[nhaehnle]

It would be interesting to know how much of this 25k/day trade is simply a kind of steady-state speculation, including attempts to exploit arbitrage. If somebody really wanted to change 100k BTC to $, it would likely have a disastrous impact on exchange rates.

The trade of US$ in the currency markets is on the order of several trillions per day. Now imagine what would happen if somebody truly wanted to exchange a few trillion US$ for Euros, and keep those Euros...

[nikete]

The global currency post market turnover is ~1.4 trillion according to the BIS, note this includes many currency pairs that dont involve USD; a trillon a day is an upper bound on the daily USD market.

China effectively traded around 0.2 trillion USD for yuan and kept the USD last quarter, the impact is not that big.

More generally looking at the volume transacted does not tell you much about the depth of the market; you need to look at the order book for that. Looking at the bitcoin market there are several lots of over 25k sitting within 20 cents on each side of the bid-ask, this means it is extremely likely one could carry out a directional 100k trade with relatively small market impact if spread out over a few days.

[nhaehnle]

Thank you for the data on the Bitcoin market, that is indeed informative.

As for China though, I would like to point out that those trades must be seen in relation to the massive net flow of goods from China to the US (and other parts of the world). The trade you claimed is actually bigger than Chinese net exports for that quarter (which I find somewhat surprising, I have to admit, but probably that just balances out with what was happening in the past), but it's in the same order of magnitude.

If China did not do such trades regularly, the Yuan would be expected to appreciate in a noticeable way, making current trade arrangements more difficult to maintain. Essentially, if China did not make such trades, it would be forced to restructure its economy towards domestic consumption, and it would force the rest of the world to start producing more of their own stuff again, or swallow the price increases.

So to claim that the impact of those trades is not big is problematic.