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>He can’t wrap his mind around why orders for 13,076.389 Tethers keep popping up on Kraken. “No human would enter that order,” he said. “It doesn’t make sense.”

>He can’t wrap his mind around why orders for 13,076.389 Tethers keep popping up on Kraken. “No human would enter that order,” he said. “It doesn’t make sense.” I'm a small time automated trader, and I've made many thousands of orders that extend out to 5 or more decimal places. There's nothing unusual about this to me. My code will take a single uneven dollar amount and make X equal trades out of it. Every few days I add an uneven amount of profit back into the original amount and then I'm trading a new 5+ decimal place dollar amount. >On May 9, eight sell trades for 13,076.389 Tethers each occurred in succession over 16 seconds, yet Tether’s price was unchanged at 0.999. The next trade—for just 75 Tethers—pushed the price up 0.0001. Is this not just the bid-ask spread? Of course sell trades and buy trades execute at different prices, that's how a limit order book works. The concern around Tether may well be justified, but some of the things I've seen presented as evidence suggest a lack of understanding about what normal exchange activity can look like.

deltateam 8y ago
> The concern around Tether may well be justified, but some of the things I've seen presented as evidence suggest a lack of understanding about what normal exchange activity can look like. MOST of the concerns I've seen about Tether are based on a lack of understanding about how most markets work. Its funny to me because the reasons I don't use Tether have to do with it being centralized in general, (with the assumption that they are full reserve). The systemic risk fractional reserve fear is why other people are concerned about Tether, and it doesn't really matter? That company is a huge target either way! If they seek to prove their reserve by an accountant, then their banking partner gets exposed and will close Tether's accounts, or that bank will be cut off by other banks. This is what has happened in the past, when Wells Fargo cut them out of their international wires route.
- wmf 8y ago
  They finally solved the banking problem by starting their own bank, although you still can't get USD in or out for some reason.
  - Solar19 8y ago
    They started a bank? What is it called? What country? I thought they were having trouble in Hong Kong or Taiwan.
    - wmf 8y ago
      https://medium.com/coinmonks/untethered-tether-new-developments-f28c02ab5875 https://medium.com/coinmonks/untethered-tether-new-developme... https://tonyarcieri.com/the-tether-conundrum-part-2-the-plot-thickens https://tonyarcieri.com/the-tether-conundrum-part-2-the-plot...
unclebucknasty 8y ago
>No human would enter that order Yeah, even if this is code vs. human, it's just as easy for the code to round or vary the amounts.
- gcbw2 8y ago
  More interesting is why the purchase orders at usually at >=$1.0, and then there are sale orders at =<$0.999. Why someone would automate something to lose money so consistently? I guess this is what the author was calling out, not the numbers per-se. The numbers just point that the buy/sell are the same entity, human or not is irrelevant for the number. But the behaviour is the odd part.
deleted 8y ago
[deleted]
bitreality 8y ago
I think the underlying point of the article is that Tether's price movement is not possibly natural. It should often trade at a premium or discount. The fact that it trades so tightly with the USD is likely a huge sign of foul play. The obvious answer is that Bitfinex AKA Tether is using wash trading and other tactics to keep Tether trading at $1.00. There is just not enough liquidity on Tether for it to follow the USD so closely. It has been very difficult to sell Tether for USD to Bitfinex AKA Tether over the past year. For awhile, any normal user had no option to withdraw USD from the platform at all. Their banks were completely shut off from the system. You can argue there were people who were on the inside with Tether / Bitfinex and were able to sell Tether to them. I think there may have been some individuals / organizations that had the ability to send and receive fiat to Bitfinex, but I highly doubt they do enough volume to fully stabilize Tether 1:1 to the USD. Look at Bitcoin over the past 1-2 years. It is completely common for it to trade at a 3-5% spread between USD exchanges. Don't get me started on exchanges in other fiat currencies. The spreads have been known to reach 10%+. These spreads can also be arbitraged by anybody, but they still appear. So I strongly doubt that Tether is a special case. If Tether was trading on a real market, it would certainly not follow the price of USD 1:1.
- aeternus 8y ago
  The tight trading with USD may actually be an indication of trust in Tether. It indicates that at least one entity has enough confidence that it is worth exactly $1 that they are willing to buy or sell whenever it fluctuates from that price. If that trust is ever lost, or there are questions about solvency, I'd expect the price of Tether to drop very quickly.
  - aplummer 8y ago
    There _are_ questions about solvency though, and it hasn’t dropped.
