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Researchers find that one person likely drove Bitcoin from $150 to $1,000
- deleted 9y ago[deleted]
- FLUX-YOU 9y ago>The bottom line is simple: if Bitcoin wants to be taken seriously it probably should be this easy or legal to manipulate the markets. wat
- crystaln 9y agoYeah TechCrunch has really passed it's heydey.
- spiznnx 9y agoprobably a typo for "should not be"
- ct0 9y agoyeah, it seems like the author missed a couple letters there.
- da_chicken 9y agoWho needs copy editors in the age of new media?
- rhizome 9y agoDoesn't the spell checker take care of that?
- avip 9y agoSeems natural continuation of a post titled "Researchers finds". Seriously - wat.
- gtcode 9y agoBitcoin topped out as soon as the futures went live. Massive contango on a regulated futures market may have been a factor in "reeling in" price. The spot market is so thin that it didn't seem to take much open interest in the futs to whip the underlying. It's conceivable that some spot exchanges are or were still from 2017 to now, either malicious and/or incompetent, which would facilitate the continuation of such behavior, likely by more players than one or two.
- oil7abibi 9y agoPerhaps, but bitcoin futures are advertised like crazy on the the futures exchange, but volume is completely minuscule compared to other commodities (and crypto exchanges for that matter).
- usrusr 9y agoI'd expect traditional future buyers (if that is the correct term?) to be much less likely to be swayed by advertisement than the new market segments that could be attracted with bitcoin futures. Kind of logical to focus advertisement activity on the latter group.
- dajohnson89 9y agosince the futures are cash settled, is it really possible for there to be such a tight correlation? also, I surmise that a major factor in the correction we've witnessed in the past month or so has been the congested mempool (high fees and slow tx times).
- gtcode 9y agoYes, the futures price settles daily based on the reference rate. Eventually such correlations become more efficient once you have a real market. (As another poster pointed out it's still thin).
- icelancer 9y agoYeah, the futures markets seriously reduced volatility and kept the price within a narrow band around $14k. I'm quite pleased by this, actually.
- KasianFranks 9y agoPeople do not realize how manipulated the traditional financial markets are otherwise known as Wall Street. Cryptocurrency is less manipulated as it's run by a different culture of people.
- deleted 9y ago[deleted]
- temp 9y agoWhat culture would that be?
- eppsilon 9y agoThese guys, I guess: https://www.nytimes.com/2018/01/13/style/bitcoin-millionaires.html https://www.nytimes.com/2018/01/13/style/bitcoin-millionaire...
- enknamel 9y agoI don't believe that to be true. Cryptocurrency is very easy to attack. Look at the previous ethereum, bitcoin, etc attacks. Not to mention massive wallet thefts. The complete lack of any insurance. It's very much a wild west market. Sure the traditional stock market is heavily manipulated but there's enough cross competition there that it balances out.
- gtcode 9y agoIt's not technically incorrect to say there is manipulation in the US markets, but comparing bitcoin exchanges to US exchanges is a bit laughable. The US Federal Reserve has (had) what amount(ed) to a printing press, associated with "working groups" a.k.a. PPT. However, major US exchanges themselves, whether stock, futures, etc., are far more regulated and mature compared to a bitcoin exchange. The manipulation to which you're referring is far more indirect.
- KasianFranks 9y agoLets talk about QE-1-4, the printing of money and bankers being bailed out. Your argument does not stand by any measure of reason or logic. Lets also talk about investment bankers and VC's who are completely being disrupted.
- ecoqba11 9y agoWhy is this news? Back in the early stages of Bitcoin this was the reason people bail on bitcoin.
- zebraflask 9y agoExplains a lot. A casual review of many coin price histories gives you the sense that something might be "off," although that is just my subjective view. Another one: coins in general would have been far better off without this current pricing bubble.
