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Bitcoin China The Almighty Buck

How a Whale Crashed Bitcoin To Sub-$7,000 Overnight (newsbtc.com) 228

Posted by BeauHD from the behind-the-scenes dept.
CaptainDork shares a report from NewsBTC: Bitcoin lost billions of dollars worth of valuation within a 30-minutes timeframe as a Chinese cryptocurrency scammer allegedly liquidated its steal via over-the-counter markets. The initial sell-off by PlusToken caused a domino effect, causing mass liquidations. PlusToken, a fraud scheme that duped investors of more than $2 billion, dumped huge bitcoin stockpiles from its anonymous accounts, according to Chainalysis. The New York-based blockchain consultancy cited an internal investigation that showed PlusToken scammers on a systematic crypto liquidation spree. Some of them have been actively selling bitcoin since June -- right after the cryptocurrency established a year-to-date high of circa $14,000. According to Chainalysis, PlusToken had cashed out at least $185 million worth of bitcoin via OTC desks. "We can say that those cashouts increased volatility in Bitcoin's price and that they correlate significantly with Bitcoin price drops," says Chainalysis.

"Chainalysis's study shows that the entity still holds a massive stash of bitcoin that it might liquidate at a later stage," adds NewsBTC. "That raises the prospects of more price crashes unless there is an adequate demand to match the scammer's supply flow."
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How a Whale Crashed Bitcoin To Sub-$7,000 Overnight More

How a Whale Crashed Bitcoin To Sub-$7,000 Overnight

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  • That raises the prospects of more price crashes unless there is an adequate demand to match the scammer's supply flow.,

    Yes of course.

    But even if from no other source, the demand for Bitcoin will continue to grow, as business and government systems all show signs that over time they are becoming less - not more - secure.

    Therefore many more outages from hackers are inevitable, as is the following payment - via BitCoin - from those targets....

    That on top of valid traffic flow, and people moving to use BitCoin

    • If you can't use it to pay your taxes, it's basically useless.

      • Re:Demand is increasing exponentially (Score:5, Insightful)

        by JaredOfEuropa ( 526365 ) on Wednesday December 18, 2019 @04:03AM (#59531194) Journal
        If the supermarket accepts it, it has use. And if it can be readily exchanged for real currency, it has value. I can't pay my taxes with gold either, but I'd pick up a Krugerrand lying in the street just the same.

        • If the supermarket accepts it, it has use.

          Just saw an article that claims IGA supermarkets now accept bitcoin. I was at the local IGA this afternoon, and they said they don't accept it. Much as i'd like to believe that website, the supermarket doesn't.

          • Just saw an article that claims IGA supermarkets now accept bitcoin. I was at the local IGA this afternoon, and they said they don't accept it. Much as i'd like to believe that website, the supermarket doesn't.

            IGA is an advertising association, not a chain. Marketing is the only thing that IGA stores have in common.

          • If the supermarket accepts it, it has use.

            Just saw an article that claims IGA supermarkets now accept bitcoin. I was at the local IGA this afternoon, and they said they don't accept it. Much as i'd like to believe that website, the supermarket doesn't.

            If you accept bitcoin for everyday transactions, you have to accept the risk that it will quickly lose half or more of it's value at any given time. I'd be pretty skittish doing that in a low markup business like selling groceries.

            • If you accept bitcoin for everyday transactions, you have to accept the risk that it will quickly lose half or more of it's value at any given time.

              Here in reality land, Bitcoin usually changes by just a few percent every day, if that (up 1.55% for today).

              But overall, it's performed pretty well [ccn.com] in 2019... Even with this drop.

              • Here in reality land, Bitcoin

                Wait, your "reality land" is thinking that money is safe because volatility is often low? And "this year?" And you expect business owners to see things that way?

                That's... that's... dude, that's so fucking stupid I can't even imagine it being possible to explain it to you! Like, wowsers. You've said some stupid things before, but this is something that gets into the, "wait, how does he remember to breath?" territory.