    - londons_explore 8y ago
      It only takes one person really sure about Tether to have a bot which simply always trades to keep the price at 1 USD. That person might be an insider (they know tether is legit, so any deviation from $1 is a moneymaking opportunity), or it could be an outsider who believes the hype.
theptip 8y ago
> I've made many thousands of orders that extend out to 5 or more decimal places. The point wasn't that a trade containing that number happened to pop up. It was that the specific number 13076.389 was in the top 50 traded amounts on the exchange. You'd expect there to be on average the same number of trades for 13076.388 and 13076.390 as there were for 13076.389, but that's not what the numbers show. Unless there is something special about the number 13076.389.
- Declanomous 8y ago
  Floating point inaccuracy in software someone built to trade?
- lowdest 8y ago
  What I meant was that my code makes hundreds or thousands of trades with the exact same extended decimal number. I'll use that trade size for several days and hundreds of trades per day before I update to another trade size.
  - theptip 8y ago
    Ah, got you. That could be it, but then why aren't there artifacts like that in the USD-BTC chart? On that one the prominent trade amounts are 1, 0.1, 0.01, ... as you would expect. Could be that for USD-USDT algorithmic trading is dominant, vs, human trading being dominant in USD-BTC, in which case arbitrary amounts like 1, 0.1,.. would be less common for the USDT case. I'm not sure how to assess this though.
    - lowdest 8y ago
      That's basically my guess. Since volume is comparatively low on Kraken USD-USDT, an algorithmic trader with a large bankroll clearly stands out. It might be one of the parties with a financial interest in maintaining the USD parity, or it could just be someone placing bets that the parity will continue.
choffman 8y ago
It could be someone that likes to use specific numbers as a "calling card" of sorts.
- tomtimtall 8y ago
  What the hell is going on in this thread? Yea, the odd repeated trades are just someone who likes that specific number.... and the reason they don’t move the market might just be that no one else likes that number.... and maybe all of the suspecius activity is just a supernova reflected off of swamp gas. We get it, your one of the people who’ve been loosing tons on crypto the last couple of months. But maybe you can reverse the course by arguing away all clear signs of market manipulation with silly stories. Or maybe it would be good to get the spotlight on the bad actors of the market so they can be exposed and the space can move forwards. Mtgox didn’t end crypto, neither will the fall of tether.
this_user 8y ago
> suggest a lack of understanding about what normal exchange activity can look like. So you are suggesting that the experts who were cited in the article, whose field of expertise is this very thing, do not understand how markets work? Meanwhile you don't seem to understand why it is remarkable that the market can absorb a huge order that should move the market because of its sheer size while much smaller order have a much larger impact. When a buy order of quantity 37.5 moves the price by 0.0002, but the following buy order of quantity 13,076.389, that is almost 350 times the size of the previous order, moves the market by half of that, something is very strange about the liquidity situation.
- arisAlexis 8y ago
  yes it's pretty common for "experts in crypto" to write complete nonesense just becUse there are no experts in this field yet
- lend000 8y ago
  These "experts" are just journalists who wouldn't be writing articles if they had enjoyed any success analyzing orderbooks. This article is perhaps the most clueless garbage I've read on the topic of crypto, and there is a LOT of cringeworthy stuff out there. What's that saying about how people scoff at the inaccuracies when reading about something in the news they know intimately, and then read the rest of the paper as though it's going to be any better? > Meanwhile you don't seem to understand why it is remarkable that the market can absorb a huge order that should move the market because of its sheer size while much smaller order have a much larger impact. Is the concept of an orderbook so foreign to non-finance/math people? Firstly, 13k is not a "huge" order. Secondly, someone clearly just had a somewhat large maker order placed at $1 for the example cited which absorbed a few orders, and the book was thinner for a subsequent price movement (liquidity vacuum). Explained by the market being low volume, low volatility, likely dominated by a handful of traders/algos, and plain old random variation (individual players' orders have a more significant effect in low volume markets like Tether/USD). It's also important to note that psychological price levels (like 1.0) tend to accumulate larger walls as a result of human nature. For Tether in particular, it makes sense that the price never breaches 1.0. It's an easy short above 1.0, as it is impossible for Tether to ever become worth more than the price it is pegged at, whereas it could become worth less if it were insolvent. So there is probably a huge wall sitting there on every exchange.

