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by sp332
4364 days ago
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The lower graph here shows the depth of the market. Right now, for $800k USD, you can move the price from $656/BTC to $665/BTC. So you might get a $67,700 discount on your $5,000,000 order. Edit: spaced the link https://bitcoinity.org/markets |
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1. Note you get bitcoins during your manipulation as well - so how much did you overpay for the bitcoins that it took to get you the $67K discount? I count that you achieved a 1.37% rise in price, so even if you put in your full $800K at the higher price, that cost you $10,960 in overpayment. There is a direct relationship between the amount of move that you cause, and the amount that you overpay. So the question is, what that relationship is - we have to compare it with the profits from the NewEgg orders at the manipulated price.
1b. Also note that there is a chance you can sell some of them back at a slightly increased price if NewEgg confirms your order quickly, as you've just filled all the lower-price bids on the exchange you just manipulated.
If nobody knows about your manipulation directly, you might even cause a bull run where people think the price is just going to go up and up - you only meant to manipulate it to a brief target price, not caring about the price fall after, but maybe you can sell at a profit as a follow-on effect.
2. On the other hand, $67,700 discount on $5M order is nothing – it doesn’t cause the price to fall below wholesale, so there’s no reason to do the manipulation, since NewEgg isn’t offering cash, it’s offering product. The question then becomes: how much would we have to increase „1a” (the $10K ”fee” you paid for a 1.37% drop) by, to cause an, e.g., 15% drop, 20% drop, 25% drop, 30% drop, 35% drop, 50% drop, 75% drop, 80% drop, 95% drop. That would be interesting in table form. The drop would have to be high, as the manipulator would have to get product below wholesale price.
3. $5M is not an upper limit. In a distributed way, there’s no way many customers couldn’t place $10M in orders together. However, they would to coordinate and play ball with each other: if any of them knows that manipulation will happen trying to corner a shallow exchange market, they can take the other side of the transaction. If they know that at a certain time, $15M will be spent on manipulating the spot price for 15 minutes, they can just set aside $15M to place on asks on the other side. So it’s quite dangerous, especially if the price movement is intended to be high. The element of surprise would have to be high.
This seems mostly a theoretical exercise, as in practice NewEgg could fail to honor prices that are outside the previous day’s intraday, or that sort of thing.
Still, I'm curious how the numbers would work.