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Is there any currency or commodity or derivative for which that statement is not true? It seems self-evident that if you own a lot of something like gold, dolla

Is there any currency or commodity or derivative for which that statement is not true? It seems self-evident that if you own a lot of something like gold, dollars, BTC, sterling, etc. and you sell it, its value relative to what you're selling it for declines.

kazen44 9y ago
the major difference between fiat and bitcoin in this case seems to be that the whales in case of fiat currency are either the central banks (like the FED and ECB) or large international banks who own a lot of currency?
- empath75 9y ago
  in the case of diamonds, it's deBeers.
  - charlesdm 9y ago
    Used to be. Don't think they have the power over the market they used to have.
  - inglondon 9y ago
    There is also no derivatives market for diamonds
FLUX-YOU 9y ago
I'd bet that large holders of gold sell small amounts all the time without the market going nuts and kicking off volatility swings. But I could be wrong. It's less the mechanism and the implication that people imply by following whales. Why should a store-of-value market react when someone sells a small amount regardless of their current holdings?
- icebraining 9y ago
  Who said anything about a small amount?
  - FLUX-YOU 9y ago
    The article that I quoted.
    - icebraining 9y ago
      Nope, it said "portion". It didn't say the size of said portion.
      - FLUX-YOU 9y ago
        I don't think replacing "small amount" to "portion" in my posts really changes the point -- that a small amount (relative to the population of Bitcoin investors) of large players (by USD value) can influence the market price. If you want to argue a minimum amount that whales would need to sell to manipulate the markets, that's probably better for the thread than arguing about semantics.
- pc86 9y ago
  I agree with you but this is an apples to oranges (or perhaps apples to 747s) comparison. The top 1000 holders of gold don't have anywhere near 40% of the market. Not to mention that 40% of the market for BTC is only a few million coins.
  - FLUX-YOU 9y ago
    Certainly, but most of us have limited choice about what investments to make -- same for any of the non-1000 that's participating in Bitcoin. It's not apples to 747s as far as their money goes. Which means Bitcoin proponents should really save the store-of-value label for later on down the road when it looks and behaves more like a store-of-value.
  - avar 9y ago
    > The top 1000 holders of gold > don't have anywhere near 40% > of the market. You're right, they have a lot more than that. Total world gold reserves are around 30K tons. The US alone has 8K tons, Germany 3K, IMF 3K, Italy 2.5K etc. So just the to 2 holders of Gold have almost 40% of the market, and the top 10 have 80%. 1. https://en.wikipedia.org/wiki/Gold_reserve https://en.wikipedia.org/wiki/Gold_reserve
    - specialp 9y ago
      I guess you didn't read the article you posted as evidence. In that article it says all the gold ever mined is 187,200 tons. Percentage of reserves != percentage of gold market. That would have the USA at ~5% and that is a country of 300+ million people. This is a lot different than 1000 individuals.
      - avar 9y ago
        In the context of this discussion, which is gold holders hypothetically pumping & dumping the market it's pretty much only the big reserve holders that matter. How do you think someone who's gold holdings are 1 kg in a warehouse embedded in motherboards is going to extract that to dump it on the market? Most gold by weight is effectively illiquid, while every Bitcoin is equally liquid. As the source the article uses[1] discusses the breakdown of those 187,200 tons is: * Jewellery: 89,200 tonnes, 47.6% * Private investment: 40,000 tonnes, 21.4% * Official sector: 31,500 tonnes, 16.8% * Other: 26,500 tonnes, 14.2% * Below ground stocks: 57,000 tonnes So around 50% of the number you're quoting is gold still in the ground. To repeat your snarky remark: Did you read the article? I guess counting the official sector and private investment the top 10 official holders "only" have around 30% of the liquid market, which is way more distorted than Bitcoin, and very comparable in this context of a few owners of large liquid assets being able to distort the market. 1. https://www.gold.org/about-gold/gold-supply/gold-mining/how-much-gold-has-been-mined https://www.gold.org/about-gold/gold-supply/gold-mining/how-...
yellowstuff 9y ago
Buying any asset pushes the price up and selling pushes the price down. It's a matter of sensitivity. The Chinese government could probably push down the price of USD a few percent by announcing a policy change today, but one guy could potentially push Bitcoin prices down significantly with a keystroke.
- tfha 9y ago
  At great cost to himself. Dumping coins like that is not free, you pay a huge price due to slippage.
  - christopheml 9y ago
    Interestingly enough, that's how Société Générale lost huge amounts of money following the discovery of Jerôme Kerviel's misbehavior. They recklessly closed their positions, shooting themselves in the foot in the process.
  - dazmax 9y ago
    But now they could also own put options.
totalZero 9y ago
That's a very intelligent point, but let's think specifically of BTC's utility as a store of value. A comparable alternative may be gold, and it would be fair to say that the gold market could be heavily impacted by a few large holders who choose to sell their holdings. However, those holders tend to be governments. Many of the top holders are fairly representative governments, so initialization of a mass gold dumping is less likely than if they were individuals or small corporate entities, I think. They would be throwing away value that belongs to a large group of citizens, and there would be trade ramifications because their trading partners would take it in the face on their own reserves. The real reason many people don't initiate aggressive sales is that, barring a mass exodus from a collapsing financial instrument where the price is going to drop anyway, nobody wants to hurt their own mark-to-market by pushing down the prices. The only exception to this would be a fire sale where there is a mandate to liquidate a holding in order to return value to creditors. Not only that, but price impact is often reversed by other, later trading. So even if your intention is to put selling pressure on the instrument, it may not have a very lasting impact on the price. However, if you assume everyone else will follow suit and race to the bottom, then there's a definite first mover advantage. That's almost certainly not the case for precious metals, and generally not the case for currencies issued by stable and relatively uncorrupt governments, but it may be the case for BTC because it is new, volatile, and unsecured/unbacked.
deleted 9y ago
[deleted]
opportune 9y ago
It only happens if the market is not there to "catch" the sell off. Say there are 1 000 000 X and the current market price is $100 each. If I have 40% of all X and I go to sell it, I first sell to everyone willing to buy X at $100 each. Then I sell to everyone willing to buy X at $99.9 each, etc. Once we stop selling at price Y, we've essentially sold X to everyone who would buy X for between Y and $100. Note that this implies selling off X always decreases its price. This is not true if Y is $100 (people were willing to buy more X at $100 than we had X at all), but even so a market usually has something like a bid-ask spread, so if we were trading a small amount of X we could maybe even sell it all off without moving the big price. So really, whether this crashes the market for X depends on how much people value X. If only a few people thought X was valuable, they probably all own it, so it's worthless. If everyone wants X and are willing to pay just a bit less to get it, Y doesn't really change much from $100. There are also non-currencies like equities that essentially have a price floor: below the price floor there is basically no risk that the item will ever be worth less than that (this could be determined by something like the total value of property owned by a business).
- montecarl 9y ago
  You can look and see exactly how much the price of BTC would move on an exchange by looking at its order book. GDAX's charts[1] makes it easy to see this infact. You can just mouse over the order book and see how many $ it would take to move the price to a certain level. [1] https://www.gdax.com/trade/BTC-USD https://www.gdax.com/trade/BTC-USD