        • Re:Demand is increasing exponentially (Score:5, Informative)

          by Kiuas ( 1084567 ) on Wednesday December 18, 2019 @07:25AM (#59531442)

          If the supermarket accepts it, it has use.

          Bitcoin sure has its uses, but its properties make in highly impractical for most consumer transactions: BC is so volatile to both directions that accepting payments in it is super risky. Essentially any store accepting it has to exchange their BC to dollars/euros almost immediately, because holding significant sums of bitcoin in the books puts you in deep currency risk, and increases costs because you get added transaction fees. It's the reason why Steam stopped accepting BC as payment a few years back.

          It's the exact same reason why most stores will not accept a foreign currency. That too has uses and value, but hassling around with the exchange rates is not worth it for most supermarket -level operators.

          High volatility may in some instances be a lucrative thing for investors, but it's never something you want for a currency.

        • Again: 'Gresham's law' (bad money drives out good): Easy money vs Hard money. The bad money will be dumped first!
      • In many countries you can't use credit cards to pay your taxes. So credit cards are basically useless? And yes, in many (most?) countries, you also can't use the almighty dollar to pay your taxes. So dollars are also useless?

        • Credit cards are not a currency, except maybe on a few onion sites.

        • Re:Demand is increasing exponentially (Score:5, Informative)

          by StikyPad ( 445176 ) on Wednesday December 18, 2019 @08:53AM (#59531590) Homepage

          Also, you can actually use the US dollar for official transactions in many, many countries. Hell, some countries even use it instead of having their own currency, like Zimbabwe and El Salvador. Even among countries that produce their own currency, the US dollar may be preferred or even required for official transactions. It's the world's largest reserve currency, by a huge margin. Something like 60% of foreign currency holdings are in US dollars. I think the next closest is the Euro at ~25%.

          A separate (but frequently overlapping) set of countries is that where merchants happily accept dollars. Checking the exchange rate in those countries is like checking the weather; it's just a daily fact of life. Everybody knows it, and whether it's going up or down. That's basically every country that has tourism as a major industry, as well as most third world countries. Even in Russia, which is neither third world nor a particularly hot tourist destination, dollars are highly desirable and accepted by most merchants.

        • In many countries you can't use credit cards to pay your taxes.

          I've never seen a credit card which was an actual currency. I've only ever seen cards that have a corporation lend you a form a currency when you use them.

          You comparison is the dumbest thing I've seen.

          And yes, in many (most?) countries, you also can't use the almighty dollar to pay your taxes. So dollars are also useless?

          I stand corrected. This is now the dumbest thing I've seen.

      • Look at the 'Gresham's law' (bad money drives out good). Nobody will use a hard money, like Bitcoin, to pay someone accepting an easy money, this is just basic economic.
    • If demand were increasing exponentially, the price would still be going up as new supply becomes available. Do math better.

      • If demand were increasing exponentially, the price would still be going up as new supply becomes available. Do math better.

        And if the price is not going up as demand increases exponentially, what that tells us is that because of the proliferation of new cryptos, supply is also increasing exponentially.

        • "exponentially growth" idn't important if the exponent is extremely small, or even negative. Any curve can be described exponentially, even a flat line. And it's very common for new markets with new products to experience "exponential growth" in their early days, even if there are built-in limitations.

          One of the critical limitations, for bitcoin, is the amount of fraud and theft by the traders such as Silk Road and "Plus Token"

    • Yep, keep telling that to yourself. I'm sure BitCoin will be the money of the future. It and all other 1000 crypto currencies plus the other 1.000.000 that will crop up as soon as someone decides it's time for yet another crypto currency.

    • I've yet to hear a good explanation for it, why bitcoin would have consistent demand in the future - especially in regards of why bitcoin and not some other coin.

      I mean, bitcoin is kinda crap if you want to avoid tracking too and for that kind of use theres better coins.

