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Bitcoin Value Loses Its Mind as Trading Lags on the Mt.Gox Exchange
- na85 13y agoHooray for high-freq algorithmic trading, I guess.
- zxcdw 13y agoDoesn't this almost guarantee profit, as long as the average price doesn't come down too much? As in, buy when it's [low enough] and sell once it's [high enough]? Of course, if the market is filled with these algorithms it will get harder, but low-risk investments and trading over long periods of time should turn to notable profit, no? Weird stuff, machine pushing the man out of business.
- kushti 13y agoIt would be pretty easy for man to beat such a simple algo.
- Retric 13y agoHow? Assume it's binary buy up to x bit-coin's at 835 and sell all of them at 875 does not leave a lot of room for manipulation.
- tedunangst 13y agoWhy bother with bitcoin? You can do the same with GOOG stock too.
- TrainedMonkey 13y agoBecause past trends do not predict future. You buy bitcoins at $835 and instead of going up to $875 they drop to $100.
- deleted 13y ago[deleted]
- PeterisP 13y agoEven if your assumptions of 'correct' price range would be 100% correct, there's an old saying "the markets can remain irrational for longer than you can remain solvent". If you buy bitcoins at 835, and the rational longterm price is above 835, then there is still a serious risk that the market price will remain much below 835 for an arbitrary amount of time.
- hft_throwaway 13y agodetermining "low enough" and "high enough" is what professional market-makers do all day. it's not easy.
- IanChiles 13y agoThe fun thing about Bitcoin is the immense latency in moving money (USD) between exchanges, which has at minimum 4 days of transit. This makes just about anything involving multiple exchanges or high frequency (especially arbitrage trading) absolutely impossible to do without a service such as bitinstant, which is currently MIA
- throwaway344 13y agoAssuming that you're willing to maintain inventory at multiple exchanges, you could still absolutely do arbitrage inter-exchange.
- aianus 13y agoUnfortunately there's no way to hedge your BTC inventory so you have to take on a lot of currency risk.
- deleted 13y ago[deleted]
- throwaway344 13y agoAssuming that you're willing to maintain inventory at multiple exchanges, you could still absolutely do arbitrage inter-exchange.
- bmelton 13y agoJust so that it's said, buying at Coinbase right now gets you the right now price (or at least their spot price at the moment). You're perfectly right that you won't receive the coin for 4 or more days, which leaves a lot of opportunity on the table for turning it around quickly, and perhaps increases the risk non-negligibly, but buying is done at spot price, not receipt.
- newobj 13y agoWhere does this 4 days of transit come from?
- 13y ago
- nly 13y agoHigh frequency? MtGox, which is still the second largest exchange, has something like a 5 second execution lag.
- na85 13y agoYou think 5 seconds is slow? If you were to do it manually it'd take much longer.
- newobj 13y agoFor the thought-of connotation of high frequency trading, yes, 5 seconds is slow.
- kolev 13y agoTheir new Midas engine is about to get released - will handle over 500,000 transactions/second and will support other cryptocurrencies (although I don't think they will open it to the public just yet). It may not be great as it is, but it's definitely better than the rivals at the moment.
- ISL 13y agoTo expect that something volatile is anything other than volatile is, in general, folly. BTC may stabilize with time, but people throwing large quantities of money at it quickly doesn't help. If BTC gains worldwide acceptance, it will be at the begrudging reluctance of governments.
- nly 13y agoTodays (6/12) somewhat sluggish decline[1] is perhaps largely US driven, beginning at around 8AM EST (1PM UTC). Yesterdays crash was sharp, surrounding the Chinese announcement, and was at around 4 PM China time[2] but the price soon bounced back. Overall not very interesting. [1] http://bitcoincharts.com/charts/btcnCNY#rg1zczsg2013-12-06zeg2013-12-06ztgMzm1g10zm2g25zv http://bitcoincharts.com/charts/btcnCNY#rg1zczsg2013-12-06ze... [2] http://bitcoincharts.com/charts/btcnCNY#rg1zczsg2013-12-05zeg2013-12-05ztgMzm1g10zm2g25zv http://bitcoincharts.com/charts/btcnCNY#rg1zczsg2013-12-05ze...