kazen44 9y ago

the major difference between fiat and bitcoin in this case seems to be that the whales in case of fiat currency are either the central banks (like the FED and ECB) or large international banks who own a lot of currency?

empath75 9y ago
in the case of diamonds, it's deBeers.
- charlesdm 9y ago
  Used to be. Don't think they have the power over the market they used to have.
- inglondon 9y ago
  There is also no derivatives market for diamonds

FLUX-YOU 9y ago

I'd bet that large holders of gold sell small amounts all the time without the market going nuts and kicking off volatility swings. But I could be wrong. It's less the mechanism and the implication that people imply by following whales. Why should a store-of-value market react when someone sells a small amount regardless of their current holdings?

icebraining 9y ago
Who said anything about a small amount?
- FLUX-YOU 9y ago
  The article that I quoted.
  - icebraining 9y ago
    Nope, it said "portion". It didn't say the size of said portion.
    - FLUX-YOU 9y ago
      I don't think replacing "small amount" to "portion" in my posts really changes the point -- that a small amount (relative to the population of Bitcoin investors) of large players (by USD value) can influence the market price. If you want to argue a minimum amount that whales would need to sell to manipulate the markets, that's probably better for the thread than arguing about semantics.
pc86 9y ago
I agree with you but this is an apples to oranges (or perhaps apples to 747s) comparison. The top 1000 holders of gold don't have anywhere near 40% of the market. Not to mention that 40% of the market for BTC is only a few million coins.
- FLUX-YOU 9y ago
  Certainly, but most of us have limited choice about what investments to make -- same for any of the non-1000 that's participating in Bitcoin. It's not apples to 747s as far as their money goes. Which means Bitcoin proponents should really save the store-of-value label for later on down the road when it looks and behaves more like a store-of-value.
- avar 9y ago
  > The top 1000 holders of gold > don't have anywhere near 40% > of the market. You're right, they have a lot more than that. Total world gold reserves are around 30K tons. The US alone has 8K tons, Germany 3K, IMF 3K, Italy 2.5K etc. So just the to 2 holders of Gold have almost 40% of the market, and the top 10 have 80%. 1. https://en.wikipedia.org/wiki/Gold_reserve https://en.wikipedia.org/wiki/Gold_reserve
  - specialp 9y ago
    I guess you didn't read the article you posted as evidence. In that article it says all the gold ever mined is 187,200 tons. Percentage of reserves != percentage of gold market. That would have the USA at ~5% and that is a country of 300+ million people. This is a lot different than 1000 individuals.
    - avar 9y ago
      In the context of this discussion, which is gold holders hypothetically pumping & dumping the market it's pretty much only the big reserve holders that matter. How do you think someone who's gold holdings are 1 kg in a warehouse embedded in motherboards is going to extract that to dump it on the market? Most gold by weight is effectively illiquid, while every Bitcoin is equally liquid. As the source the article uses[1] discusses the breakdown of those 187,200 tons is: * Jewellery: 89,200 tonnes, 47.6% * Private investment: 40,000 tonnes, 21.4% * Official sector: 31,500 tonnes, 16.8% * Other: 26,500 tonnes, 14.2% * Below ground stocks: 57,000 tonnes So around 50% of the number you're quoting is gold still in the ground. To repeat your snarky remark: Did you read the article? I guess counting the official sector and private investment the top 10 official holders "only" have around 30% of the liquid market, which is way more distorted than Bitcoin, and very comparable in this context of a few owners of large liquid assets being able to distort the market. 1. https://www.gold.org/about-gold/gold-supply/gold-mining/how-much-gold-has-been-mined https://www.gold.org/about-gold/gold-supply/gold-mining/how-...

