4 ms·

Bitcoin Is Suddenly Surging Again

28 points by jsnathan 11y ago

nikolay 11y ago
Which is weird. The volume has greatly increased in China, but we've never trusted their published numbers before. This is yet another China-driven rally - beware of the sudden drops we know very well from the painful past!
Kinnard 11y ago
The only surprising thing is the timing. My guess is that this has to do with all the attention from the Economist. The fundamentals of the Bitcoin economy have been developing at a solid pace for more than a year— they've been swelling for months.
gkoberger 11y ago
Evidently it's due to the MMM Ponzi Scheme: http://www.dailytradingprofits.com/5063/is-bitcoin-being-pumped-by-a-ponzi-scheme/ http://www.dailytradingprofits.com/5063/is-bitcoin-being-pum... Nobody knows for sure how big of an impact it's having, but it's likely not a coincidence.
arthurcolle 11y ago
What is the typical behavior (behavior in terms of market dynamics, and impact on orderbooks) of market makers in up trending markets? General question, not specific to bitcoin.
- patio11 11y ago
  If the trend is upwards but there are still sells, then that's pretty normal for a market maker -- they continue executing their standard risk controls and don't really care. If buys greatly outnumber sells and the price is surging, that is problematic for the market maker, because that implies they're going to accumulate a short position and start losing money on it. You should expect them to start resizing/repricing their asks (i.e. offer to sell less at close-to-market prices), possibly terminating their short via buying (in extremis), and (if available) hedging their position via instruments other than the one which is surging. A very rapid spike up is indistinguishable for market makers from a very rapid crash down: expect them to pull liquidity and wait for the market to stabilize before reintroducing it. Their mental monologue is "Sorry, but you guys don't pay me for this."
Mandatum 11y ago
Kids need their drugs for NYE/the holidays. I think we'll see this increase up until December, and just like mail we'll see it drop off.

28 points by jsnathan 11y ago

Which is weird. The volume has greatly increased in China, but we've never trusted their published numbers before. This is yet another China-driven rally - beware of the sudden drops we know very well from the painful past!

Kinnard 11y ago

The only surprising thing is the timing. My guess is that this has to do with all the attention from the Economist. The fundamentals of the Bitcoin economy have been developing at a solid pace for more than a year— they've been swelling for months.

gkoberger 11y ago

Evidently it's due to the MMM Ponzi Scheme: http://www.dailytradingprofits.com/5063/is-bitcoin-being-pumped-by-a-ponzi-scheme/ http://www.dailytradingprofits.com/5063/is-bitcoin-being-pum... Nobody knows for sure how big of an impact it's having, but it's likely not a coincidence.

arthurcolle 11y ago

What is the typical behavior (behavior in terms of market dynamics, and impact on orderbooks) of market makers in up trending markets? General question, not specific to bitcoin.

patio11 11y ago
If the trend is upwards but there are still sells, then that's pretty normal for a market maker -- they continue executing their standard risk controls and don't really care. If buys greatly outnumber sells and the price is surging, that is problematic for the market maker, because that implies they're going to accumulate a short position and start losing money on it. You should expect them to start resizing/repricing their asks (i.e. offer to sell less at close-to-market prices), possibly terminating their short via buying (in extremis), and (if available) hedging their position via instruments other than the one which is surging. A very rapid spike up is indistinguishable for market makers from a very rapid crash down: expect them to pull liquidity and wait for the market to stabilize before reintroducing it. Their mental monologue is "Sorry, but you guys don't pay me for this."

Mandatum 11y ago

Kids need their drugs for NYE/the holidays. I think we'll see this increase up until December, and just like mail we'll see it drop off.