Преписвам мнението, което написах във форума на американската биткойн фондация. Приемете моите извинения, че е на английски. Ще преведа 0,05 биткойна на този член на форума, който пръв го преведе на български и го добави към тази тема през следващите 48 часа.
I read a lot of theories recently neither of which is correct. Below is my look into it.
Short answer:
Margin collateral and leverage allowing naked short sales on major bitcoin exchanges.
Long answer:
Couple of years ago I've warned some core devs to not help develop margin and leverage trading on the exchanges. Their response was financially naive - "This will increase liquidity which will make price less volatile". No. This is a bad liquidity deliberately designed to distort price discovery mechanism.
You can already sell bitcoins without even having a single satoshi. To do that you can use margin deposits and leverage - 1:2, 1:5 or 1:10. In other words you can place $10K in one such exchange and sell bitcoins worth $100K without having a single satoshi. If you meet somebody on the street that tries to sell you something they don't have undoubtedly you'll call them crooks and swindlers, but in the nowadays "regulated" financial world such crooks and swindlers are blessed as "liquidity providers"...
Another way of doing the same is by using the newly (hastily) licensed bitcoin swap exchanges like TeraExchange. You swap your dollars for bitcoins for a certain period at predetermined exchange rates. But why would you want to have bitcoins for 6 or 12 months instead of dollars? The only reason is to sell them hoping to buy them back with a profit when time comes to pay them back. But make no mistake, the final result of such swaps (profit or loss) is always cleared in $.
This is nothing new. Such price suppression schemes are applied to gold, silver, oil for a long long time. What happens if price doesn't want to go lower? You simply increase the leverage or margin collateral! That is why the leverage in the derivatives portfolio of big banks is currently at record levels! What happens if increasing leverage and margin collateral still doesn't work and you make a loss? Well, Fed or ECB or BOE or whatever central bank print additional money only for you at zero interest rate or even at negative (ECB). They are the too-big-to-fail guys and their cronies. For them bitcoin price is just a joke to play with...
So what can be done to counter such price manipulations?
- Don't sell your bitcoins if you'll make a loss just for the sake of hedging your loss.
- Never buy bitcoins with all of your capital. Leave room for further depreciation and lower price to buy at. Thus you'll not be 100% invested when price goes up but that is OK.
- Don't deposit your bitcoins to earn interest. Remember, the only purpose to borrow bitcoins currently is for a speculative sale. Every time price of bitcoin goes dramatically up all such proxy entities created to collect bitcoins go belly up! Learn from bitcoin financial history.
- Don't listen to market gurus and oracles for buy or sell signals. You're effectively becoming one of Pavlov's dogs. Most of the time you will have prifitable trades but at the end you'll lose everything earned and most of your initial bitcoin capital.
- Leave the sharks eat each other. Don't buy bitcoins withh borrowed fiat. Buy bitcoins only with long term money and never leave considerable amounts in bitcoin on your bitcoin exchange account.
Obviously, the world financial aristocracy missed bitcoin train and now they do whatever they can to catch up. They can do that ONLY by purchasing or confiscating your bitcoins. Take care!
I read a lot of theories recently neither of which is correct. Below is my look into it.
Short answer:
Margin collateral and leverage allowing naked short sales on major bitcoin exchanges.
Long answer:
Couple of years ago I've warned some core devs to not help develop margin and leverage trading on the exchanges. Their response was financially naive - "This will increase liquidity which will make price less volatile". No. This is a bad liquidity deliberately designed to distort price discovery mechanism.
You can already sell bitcoins without even having a single satoshi. To do that you can use margin deposits and leverage - 1:2, 1:5 or 1:10. In other words you can place $10K in one such exchange and sell bitcoins worth $100K without having a single satoshi. If you meet somebody on the street that tries to sell you something they don't have undoubtedly you'll call them crooks and swindlers, but in the nowadays "regulated" financial world such crooks and swindlers are blessed as "liquidity providers"...
Another way of doing the same is by using the newly (hastily) licensed bitcoin swap exchanges like TeraExchange. You swap your dollars for bitcoins for a certain period at predetermined exchange rates. But why would you want to have bitcoins for 6 or 12 months instead of dollars? The only reason is to sell them hoping to buy them back with a profit when time comes to pay them back. But make no mistake, the final result of such swaps (profit or loss) is always cleared in $.
This is nothing new. Such price suppression schemes are applied to gold, silver, oil for a long long time. What happens if price doesn't want to go lower? You simply increase the leverage or margin collateral! That is why the leverage in the derivatives portfolio of big banks is currently at record levels! What happens if increasing leverage and margin collateral still doesn't work and you make a loss? Well, Fed or ECB or BOE or whatever central bank print additional money only for you at zero interest rate or even at negative (ECB). They are the too-big-to-fail guys and their cronies. For them bitcoin price is just a joke to play with...
So what can be done to counter such price manipulations?
- Don't sell your bitcoins if you'll make a loss just for the sake of hedging your loss.
- Never buy bitcoins with all of your capital. Leave room for further depreciation and lower price to buy at. Thus you'll not be 100% invested when price goes up but that is OK.
- Don't deposit your bitcoins to earn interest. Remember, the only purpose to borrow bitcoins currently is for a speculative sale. Every time price of bitcoin goes dramatically up all such proxy entities created to collect bitcoins go belly up! Learn from bitcoin financial history.
- Don't listen to market gurus and oracles for buy or sell signals. You're effectively becoming one of Pavlov's dogs. Most of the time you will have prifitable trades but at the end you'll lose everything earned and most of your initial bitcoin capital.
- Leave the sharks eat each other. Don't buy bitcoins withh borrowed fiat. Buy bitcoins only with long term money and never leave considerable amounts in bitcoin on your bitcoin exchange account.
Obviously, the world financial aristocracy missed bitcoin train and now they do whatever they can to catch up. They can do that ONLY by purchasing or confiscating your bitcoins. Take care!