- cardmagic 9y agoIt’s similar to 1999 dotcom run up, there will be a crash to remove all the bad actors (like the former pets.com), but it won’t kill cryptocoins just like the dotcom crash didn’t kill ecommerce.
- oculusthrift 9y agoeveryone keeps saying that to the point where i start questioning it. there’s no actual proof that this is anything like the dot com bubble.
- diab0lic 9y agoThe dot com bubble analogy is fashionable right now because it serves to push the desired narrative without having to deny or provide evidence against what is clearly a bubble. I'd imagine many of the people you see perpetuating this are the same that were denying the bubble a few months ago. However that doesn't necessarily make it wrong -- I'm very skeptical but I'd have a tough time arguing that nothing useful at all will come of crypto after a bubble pop. Wether it's worth it or not is another question.
- pessimizer 9y agoI'd argue that nothing useful is coming of it now, and that during dot com, the internet was extremely useful.
- Fnoord 9y agoIs that rose tinted glasses / nostalgia though? Do you have a bunch of examples to support your conclusion?
- Alex3917 9y agoAs an interesting thought experiment, consider that VC is a tiny asset class. Now consider that if the amount invested in crypto were the same as is invested in VC, the market cap of crypto would be over 100 trillion dollars. At least if you assume a fixed ratio of dollars invested to market cap.
- prostoalex 9y agoThe market will react, though, by launching new coins. And soon that 100 trillion dollars will be spread out over 101 trillion currencies or tokens.
- whataretensors 9y agoMost portfolios do not follow a uniform distribution. Additionally there is a 'listing fee' for a coin on each exchange to prevent sybil attacks.
- SwellJoe 9y agoAnd, it would produce literally no value (unlike VC investment in companies). There are so many ways to look at crypto that makes it seem like it's incredibly undervalued and this kind of thought experiment has been done many times in different ways (with the example for the thought experiment changing over the years as the crypto market cap has grown to surpass the example...e.g. gold, Western Union money transfers, etc.). But, unless and until crypto provides value to justify it, it's all just speculation. Right now, BTC is a basically useless asset. You can't buy things with it (without paying more than using dollars). You can't cost-effectively transfer money with it (fees are too high and transaction times are too long). What can you do with it? Sit on it, and hope it goes up. (Which is what I'm doing with the small amount I still hold.) I'm vaguely optimistic about cryptocurrency, in general, but the current state of things makes me think there's too much money chasing too little value...all that money could be going into companies that make or do useful things. But, instead, it's just burning electricity. Not directly a Bitcoin issue, but 99% of ICOs are blatant and obvious scams, most small altcoins are blatant and obvious scams. Even some major altcoins are blatant and obvious scams. I feel like there's a more than even chance of this whole thing ending in tears in the next couple of years, even if cryptocurrency eventually (like five, ten, twenty, years down the road) wins. I don't mean to say you're wrong. More money will likely pour into cryptocurrency as people with money either fall for the ponzi schemes that surround it, or as it actually begins to produce some kind of value and becomes a useful tool for normal people to do normal things with it. We can't begin to compare crypto to the internet (as I've also seen people do...suggesting crypto adoption is now where the internet was 5, 10, years in, or whatever, just because the same number of people are hoarding coins as were on the internet at some early point) until you can actually buy pet food using it (or do something else of value). It isn't a revolution if it just sits in a vault like gold.
- thisisit 9y agoWow, this paper's conclusion is delayed by 3 years. Willy and Markus bots are old news for anyone who has been following bitcoin closely. The source of all these allegations was this blog appearing in 2014: https://willyreport.wordpress.com/2014/05/25/the-willy-report-proof-of-massive-fraudulent-trading-activity-at-mt-gox-and-how-it-has-affected-the-price-of-bitcoin/ https://willyreport.wordpress.com/2014/05/25/the-willy-repor...
- agumonkey 9y agoAny recent manipulations ? especially in 2017 end ?