deltateam 8y ago

> The concern around Tether may well be justified, but some of the things I've seen presented as evidence suggest a lack of understanding about what normal exchange activity can look like. MOST of the concerns I've seen about Tether are based on a lack of understanding about how most markets work. Its funny to me because the reasons I don't use Tether have to do with it being centralized in general, (with the assumption that they are full reserve). The systemic risk fractional reserve fear is why other people are concerned about Tether, and it doesn't really matter? That company is a huge target either way! If they seek to prove their reserve by an accountant, then their banking partner gets exposed and will close Tether's accounts, or that bank will be cut off by other banks. This is what has happened in the past, when Wells Fargo cut them out of their international wires route.

wmf 8y ago
They finally solved the banking problem by starting their own bank, although you still can't get USD in or out for some reason.
- Solar19 8y ago
  They started a bank? What is it called? What country? I thought they were having trouble in Hong Kong or Taiwan.
  - wmf 8y ago
    https://medium.com/coinmonks/untethered-tether-new-developments-f28c02ab5875 https://medium.com/coinmonks/untethered-tether-new-developme... https://tonyarcieri.com/the-tether-conundrum-part-2-the-plot-thickens https://tonyarcieri.com/the-tether-conundrum-part-2-the-plot...

unclebucknasty 8y ago

>No human would enter that order Yeah, even if this is code vs. human, it's just as easy for the code to round or vary the amounts.

gcbw2 8y ago
More interesting is why the purchase orders at usually at >=$1.0, and then there are sale orders at =<$0.999. Why someone would automate something to lose money so consistently? I guess this is what the author was calling out, not the numbers per-se. The numbers just point that the buy/sell are the same entity, human or not is irrelevant for the number. But the behaviour is the odd part.

deleted 8y ago

[deleted]

bitreality 8y ago

I think the underlying point of the article is that Tether's price movement is not possibly natural. It should often trade at a premium or discount. The fact that it trades so tightly with the USD is likely a huge sign of foul play. The obvious answer is that Bitfinex AKA Tether is using wash trading and other tactics to keep Tether trading at $1.00. There is just not enough liquidity on Tether for it to follow the USD so closely. It has been very difficult to sell Tether for USD to Bitfinex AKA Tether over the past year. For awhile, any normal user had no option to withdraw USD from the platform at all. Their banks were completely shut off from the system. You can argue there were people who were on the inside with Tether / Bitfinex and were able to sell Tether to them. I think there may have been some individuals / organizations that had the ability to send and receive fiat to Bitfinex, but I highly doubt they do enough volume to fully stabilize Tether 1:1 to the USD. Look at Bitcoin over the past 1-2 years. It is completely common for it to trade at a 3-5% spread between USD exchanges. Don't get me started on exchanges in other fiat currencies. The spreads have been known to reach 10%+. These spreads can also be arbitraged by anybody, but they still appear. So I strongly doubt that Tether is a special case. If Tether was trading on a real market, it would certainly not follow the price of USD 1:1.

aeternus 8y ago
The tight trading with USD may actually be an indication of trust in Tether. It indicates that at least one entity has enough confidence that it is worth exactly $1 that they are willing to buy or sell whenever it fluctuates from that price. If that trust is ever lost, or there are questions about solvency, I'd expect the price of Tether to drop very quickly.
- aplummer 8y ago
  There _are_ questions about solvency though, and it hasn’t dropped.
  - londons_explore 8y ago
    It only takes one person really sure about Tether to have a bot which simply always trades to keep the price at 1 USD. That person might be an insider (they know tether is legit, so any deviation from $1 is a moneymaking opportunity), or it could be an outsider who believes the hype.

theptip 8y ago

> I've made many thousands of orders that extend out to 5 or more decimal places. The point wasn't that a trade containing that number happened to pop up. It was that the specific number 13076.389 was in the top 50 traded amounts on the exchange. You'd expect there to be on average the same number of trades for 13076.388 and 13076.390 as there were for 13076.389, but that's not what the numbers show. Unless there is something special about the number 13076.389.

