific endeavor which may bring startling observations about what it really means to be human.

--

Finally, my view is that people who think they can make a killing on markets, any markets, just because there could be inefficiencies are extremely misguided.

Even if EMH is completely wrong, it does not follow for one second that you'll make money on markets. You may indeed do so. But it's a two sided coin, an implicit bet on markets going from inefficient to less inefficient. If you're putting money in, and you're right, and it goes in the other direction, then what? You are then depending on the roulette wheel.

tldr;
Quote
"In the short run, the stock market is a voting machine, but in the long run it's a weighing machine." -- BG



Title: Re: Artificial lowering of BTC price
Post by: pine on September 12, 2012, 09:09 am
A thought experiment: What if Graham and Buffet lived in the Weimar Republic in 1920?

There are some upheavals you may not live through. Risk is a real thing, and perhaps not what most market participants imagine to be risk.
Title: Re: Artificial lowering of BTC price
Post by: TheBusiness on September 12, 2012, 09:17 am
There will always be chaos in any sufficiently complex system. That's a given but no reason to assume you can't use some kind of predictive strategy.

The idea is not to follow one analysis but several. Technical, fundamental, intuition - whatever. have 5-6 of them to run over your data, then when 3-4 of then agree on something you can make a decision based on that.

With BTC there are clear indicators for patterns. Weekends seem to be more stable than weekdays for example, with less activity. Journo's and media attention pushes the price higher. Even in a market like bitcoin, we can still predict some things.
Title: Re: Artificial lowering of BTC price
Post by: TheBusiness on September 12, 2012, 09:18 am
Also, there is no god.
Title: Re: Artificial lowering of BTC price
Post by: wolverine434 on September 12, 2012, 09:25 am
I love seeing thought experiments on entropy and systems theory relating to the markets/economies.

Think of economies as systems.

The more linked the system become, the more energy it takes to keep that system going. In other words, in order to stave off collapse, the system grows and becomes more interconnected (we go global). But as the system grows, its energy requirement skyrockets (more oil, gas, etc...). If the energy requirement for continual exponential expansion is not met, then entropy enters the system. And eventually, entropy will collapse the entire thing.

Right now we are seeing energy requirements shoot up exponentially. It could easily outpace what we have in the next decade or two. If that happens, we will see economic entropy followed by collapse. In order to stave this off we need to see energy coming from seemingly unlimited sources (solar, wind, thermo, hydro). It takes about 100 years for an economy to switch from one energy source to another. So it could take 60-70 more years before our economy switches to a more unlimited source of energy.

In the meantime, the system keeps growing, and so does its demand for energy.

Who knows... maybe we're a decade or two away from the collapse.

At the end of the day, the good times we're living through now is a blip in human history. One day the US won't be the dominant empire, people will prosper somewhere else, and one persons junk will turn into another mans gold.

In the meantime, we might as well make some money : )
Title: Re: Artificial lowering of BTC price
Post by: pine on September 12, 2012, 11:26 am
There will always be chaos in any sufficiently complex system. That's a given but no reason to assume you can't use some kind of predictive strategy.

I can't agree, if you read Théorie de la Spéculation you'll understand why. There *are* reasons predicative strategies have a weird habit of suddenly collapsing and this is very consistent.

Pretty much the first whitepaper on Finance ever, namely the Theory of Speculation paper published in 1900 by Louis Bachelier explains why this is so. The guy who wrote it discovered the underlying principal of Brownian Motion *five years* before Einstein and still wrote a better paper on it. This is a guy to be taken seriously. If you boil it right down to one sentence, he is saying that markets basically follow a random walk. The question you should be asking yourself, is why do they do that? And what is randomness in this context anyway?

Title: Re: Artificial lowering of BTC price
Post by: CharasBros on September 13, 2012, 01:09 pm


Think of economies as systems.


exactly, but better think of economies as System Dynamics, first book written by J Forrester on SD explains pretty well, what is happening nowadays in the world. and its going to get much more worse.

As nothing is manufactured by paying expenses in bitcoins, I see bitcoins rather as fast, reliable and cheap remittance system, compared to hawala for, example who charge 10%.
Title: Re: Artificial lowering of BTC price
Post by: AnOn.edu on September 13, 2012, 03:15 pm
There will always be chaos in any sufficiently complex system.

Wait a sec, sufficiently complex systems are a priori mathmatically chaotic systems.  They cannot be predicted but by their very nature are probabilistic. I think we're running into a Voltaire issue in that we should prob be defining our terms.