3 ms·
It would be beneficial to Bitcoin if more people were to buy some and sit on it. Right now the market cap is only around 5 Billion. If BTC is going to realize
by pmorici 13y ago
It would be beneficial to Bitcoin if more people were to buy some and sit on it. Right now the market cap is only around 5 Billion. If BTC is going to realize the promise of making transactions easy then the total market cap needs to be large enough to absorb large buys and sells w/o causing huge movements in the price.
- tomkarlo 13y agoYou want transaction volume, not total value outstanding, to help a market absorb larger transactions. The impact of a particular trade on a market is determined by the amount of trading going on (in particular, the size of the unfilled bids and the depth of the bids -- how much is available to trade, and how far away from the current market price is each potential trade.) At its most simple this is represented by the bid/ask spread, the gap between where you can buy and sell at a given moment - in more liquid markets, this gap is smaller. Generally, a market where there are lots of transactions going on is going to have a bigger set of bids and asks right near the most recent transaction price. If a market is thin, than a large sale, for example, might have to chew through a lot of bids and push the price way down to get done.
- dkural 13y agolarge buys and sells will cause huge movements in thinly traded markets in which people "buy some and sit on it" (ie don't engage in transactions). I don't understand what you're getting at?
- pmorici 13y agoThe larger the total BTC market cap the larger a large buy will have to be before it looks large.
- dkural 13y agoFalse. A large buy order in a market without many trades will look large, no matter how large the bank accounts are. If you have a market with each participant holding onto $10M, but doing only a few $1 trades per day, a $10,000 trade will be large.