      --

      so tell me, how much did you bet for bitcoin after it's price plummeted this time? totalitarian, blahblah government funded hackers blahblah - WHY WOULD YOU PUT YOUR MONEY IN CRYPTO COINS IF YOU FEAR THAT STUFF ?! it makes no sense really

    • Bitcoin is too volatile to be used as a currency.
      If countries use bitcoins their economies will fluctuate to boom and bust over night. Without much influence from them. If you were a company running off of bitcoin say you sell Pizza. You can buy a Pizza at 0.0028 bitcoin this morning. By the end of the day you will need to sell it at 0.0035 bitcoin or 0.0021 bitcoin depending how this market fluctuates all day. Having to buy ingredients that pizza that you sold at 0.0028 bitcoin may not make a profit beca

  • n/t

  • Another evidence btc is not a currency (Score:5, Interesting)

    by aepervius ( 535155 ) on Wednesday December 18, 2019 @03:36AM (#59531158)
    $185 million worth of currency exchanging hands should not break the value of a currency by nearly 2,75% (200/7100) especially since this is a drop in the amount (17 million bitcoin, so theoretically more than 100 billion dollar (7000*17*10^6 don't care for exact values)) that's barely 0.0015% of the total amount of btc. This is on the other hand typical of a highly volatile commodity on which the value is speculative : first to sell is first to win. Frankly BTC looks like a mix of a pyramide scheme and a way to bypass laws to do illegal tx , rather than something even remotely legit.

    • $185 million worth of currency exchanging hands should not break the value of a currency by nearly 2,75% (200/7100)

      It will if the value is:
      a) Artificially propped up.
      b) Mostly owned by a small group of "whales" who have their computers set up to sell at the slightest sign of trouble so they're not left holding the baby when the house of cards finally collapses.

      • B) sounds plausible, but the collapse would already have happened if that were the case. We’ve already seen a couple of serious crashes, but they have failed to trigger a mass selloff causing a meltdown (ie a crash to sub dollar levels)
        • Your powers of "reasoning" are astounding.

        • B) sounds plausible, but the collapse would already have happened if that were the case. We’ve already seen a couple of serious crashes, but they have failed to trigger a mass selloff causing a meltdown (ie a crash to sub dollar levels)

          That's because it's organized - a bit like OPEC.

          In theory the group of people who own most of Bitcoin are rivals, in practice they have meetings and agreements between themselves. It's in nobody's interest to provoke that mass selloff, They have enough cash on hand that they don't need to liquidate their holdings all at once, it's better to keep the price up.

      • C) trade volume is low

        If trade volume is low, but onesided, then you can run the price up or down by a large percentage and make some headlines, but when others try to respond to take advantage, the price instantly corrects as the volume ramps up. Trying to take advantage often results in a loss as the price swings faster than exchange transactions complete.

        You'll see this a lot in "penny stocks," where the price might be swinging up and down by 2 or 3x, but there is actually no discount opportunity there b

    • that's what it is. the price is totally speculative. nobody actually "needs" to have bitcoin next week so nobody has to buy it.

      thats why perhaps the total actual market cap would be like about 1 billion dollars worldwide. that being the amount of money that is tied into it and how much can be actually extracted from it. if you had all the bitcoin and started just selling it off, maybe you would just cap out at 1 billion or even less.

      • Re:it's a speculative item with very little traffi (Score:4, Insightful)

        by StikyPad ( 445176 ) on Wednesday December 18, 2019 @09:23AM (#59531654) Homepage

        Less. Far less. If you had 100% of the BTC, and you decided to sell it all, the price would crash well before you reached 100% of what you paid for it. Probably before you reached 50%.

        That's over simplified, but the same thing would happen if some percentage of holders behaved similarly. What that percentage is remains to be seen.

        Also, "value" has already been extracted from BTC in the form of production and transaction(s), which cost real money to perform, ergo one should not expect a 100% ROI even in ideal circumstances. Currency works precisely because its manufacturing and use costs are almost completely decoupled from its value. BTC is almost exactly the opposite, despite its founders unrealistic expectations, where a huge part of the price of a bitcoin is the cost to mine it.

