Theory That Bitcoin Price Is Being Propped Up | Hacker News Reader

Theory That Bitcoin Price Is Being Propped Up

fortune.com

15 pointsnew2this23 comments

This article is less concrete than the Bloomberg TV coverage I saw sometime this last week that discussed the same theme/possibility of Bitcoin manipulation in recent weeks.

That coverage discussed that much of the pricing up-moves this past month are happening on weekends when there is less liquidity/action, and then saying some analysts see this as suggestive that some whale(s) are deliberately trying to push the price up (using weekends to get the most oomph for their trading dollar.) There was also an assertion that the market volumes involved in bitcoin are substantially less than in other more traditional markets so the market is more susceptible to this sort of thing.

I have no knowledge of the truth of any of this, but there was a thread of a "fact" to that argument which I didn't notice in this Fortune article (so I pass it on.)

The low market cap of BTC, albeit some 100's of billions of $, compared to the huge indexes, of course makes price manipulation easier. But as a fan of the technology and future use cases for crypto in general, I do think most of the fluctuation in price is emotional moreso than anything else.

So the central argument is that whales manipulate the price by buying bitcoins once the price is low.

Isn’t that the definition of a market?

Could you imagine an alternative where this does not happen?

The central allegation is that Tether would print coins for themselves that were not backed by USD and then buy BTC. Thus, artificially propping up BTC in a price range where they could then quickly sell, pocket profits, and stor the money to back the Tether they just printed.

In other words, gaming the system is pretty easy when you're printing/minting the money needed to do it. This is what puts crypto in a league of it's own.

Isn't this what the Fed does?

Not that they're in the same league, but it feels like the same sport.

Nope. The Fed does not print money for it's own personal/private use or to directly benefit it's members.

The Fed is incentived to profit from economic growth and increased financial activity --- which theorectically works to everyone's benefit. Individual Fed board members are restricted from personally investing in the financial markets to avoid the appearance of any conflict of interest.

  > The Fed does not print money for it's own personal/private use or to directly benefit it's members.

You're referring to the small handful of people on its Board of Governors, but the member banks are private institutions run by private individuals who absolutely have investments.

Any policy changes the Fed makes affects all these private member institutions equally and at the same time.

They can guess but it's not possible for these private institutions to "know" what policy changes the Fed will make because even the Fed doesn't know until they meet and vote. It's not practical for one of these institutions to individually request or receive special treatment or favors from the Fed. There is no one individual at the Fed empowered to grant any such request. Making any such attempt would subject the institution to having it's banking charter revoked.

Compare this to crypto where exchanges can and do grant themselves special treatment and secret monetary favors without any permission or oversight whatsoever.

"No special favors" for member banks is hard to swallow after seeing the fallout in 2008 for everyone except those responsible.

That's not a defense of crypto, it's an acknowledgement our banking system is corrupt. It's nice that it magically always works out for those in the know though.

Agreed. The 2020 CARES Act was ~1/3 of 1 month's rent for the peasants and some innumerable amount of money, yes, printed for a secret list of then-Treasury Secretary Mnuchin's choosing. Plus plenty of good provisions. And in 2008, a more transparent yet still obvious use of "quantitative easing" helped the ultra rich become ultra richer. One can claim it's for all of our benefit.

Crypto has plenty of issues, but these defenses of the corrupt use of the Federal Reserve is pretty silly.

But then some people are selling BTC against tether. And, at some point, want to exchange tether with USD.

So I understand that Tether is shit if it’s true but it has nothing to do with bitcoin.

Buying it because it's low, and buying it push to higher, are different things.

how?

Let's be real.

Nobody knows anything for sure.

People who like Bitcoin will deny this.

People who hate Bitcoin will use this as confirmation bias.

/thread

Nobody knows anything for sure.

We know for sure that "bad behavior" is fairly common in this unregulated "marketplace". If it's easy and possible and profitable, someone is going to do it.

This alone is sufficient to deter a lot of sensible investors.

The so-called regulated marketplace only has a thin veneer of propriety. Naked short selling is rampant, many financial statistics are entirely self-reported with barely a slap on the wrist for intentional fabrications, market makers have privileges to manipulate the price that normal folks don't have access to, etc. And one time the plebs got one over on the financial class (the GME thing) they literally "shut it down".

>And one time the plebs got one over on the financial class (the GME thing) they literally "shut it down".

That's not what happened. Robinhood (and a couple others) weren't prepared for a stock with no fundamentals to be bought by everyone, so they didn't have the collateral for it that was required.

"Your honor, my client didn't throw Joe out of the window, he merely defenestrated him at high velocity."

"Oh I see. That's totally different. Case dismissed."

How did they not have the collateral? The customers money is the collateral.

It wasn't as nefarious as it seemed at first, but the fact is the systems of investment currently in place do not allow for plebs to manipulate it in their favor. I was only an observer rooting for the common man, but I still have a difficult time seeing Robin Hood as a useful tool when they were not able to execute basic buying of an EFT on an open market.

We're about to transition to digital currency/tokens. Lots of laundering happening. And Tax Season is upon us, which correlates with deflation in price. Yet, BTC is riding above 20K. This is artificial inflation of the price of BTC, no doubt.

LOL “theory”.

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