- deleted 9y ago[deleted]
- oldstrangers 9y agoTheres 'Spoofy': https://hackernoon.com/meet-spoofy-how-a-single-entity-dominates-the-price-of-bitcoin-39c711d28eb4 https://hackernoon.com/meet-spoofy-how-a-single-entity-domin... Then of course there is the Tether debate. https://www.bloomberg.com/news/articles/2017-12-05/mystery-shrouds-tether-and-its-links-to-biggest-bitcoin-exchange https://www.bloomberg.com/news/articles/2017-12-05/mystery-s... Both probably related.
- wcoenen 9y agoTether claims to be backed by USD but could easily be a money printing press injecting fake value into the crypto markets. According to their own data, they have created $1.6B worth of tethers: https://wallet.tether.to/transparency https://wallet.tether.to/transparency
- paulmd 9y agoDon't worry though, they have $900k of assets backing up that $1.6B of Tethers! No problemo! 1800x leverage is a walk in the park right guys? /s
- simplemath__ 9y agoAll crypto markets have always been shallow and rife with manipulation. It's still almost a total free-for-all.
- ouwen 9y agoIt is a bit nerve racking seeing the distribution of coins to such few addresses: https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html https://bitinfocharts.com/top-100-richest-bitcoin-addresses.... I wonder if there is any collusion among the top 2000 addresses. Mind you one person can even have multiple addresses.
- simplemath__ 9y ago>I wonder if there is any collusion among the top 2000 addresses I would bet my life on it.
- michaelchisari 9y agoWhat's interesting is the rhetoric around cryptos as a populist movement. There's so many people on reddit that claim that trading cryptos is how they're going to get out of the 9-5 working man grind. That it's a way to end the dominance of the wealthy banking elites. And yet, the wealth inequality in cryptos, especially bitcoin, makes our current economic situation seem like child's play. If bitcoin ever does go "to the moon", we will have a small, few mega-wealthy elite who did hardly anything to build that wealth, while the rest of the world missed the boat.
- dragonwriter 9y ago> . There's so many people on reddit that claim that trading cryptos is how they're going to get out of the 9-5 working man grind. That it's a way to end the dominance of the wealthy banking elites. It's a common way of selling get rich quick scams; having a handful of people who have gotten rich quick provides a veneer of plausibility. (Including, but not limited to, Ponzi schemes.)
- b1daly 9y ago
- randomdrake 9y agoStudy: Price Manipulation in the Bitcoin Ecosystem Citation: Neil Gandal, JT Hamrick, Tyler Moore, Tali Oberman, Price Manipulation in the Bitcoin Ecosystem, Journal of Monetary Economics (2017) Link: https://doi.org/10.1016/j.jmoneco.2017.12.004 https://doi.org/10.1016/j.jmoneco.2017.12.004 DOI: 10.1016/j.jmoneco.2017.12.004 Abstract: To its proponents, the cryptocurrency Bitcoin offers the potential to disrupt payment systems and traditional currencies. It has also been subject to security breaches and wild price fluctuations. This paper identifies and analyzes the impact of suspicious trading activity on the Mt. Gox Bitcoin currency exchange, in which approximately 600,000 bitcoins (BTC) valued at $188 million were fraudulently acquired. During both periods, the USD-BTC exchange rate rose by an average of four percent on days when suspicious trades took place, compared to a slight decline on days without suspicious activity. Based on rigorous analysis with extensive robustness checks, the paper demonstrates that the suspicious trading activity likely caused the unprecedented spike in the USD-BTC exchange rate in late 2013, when the rate jumped from around $150 to more than $1,000 in two months. Highlights: • Suspicious trades on a Bitcoin currency exchange are linked to rises in the exchange rate. • A single actor likely drove the USD/BTC exchange rate from $150 to $1000 in 2 months. • Trading volume on all exchanges increased greatly on days with suspicious activity. • Unregulated cryptocurrency markets remain vulnerable to manipulation today.