yellowstuff 9y ago

Buying any asset pushes the price up and selling pushes the price down. It's a matter of sensitivity. The Chinese government could probably push down the price of USD a few percent by announcing a policy change today, but one guy could potentially push Bitcoin prices down significantly with a keystroke.

tfha 9y ago
At great cost to himself. Dumping coins like that is not free, you pay a huge price due to slippage.
- christopheml 9y ago
  Interestingly enough, that's how Société Générale lost huge amounts of money following the discovery of Jerôme Kerviel's misbehavior. They recklessly closed their positions, shooting themselves in the foot in the process.
- dazmax 9y ago
  But now they could also own put options.

totalZero 9y ago

That's a very intelligent point, but let's think specifically of BTC's utility as a store of value. A comparable alternative may be gold, and it would be fair to say that the gold market could be heavily impacted by a few large holders who choose to sell their holdings. However, those holders tend to be governments. Many of the top holders are fairly representative governments, so initialization of a mass gold dumping is less likely than if they were individuals or small corporate entities, I think. They would be throwing away value that belongs to a large group of citizens, and there would be trade ramifications because their trading partners would take it in the face on their own reserves. The real reason many people don't initiate aggressive sales is that, barring a mass exodus from a collapsing financial instrument where the price is going to drop anyway, nobody wants to hurt their own mark-to-market by pushing down the prices. The only exception to this would be a fire sale where there is a mandate to liquidate a holding in order to return value to creditors. Not only that, but price impact is often reversed by other, later trading. So even if your intention is to put selling pressure on the instrument, it may not have a very lasting impact on the price. However, if you assume everyone else will follow suit and race to the bottom, then there's a definite first mover advantage. That's almost certainly not the case for precious metals, and generally not the case for currencies issued by stable and relatively uncorrupt governments, but it may be the case for BTC because it is new, volatile, and unsecured/unbacked.

deleted 9y ago

[deleted]

opportune 9y ago

It only happens if the market is not there to "catch" the sell off. Say there are 1 000 000 X and the current market price is $100 each. If I have 40% of all X and I go to sell it, I first sell to everyone willing to buy X at $100 each. Then I sell to everyone willing to buy X at $99.9 each, etc. Once we stop selling at price Y, we've essentially sold X to everyone who would buy X for between Y and $100. Note that this implies selling off X always decreases its price. This is not true if Y is $100 (people were willing to buy more X at $100 than we had X at all), but even so a market usually has something like a bid-ask spread, so if we were trading a small amount of X we could maybe even sell it all off without moving the big price. So really, whether this crashes the market for X depends on how much people value X. If only a few people thought X was valuable, they probably all own it, so it's worthless. If everyone wants X and are willing to pay just a bit less to get it, Y doesn't really change much from $100. There are also non-currencies like equities that essentially have a price floor: below the price floor there is basically no risk that the item will ever be worth less than that (this could be determined by something like the total value of property owned by a business).

montecarl 9y ago
You can look and see exactly how much the price of BTC would move on an exchange by looking at its order book. GDAX's charts[1] makes it easy to see this infact. You can just mouse over the order book and see how many $ it would take to move the price to a certain level. [1] https://www.gdax.com/trade/BTC-USD https://www.gdax.com/trade/BTC-USD