- kolev 13y agoYes and then later on it fell even further. This is a cautious sell off. Big guys cannot sell tens and hundreds thousand of Bitcoins at once - they will crash the market. Super optimistic guys buy expensive and hope for better times. I witnessed today one guy buying nearly 2,000 BTC at $950 on Gox and then the price dropped by more than $100 in few minutes. I believe it will drop even further. I believe in Bitcoin, but it's doomed until its in the hands of speculators and they should get hurt and move to altcoins hopefully although they usually profit from drops as this is how they multiply their coins.
- kclay 13y agoWas hoping for a panic sell like April, O well give it a day or two and it will bounce back.
- Anderkent 13y agoMtGox is known for abusing the market and cancelling trades when the price falls significantly. It happened before [1]. One way to look at it is that they prevent a bank run. The other perspective is that they trick people into thinking the market price is higher than it really is, making unaware people lose even more money as they buy at the high price and the crash happens anyway, just over a longer time. [1] http://www.malwaretech.com/2013/11/mtgox-nearly-breaks-bitcoinagain.html http://www.malwaretech.com/2013/11/mtgox-nearly-breaks-bitco...
- TwoBit 13y agoI also can't help but wonder if insiders of sites like MtGox are taking advantage of their market knowledge.
- n00b101 13y agoThis issue goes well beyond "market knowledge." MtGox _is_ the market; they control the order book, trade matching engine, data feeds and even the custodian accounting system. If you own your very own completely unregulated trading exchange and deposit syatem then you have a big incentive to cheat the market. One way to do so would be to allow your own trades to jump the queue in the order book. By ensuring that your order are always filled ahead of everyone else's (even when you place them later in time) you would have a massive advantage if you start doing market making trades. Another dimension is that MtGox plays not only the role of an exchange but also the role of a custodian for US dollar accounts. MtGox's systems decide how many USD a particular trading account has for buying Bitcoin. This incentivises them to create US dollars "out of thin air" for their own trading account and then use those fictional US dollars to buy Bitcoin from MtGox customers. Combining these two advantages (money "creation" power and total market book control), they could extract huge sums of money from customers through trading without even having to invest a single dollar from the "real world." And if this market making strategy were to go wrong and MtGox loses too much fictional USD currency they could simply reverse the trades! Worst case scenario, if they lost too much money, they could just disappear without paying out customer USD balances. This is why real financial exchanges are heavily regulated and the different roles are played by different legal entities (eg exchange role vs custodian role).
- ktsmith 13y agoThis also happened on the 19th. There was an article posted explaining that their crash prevention code was processing a big sell order, reversing, and then infinite looping. This looks like the same thing.
- deleted 13y ago[deleted]
- bvttf 13y agois that unsourced chart just a screenshot biscoinwisdom, and why isn't it sourced?
- jlgaddis 13y agoThe first link in the article (hyperlink text "gone crackerdog") takes you to the source: http://bitcoin.clarkmoody.com/ http://bitcoin.clarkmoody.com/
- skinnycow 13y agoIf you trade on Gox, you get what is coming. If you speculate based on Gox prices, you get what is coming.
- timothyjcoulter 13y agoYou can see the last 24 hours here. Note data collection for MtGox was stalled due to their extreme server load. http://live.bitcoinindex.es/ http://live.bitcoinindex.es/
- AceJohnny2 13y agoReminds me of the beginning of Arthur C. Clarke's "Childhood's End" (or was it "Fountains of Paradise"? It's been decades since I've read them), where he explains how, even in a networked, high-speed trading world, the stock trading system can get overloaded by orders and lag will cause the system to spiral out of control and collapse, repeating, in essence, the Crash of Black Tuesday. I found that interesting because it showed how, despite advances in technology which we'd expect to solve failures of previous systems, the same fundamental vulnerabilities remained, just at a different scale.