- krisives 9y agoTo be fair regulated markets are vulnerable to manipulation today
- prostoalex 9y agoMost exchanges in regulated markets * know and contractually oblige their customers (the brokerages who gain access to the exchange) to avoid self-trading * have some preventative mechanisms, e.g. https://www.theice.com/publicdocs/futures_us/exchange_notices/ExNot091113STPFFinal.pdf https://www.theice.com/publicdocs/futures_us/exchange_notice...
- xenadu02 9y agoThat’s like saying the recent California wildfires are equivalent to the Great Chicago Fire. Both are tragedies and both have a certain element of scale to them, but the Chicago fire was actually much much worse. It killed far more people, made far more people homeless, and destroyed far more economic value (adjusted for inflation). Yes the current regulated markets have serious problems and are in need of reform. But the scale and scope of fraud and manipulation on all crypto currency markets is vastly larger and far more pervasive.
- wyldfire 9y agoWhat's the nature of the suspicious trades?
- KasianFranks 9y agoFor example, 10mil shares decided between market makers sitting on both sides of the bid that goes at a price they agree on which is not in the interest of fairness or the public. Another reason for the crypto movement. Source: Me, former hedge fund algo dev
- RickHull 9y agoCan you elaborate? Say Alice and Bob are market makers. They are colluding on some target price, say $10k. What's the spread, how does the trading proceed, and what is the effect on fairness and the public?
- module0000 9y agoI'm not the OP to your question, but I observe what you are asking about each day. Here are the steps that can facilitate your example. If you are imagining stocks(instead of futures), replace the word "contract" with the word "share" in the example below. 1) The last trade price is $9950 2) Alice calls Bob, confirming she wants to close 500k long contracts by selling them to Bob 3) Bob bids up the price to $9999 4) Alice says "Ok Bob, let's go", and offers the maximum limit offer quantity at $10,000. This maximum varies by instrument(example 5000) 5) Bob bids 5000 at $10,000, consuming all of Alice's offers 6) This process repeats(very, very quickly) until 500k has been exchanged, or until another participant with size starts knocking out Alice's offers. Edit: When you see this behavior on the volume profile, it looks like a long horizontal bar that doesn't belong. When you see it live as it happens, it's pretty scary if you have a position open. That's when you realize that you are a rubber life raft, and there are 2 gargantuan oil tankers colliding in the space you occupy. The other way these happen(in futures at least) are called "upstairs" deals. It's when you want to exchange a quantity of contracts large enough to disturb the market, and the exchange will facilitate the trade to avoid Bob or Alice(accidentally) knocking the market several ticks. I don't know how crypto currencies could have a similar scenario for those deals, but since CME is involved with BTC futures, it might be possible. Source: me, active futures trader in NQ/ZB/CL land.
- astund 9y agoI suspect this is going on today. Cryptocurrency traders place a lot of faith in the exchanges. A bad actor at an exchange could manipulate a price upwards: - Create a ton of volume and potentially and upward trend (two bots trading with one another, increasing the price each time) - Generate hype around a coin - Let FOMO take over If things start to go south, disable withdrawals, deposits, or freeze the market until you can get it under control. I doubt any of this manipulation is even illegal?
- module0000 9y ago>> I doubt any of this manipulation is even illegal? That was my first thought also... in stock/futures trading world, this is 100% normal business as usual. The idea of buying all the available XYZ to run up prices is a valid move for a hedge fund with sufficient capital to do so.
- nrb 9y agoIn the MtGox case, the exchange was (allegedly) fraudulently buying BTC with cash that didn't exist, which could theoretically continue for as long as they have enough cash on hand to satisfy withdrawal requests. IANAL but in the US that sounds like blatant wire fraud at the very least; I'm not sure about the relevant Japanese law.