    • I just wonder how exactly a scammer is going to take hundreds of millions of dollars out of a cryptocurrency exchange. (Asking for a friend ;-) )

      Apparently, everybody knows these bitcoins came from a fraud scheme. So the exchanges must know too. Are there still any exchanges left that pass money around no questions asked? Most are doing their best to comply with banking regulations these days. I lost count how many times I had to send them passport details, electricity bills etcetera.

      They could use mules, o

      • Re: (Score:3)

        by cusco ( 717999 )

        Didn't CitiCorp, one of the world's largest money laundries, say they were going to get into BitCoin a few years ago?

    • $185 million worth of currency exchanging hands should not break the value of a currency by nearly 2,75% (200/7100) especially since this is a drop in the amount (17 million bitcoin, so theoretically more than 100 billion dollar (7000*17*10^6 don't care for exact values)) that's barely 0.0015% of the total amount of btc.

      What idiots are voting this up when the poster can't even get basic maths right? You're 0.0015% is off by a factor 100, you dimwit. With your mathematical prowess you should trade in bitcoin.

  • liquidate (Score:4, Insightful)

    by pjrc ( 134994 ) <paul@pjrc.com> on Wednesday December 18, 2019 @03:38AM (#59531162) Homepage Journal

    Anyone else find the language of liquidating a large stash of bitcoin a little odd?

    If bitcoin really is a currency like cash in dollars or euros, isn't it by definition already as "liquid" as possible?

    • Re:liquidate (Score:5, Informative)

      by Carewolf ( 581105 ) on Wednesday December 18, 2019 @04:21AM (#59531212) Homepage

      If bitcoin really is a currency like cash in dollars or euros

      It isn't.

    • Re:liquidate (Score:5, Interesting)

      by Joce640k ( 829181 ) on Wednesday December 18, 2019 @04:24AM (#59531218) Homepage

      Anyone else find the language of liquidating a large stash of bitcoin a little odd?

      If bitcoin really is a currency like cash in dollars or euros, isn't it by definition already as "liquid" as possible?

      Occam's razor: It isn't a currency.

      (What currency would ever allow people to print their own money at home?)

      • Anyone else find the language of liquidating a large stash of bitcoin a little odd?

        If bitcoin really is a currency like cash in dollars or euros, isn't it by definition already as "liquid" as possible?

        Occam's razor: It isn't a currency.

        (What currency would ever allow people to print their own money at home?)

        Bitcoin is indistinguishable from tulip bulbs.

      • Re: (Score:2)

        by Zocalo ( 252965 )

        (What currency would ever allow people to print their own money at home?)

        People were still allowed to breed chickens, goats, etc. when bartering them was (and still is, in some locations) the defacto "currency". Like any asset/currency, it's worth precisely what other people are prepared to pay/exchange for it, even if the value of the raw materials is significantly less, or maybe even zero (see "art"). This is just the same principle at work, so not something I really consider as a flaw of crypto curre

        • You can still eat a chicken if nobody wants it.

        • Currency != asset. As you say, chickens and pigs and other real world assets are worth exactly how much people are willing to exchange for it; it's entirely possible that if you have 100 chickens, you're not able to find a buyer that wants them, and have problem liquidating (even at fire sale prices). That's a problem that BTC has, because it's an asset, not a currency, since it is not accepted by everyone and there is no governing body that mandates its acceptance. Even if BTC or another crypto becomes sup
          • Your definition is naive. Why do you think Gold was the reference as money for thousand of years? Money in the free market is the most salable asset; Since the 20th century, we are not anymore in a free market of money:

            https://medium.com/@festina_le... [medium.com]
            • You're right, "money" is the most liquid, salable, commonly accepted asset. Bitcoin is trying to be that, and while it could be, it isn't. It's definitely preferable to gold or other real life commodities as a trading tool (and that's why we don't use chickens as common coin); it does also eliminate counterparty risk unless 1700s IOUs. And yes, if you have absolutely no trust in central institutions, you can say there is counterparty risk with fiat currency (after all, a bank can go bankrupt and the FDIC co
              • We are now in the QE-infinity phase, with negative rates for Europe. Before QE (2008...), our FIAT currencies were well managed. This is not the case anymore. We still trust them, due to habit. But now, we are at risk of stagflation. This will not happen in the years to come. But, 15 years from now who knows.