- tedivm 13y agoIt definitely was not Childhood's End that you're thinking of, although that's a fantastic book. I haven't read Fountains of Paradise but will have to add that to the list.
- zem 13y agostrongly recommend it; it's probably my favourite of his novels. also won both the hugo and the nebula, so i'm not alone in thinking so.
- e12e 13y agoHm, and here I thought I'd read all the double-winners... thanks for the extra information :-) (Might have actually read it, just long ago -- but I don't think so -- haven't read that much by him).
- this_user 13y agoThe overloading of exchanges with orders has actually become an intentional strategy in the real world. High frequency firms send large quantities of junk orders to create arbitrage possibilites or even as an offensive measure for the purpose of slowing down the competition by making them waste ressources processing useless orders.
- yummyfajitas 13y ago
- Helianthus 13y agoThis topic is full of bitcoin advocates doing terrible jobs of reconciling themselves to a new .800~.900 standard USD. However you criticize MtGox, this has spread to other exchanges. That's the price now. Personally, I think this is the effect of the Chinese market reversing its positivity on Bitcoin. (which is an outgrowth of bitcoin's lack of delivery on any significant front.)
- scotty79 13y agoI made similar screenshot as the one from this article. I noticed strange periodic behavior of bitcoinwisdom.com, asked myself WTF, uploaded image to imgur, then made a post on HN. Within 5 minutes, I guessed that this behavior is caused by the javascript replaying stale package of transactions and not getting new ones. I reloaded the page, artifact disappeared, I took down HN post to avoid misleading people (it got two upvotes already and one comment). Now I see this what I thought was local glitch prominently featured as a part of front page article. I guess it wasn't so local and accidental after all. Since the image in article comes from http://bitcoin.clarkmoody.com/ http://bitcoin.clarkmoody.com/ not bitcoinwisdom I guess it was some glitch in MtGox API or case of clients wasn't able to tell that what they get from API is stale data not expected fresh one. My screenshot from bitcoinwisdom: http://imgur.com/Q6gKIok http://imgur.com/Q6gKIok
- tokenadult 13y agoWhoa! It's plummeting just as I come here to read this thread. http://bitcointicker.co/ http://bitcointicker.co/ I saw the first news of the Chinese restrictions last evening (United States time zones) and a person who kindly replied to my post here yesterday recommended the link I've just put here for tracking the price of Bitcoin. I saw this thread just after seeing http://www.latimes.com/business/money/la-fi-mo-china-bitcoin-20131205,0,2766336.story http://www.latimes.com/business/money/la-fi-mo-china-bitcoin... on Google News.
- zainny 13y agoPretty wild. I opened your first link maybe 20 minutes ago and the price was $650. And now it's $750. The volatility is just crazy.
- jychang 13y agoI watched it live as it hit $600. A bunch of buy orders held it there for a few minutes, and then after burning thru all of them, it dropped like a rock to ~580. I wonder where I can learn about day trading this stuff...
- waps 13y agoAnswer yourself 2 questions : 1) why does trading lag on MtGox ... who benefits ? 2) does this happen every time the value drops ? And you'll be back to day trading something else very quickly.
- knowitall 13y agoAlways the volatility remarks - because in contrast the world economy is so very stable, as recent years have shown?
- SilkRoadie 13y agoA couple of days ago commenter on HN said they had pulled their savings from the bank and dumped it into bitcoins. It will probably recover but betting on bitcoins is akin to taking one hell of a ride by the looks of things.
- dfrey 13y agoHow can anyone make seriously make statements like this: > Following a steep decline that saw the currency trade at prices not seen since late November That was 2 or 3 weeks ago and they speak of it like it was a generation ago.