- fjsolwmv 9y agoOf course the cash existed. It was their depositors cash and cash from their depositors Bitcoin
- nrb 9y agoRight, I'm saying the exchange isn't actually solvent. The "cash balance" on the fraudulent buyer account wasn't backed by any actual cash deposit or proceeds from BTC sale, it's just a column in a database table. Theoretically, the exchange buys up a bunch of BTC with non-existent cash, raising the price tenfold, until their real cash deposits are too low to meet withdrawal requirements, then they do as the grandparent post says and disable withdrawals, deposits, or freeze the market until they can get it under control.
- perseusprime11 9y agoInteresting. I am curious to know who drove up the Bitcoin price to $18K.
- stefano 9y agoTether might be a good candidate.
- lallysingh 9y agoPeople looking to hedge futures contracts
- notsrg 9y agoYou can see on a regular basis that South Korean exchanges are always paying 25-50% more than Western exchanges. The Bitcoin pump to 20k, the entire history of Bitcoin Cash, and recently the Ripple pump to $3 were all pumped by Bithumb, Upbit, etc. Hence the controversy with Coinmarketcap removing Korean exchanges for a second resulting in the marketcap dropping 50 billion. Even right now, almost 50% of XRP volume is in SK all paying > $2, but there's no Western exchange trading above $2. See: https://coinmarketcap.com/currencies/ripple/#markets https://coinmarketcap.com/currencies/ripple/#markets
- perseusprime11 9y agoThat's interesting. Why would they buy it for more than $2? Is it because the exchange is selling for more or just problems with international currency.
- peterjlee 9y agoThere's a high demand in S.Korea (mostly FOMO) and it's a bit hard to transfer a large amount of money out of S.Korea for some legal reasons, which makes arbitraging hard.
- barbegal 9y agoThe paper is available online at http://weis2017.econinfosec.org/wp-content/uploads/sites/3/2017/05/WEIS_2017_paper_21.pdf http://weis2017.econinfosec.org/wp-content/uploads/sites/3/2... I wouldn't call it a particularly rigorous analysis and it provides no more incite than what has been published about Willy before. Mark Karpeles fraudulently buying up $112 million worth of bitcoin in two months when there was no fiat on the other side of the trade pushed the Bitcoin price up. It's as simple as that.
- sambe 9y agoThe paper is written rather... colloquially. Not necessairly a problem. But it seems mostly concerned with telling the story, and that a huge buyer in the market causes prices to go up. That's not market manipulation. However, there is also the claim that the buyer did not actually have to pay for the BTC they bought. Well, that's certainly a (very strong!) form of manipulation, but it's not what people traditionally mean when they use the phrase. There is normally an expectation that you have real money and are following exchange procedures, but simply behaving in a way that is frowned upon or considered unfair/detrimental to the reputation of the market. As far as I can tell, people are still worried about traditional manipulation in Bitcoin markets, for things like marking the close. The behaviour described here is more akin to hacking/traditional fraud - it is not zero-sum.
- barbegal 9y agoI agree, the version of the paper published for the Workshop on the Economics of Information Security http://weis2017.econinfosec.org/wp-content/uploads/sites/3/2017/05/WEIS_2017_paper_21.pdf http://weis2017.econinfosec.org/wp-content/uploads/sites/3/2... has a large number of small mistakes and the statistical analysis performed is pretty poor and badly explained. And you're right, it is not really market manipulation, it is blatant fraud by Mark Karpeles and he will almost certainly be found guilty of that charge in Japan. It is strange that the paper makes no mention of his conviction for fraud.
- bduerst 9y agoThe number of seemingly throwaway accounts (created in the last few days) commenting on this thread is interesting too: - https://news.ycombinator.com/threads?id=astund https://news.ycombinator.com/threads?id=astund - https://news.ycombinator.com/threads?id=simplemath__ https://news.ycombinator.com/threads?id=simplemath__ - https://news.ycombinator.com/threads?id=zhjansbnas https://news.ycombinator.com/threads?id=zhjansbnas - https://news.ycombinator.com/threads?id=barbegal https://news.ycombinator.com/threads?id=barbegal
- g09980 9y agoJust people are very cautious online with signaling that they have any crypto.
