The title and the sensationalist wording of the article is complete nonsense.<p>Yes, placing a large order might be interpreted as a signal by some traders and it might be possible to take advantage of that.<p>But that does not mean somebody dominates the price of Bitcoin. By the same logic you could say that HN posts dominate the price of Bitcoin because some traders might use them as a signal.
Why exactly is spoofing illegal? How do you differentiate legitimate order canceling from spoofing? Trading is very emotional process. You place order, 5 minutes later you decide to cancel it, 10 minutes later you decide to place another order.<p>I think it doesn't make any sense for this kind of activity to be illegal, and I don't see much wrong with it. It would be impossible for exchanges to differentiate between spoofing or legitimate trading anyway.
Flagged because the title is sensationalist and doesn't reflect the content of the article (even if you believe the article itself). Seems much more like FUD against Bitfinex.<p>Even if "Spoofy" was able to dominate Bitfinex (which they couldn't with the described tactics) that would be a far cry from dominating the price of Bitcoin. There are so many more exchanges.<p>I started doing doing some trading for fun and profit a few months ago, and "fake walls" were very well known to all users of Poloniex (there used to be a public chat there, so I learned about those almost immediately). It's a sure thing that there are whales manipulating the market, but that's for sure not a single entity, it's not limited to bitfinex, and if you want to gamble on this bubble you have to deal with it.<p>* edited for clarity
This entry explains how spoofing caused the 2010 flash crash in the stock market.<p><a href="https://en.wikipedia.org/wiki/2010_Flash_Crash" rel="nofollow">https://en.wikipedia.org/wiki/2010_Flash_Crash</a>
With the constant stream of negativity surrounding blockchain coins it's a wonder that anybody chooses to use them as an investment vehicle. There are so many parallels to penny stock trading in the 80's that it's uncanny.
The article is a bit dramatic, but the funny part is that he spent so much time trying to prove that whales install buy and sell walls to manipulate the price. This is not news and happens with every cryptocurrency on every exchange. It is especially common and easy to spot with altcoins. The typical life cycle of an altcoin is similar to this:<p>1) Bitcoin code forked and slightly modified.<p>2) New coin announced on Bitcoin talk and the creators premine enough to control the price<p>3) attempt to hype the coin and gain interest<p>4) coin is added to exchanges and people begin buying it<p>5) buy walls are installed by the coin creator to prevent the price from crashing and they continue to hype the coin in trading chatrooms<p>6) price raises high enough and enough demand exists for the coin creator to remove the buy walls and sell off premined coins<p>7) the price crashes and the coin is abandoned<p>This is called pump and dump and it happens all the time. With more successful coins...the effect isn't as dramatic bc there are investors that believe in the value of the project, but the mechanics of the price manipulation is the same.
I wonder if it would be possible to "piggyback" on that, and when you see a spoofing attempt, issue a certain order. Your advantage would be to know that their order is fake and will likely be canceled.<p>Furthermore, would that be legal? You are just using publicly available information.
If it was on a single exchange sure one might then the evidence holds a lot of weight. Across exchanges, it could simply be a whale trader or a market making type algo to move the prices along.<p>That said, I wish bitcoin related articles get to the point quickly and tell the story succinctly. This comes off a long 13-minute rant. I gave up in between to read the TL;DR version here and then scan through the article.
I know in the USA, placing bid/ask offers you have no intention of completing is illegal, but IMO this rule makes no sense.<p>It's like advertising a $1,000 plastic keyring. Sure, I as the store keeper think it's very unlikely I'll sell it, but it is still for sale, and if someone tries to buy it, I really will sell for that amount.<p>The fact that other keyring buyers see my $1000 advertisement and that affects their buying habits (for example buying more $3 keyrings now they look like a bargain) is their problem.
This article is a boldface warning about Bitcoin, but not necessarily in the sense intended. If we're scandalized by the very mild trading behavior described, we are in way over our heads in any kind of market at all.
Somewhat dismayed by all the "I don't see the problem" posts.<p>Anyway. I wouldn't be surprised if this is linked to the BTC ETF. Seems like a very clean way to get shady money out of the BTC economy into the real world.
It's the Wild West, which admittedly does look pretty fun at times. Interesting at the least. But I can't believe anyone really thinks that any day now, normal people are going to start using this currency.
You mean people use their financial positions in order to trigger sells and buys in order to capitalize on sentiment changes? Tell me it ain't so!
I have observed very similar behavior on Kraken. I cannot say if it's as significant as "Spoofy", but there's definitely some algo placing and canceling orders in direct response to legitimate limit orders.
98% of orders are canceled limit orders. The average duration an order is open ranges from 1.5 to 20 or 30 seconds, depending on the time frame you look at. The entire market is "spoofing." It's crypto not NYSE.
Can someone tell me how is current price of bitcoin or any other crypto currency calculated, or point me in direction where I can learn more about market mechanics. Say I want to develop a toy stock market, what do I need to know ? Any good book resources ? I found this while writing my comment <a href="http://www.dummies.com/education/economics/how-to-determine-price-find-economic-equilibrium-between-supply-and-demand/" rel="nofollow">http://www.dummies.com/education/economics/how-to-determine-...</a>
There is a Jim Cramer interview on Youtube (<a href="https://www.youtube.com/watch?v=VMuEis3byY4" rel="nofollow">https://www.youtube.com/watch?v=VMuEis3byY4</a>) where he talks about how hedge fund managers routinely manipulate stock prices on traditional exchanges in various ways. It would be nice if electronic currencies really offered a level playing field for its participants. The notion of fair-market is crucial for the long term health of any currency mechanism.
I would posit that it's different people at different times trying to move the market in a direction favourable to them, but it's a case of caveat emptor, once people realise these things are happening they are safe against them.
What's the difference between Wash Trading of a company and money printing + fake (e.g. construction) projects by a government?<p>A little sad to see that all the banking problems are still existing with Bitcoin as well.