Declanomous 8y ago
Floating point inaccuracy in software someone built to trade?
lowdest 8y ago
What I meant was that my code makes hundreds or thousands of trades with the exact same extended decimal number. I'll use that trade size for several days and hundreds of trades per day before I update to another trade size.
- theptip 8y ago
  Ah, got you. That could be it, but then why aren't there artifacts like that in the USD-BTC chart? On that one the prominent trade amounts are 1, 0.1, 0.01, ... as you would expect. Could be that for USD-USDT algorithmic trading is dominant, vs, human trading being dominant in USD-BTC, in which case arbitrary amounts like 1, 0.1,.. would be less common for the USDT case. I'm not sure how to assess this though.
  - lowdest 8y ago
    That's basically my guess. Since volume is comparatively low on Kraken USD-USDT, an algorithmic trader with a large bankroll clearly stands out. It might be one of the parties with a financial interest in maintaining the USD parity, or it could just be someone placing bets that the parity will continue.

choffman 8y ago

It could be someone that likes to use specific numbers as a "calling card" of sorts.

tomtimtall 8y ago
What the hell is going on in this thread? Yea, the odd repeated trades are just someone who likes that specific number.... and the reason they don’t move the market might just be that no one else likes that number.... and maybe all of the suspecius activity is just a supernova reflected off of swamp gas. We get it, your one of the people who’ve been loosing tons on crypto the last couple of months. But maybe you can reverse the course by arguing away all clear signs of market manipulation with silly stories. Or maybe it would be good to get the spotlight on the bad actors of the market so they can be exposed and the space can move forwards. Mtgox didn’t end crypto, neither will the fall of tether.

this_user 8y ago

> suggest a lack of understanding about what normal exchange activity can look like. So you are suggesting that the experts who were cited in the article, whose field of expertise is this very thing, do not understand how markets work? Meanwhile you don't seem to understand why it is remarkable that the market can absorb a huge order that should move the market because of its sheer size while much smaller order have a much larger impact. When a buy order of quantity 37.5 moves the price by 0.0002, but the following buy order of quantity 13,076.389, that is almost 350 times the size of the previous order, moves the market by half of that, something is very strange about the liquidity situation.

arisAlexis 8y ago
yes it's pretty common for "experts in crypto" to write complete nonesense just becUse there are no experts in this field yet
lend000 8y ago
These "experts" are just journalists who wouldn't be writing articles if they had enjoyed any success analyzing orderbooks. This article is perhaps the most clueless garbage I've read on the topic of crypto, and there is a LOT of cringeworthy stuff out there. What's that saying about how people scoff at the inaccuracies when reading about something in the news they know intimately, and then read the rest of the paper as though it's going to be any better? > Meanwhile you don't seem to understand why it is remarkable that the market can absorb a huge order that should move the market because of its sheer size while much smaller order have a much larger impact. Is the concept of an orderbook so foreign to non-finance/math people? Firstly, 13k is not a "huge" order. Secondly, someone clearly just had a somewhat large maker order placed at $1 for the example cited which absorbed a few orders, and the book was thinner for a subsequent price movement (liquidity vacuum). Explained by the market being low volume, low volatility, likely dominated by a handful of traders/algos, and plain old random variation (individual players' orders have a more significant effect in low volume markets like Tether/USD). It's also important to note that psychological price levels (like 1.0) tend to accumulate larger walls as a result of human nature. For Tether in particular, it makes sense that the price never breaches 1.0. It's an easy short above 1.0, as it is impossible for Tether to ever become worth more than the price it is pegged at, whereas it could become worth less if it were insolvent. So there is probably a huge wall sitting there on every exchange.