- bduerst 9y agoI don't buy that. What's the threat vector? Are you not able to be anonymous with an HN account if you choose? So much so that creating multiple accounts doesn't matter?
- TomMarius 9y agoYes, you can be anonymous on HN - that assumes you've stayed anonymous. Obviously these people didn't and so they need a new account. The motivation is huge.
- cjbprime 9y agoThe threat vector boils down to using a phone number porting attack to gain access to Coinbase, and maybe also email. It has happened to many public owners of crypto.
- g09980 9y agoOr even the five dollar wrench attack.
- cantrip 9y ago
- yters 9y agoGood ol' pump and dump.
- deleted 9y ago[deleted]
- happy-go-lucky 9y agoNot to sound pedantic, but the singular verb finds in the title needs an edit please :)
- cronenberg 9y agoIs this serious scientific research? Looks like a joke to me, or very bad journalism: >During both periods, the USD-BTC exchange rate rose by an average of four percent on days when suspicious trades took place, compared to a slight decline on days without suspicious activity. So price action happens based on trading activity, wow what a shocking conclusion. Here I was thinking prices went up and down randomly for no reason! >The team found that many instances of price manipulation happened simply because the market was very thin for various cryptocurrencies including early Bitcoin. Hmmm this seems to imply supply and demand also have some sort of effect on price movement. Another shocking discovery! >As mainstream finance invests in cryptocurrency assets and as countries take steps toward legalizing bitcoin as a payment system (as Japan did in April 2017), it is important to understand how susceptible cryptocurrency markets are to manipulation. And they came to this final fantastic conclusion about the present (2017/2018) based on alleged manipulation that happened 4 years ago on an exchange that no longer exists. Fascinating research indeed. /s
- plg 9y agoWinklevoss?
- seannyg 9y agoIf you haven't read the recent NYTimes article on the topic of cryptocurrencies, you should check it out: https://www.nytimes.com/2018/01/13/style/bitcoin-millionaires.html https://www.nytimes.com/2018/01/13/style/bitcoin-millionaire... At the end of an article is an anecdote about an older (for Silicon Valley) woman who states "And maybe I’m going to lose [my investment of $12k].. Maybe I’m going to keep cleaning houses. But something is telling me I can trust this generation." My worry is that (1) people like this woman who don't understand markets, let alone cryptocurrencies, will get burned by this, and (2) some small set of people who do understand markets will take advantage of those who don't. This could result in a situation in which techies are blamed, like Wall Street, for causing lots of people to lose money (and -- let's face it -- lots of people will lose money, if not now then at some point).
- _hardwaregeek 9y agoWhen my 70 year old neighbor who can barely operate an iPhone wants to buy crypto, all I can think of is that scene in the Wolf of Wall Street where they're selling people penny stocks. I do think there is a utility for crypto and I do think some cryptocurrencies will be good investments long term. But I also think the hype is outpacing the utility and a lot of people will be left holding the bag
- imron 9y agoRight. Now to drive it from $14,000 to $100,000. To the moon! /s
- Simon_says 9y agoPlease don't post unsubstantive comments here.
- imron 9y agoIt's partly substantive. The 'too the moon' part was snark, but Bitcoin went from $400 to $1,000 in 2016, then from $1,000 to $14,000 in 2017, and I guess the same people driving the market who enjoyed 1,000% returns 2 years in a row will attempt to do it again this year too. This time next year if Bitcoin hasn't imploded it will be up around $100,000.
- dlwdlw 9y agoIt's interesting to imagine this being "good" from the chains point of view. It is "using" predictable human greed to create a situation where it absorbs more and more value. The game Go's complexity cascades from very simple rules and has a "life" to it sustained by human energy. Blockchain's may be the first of games that are tied into reality via economic effects. Games do this already, but not at these levels of global mindshare and value.