    • liquidity is your ability to spend it.

      Euros in the US are less liquid because you just can't go to any US store and hand them a 10E note and buy something worth $11 You will need to get your euros converted to usd before you can go to any store and buy a product.

      In college back in the old days. The liquidity of paper bills over $5.00 were drastically diminished, and quarters and singles were very liquid.
      I once had $5.00 as the smallest bill in my pocket, and I couldn't buy anything with it. Products under $

  • Massive fraud (Score:4, Interesting)

    by gnasher719 ( 869701 ) on Wednesday December 18, 2019 @05:41AM (#59531322)
    So do I get this right: Some idiots paid a total of about $185,000,000 to a bunch of fraudsters, and you get all excited about a drop in the bitcoin price?

    What's wrong with you guys? Bitcoin harms the environment in a massive way, to produce something that is of no value whatsoever except in the imagination of some people, it's used to shovel 9 digit sums into the hands of criminals, and there are still people who think it's all a good idea?

    • So do I get this right: Some idiots paid a total of about $185,000,000 to a bunch of fraudsters, and you get all excited about a drop in the bitcoin price?

      We all? No - just the scammers, and the gulls they haven't burned yet. and BeauHD.

    • But, the other option is the "gubermnt" and "gubermnt" is bad, OK?

    • Re: (Score:2)

      by Pollux ( 102520 )

      Bitcoin harms the environment in a massive way, to produce something that is of no value whatsoever except in the imagination of some people, it's used to shovel 9 digit sums into the hands of criminals...

      And it's used to exploit people to pay over sums of money which fund the North Korean government's missile and nuclear weapons programs [coindesk.com]. You forgot that one.

      Just tell everyone who trades in bitcoin that they're helping Kim get nukes. See if they're still a fan of the system after learning that fact.

      • And it's used to exploit people to pay over sums of money which fund the North Korean government's missile and nuclear weapons programs [coindesk.com]. You forgot that one.

        Didn't know that, but "shovelling nine digit sums into the hands of criminals" should cover that.

      • It doesn't even matter that it helps North Korea get nukes, because NK could get nukes with real money too (it's just more difficult). The problem IS the "environment", in the sense that we're spending real life resources to create a virtual asset that brings nothing productive to society except sticking it to the man, which it doesn't even do right now. Bitcoin and its ilk are exactly the problem we have with the finance industry in the last few decades, people creating esoteric "assets" built on shaky fou
  • "Oh no, not again."

    Many people have speculated that if we knew exactly why the bowl of petunias had thought that we would know a lot more about the nature of the Bitcoin than we do now.

  • Welcome to the free market! (Score:5, Insightful)

    by Opportunist ( 166417 ) on Wednesday December 18, 2019 @06:10AM (#59531362)

    Well, that's what you signed up for, why are you complaining now? You wanted no government oversight, you got it. Where exactly is the problem?

  • Do we need click bait headlines on Slashdot? (Score:3, Insightful)

    by blindseer ( 891256 ) <blindseer.earthlink@net> on Wednesday December 18, 2019 @06:28AM (#59531378)

    Would it really be that hard to rephrase the headline into something that doesn't read like the typical clickbait trash?

    I'm no professional editor but maybe have it something like...
    Massive BitCoin Liquidation Sent Value To Sub-$7000 Overnight

    Don't make me click on the link to find out how, tell me in the headline. If this is interesting to me then I will click. If this reads like clickbait then I move on.

    I only commented to point out the clickbait headline. Slashdot quality has been really taking a dive lately. Is it too much to ask to not cross the line into clickbait headlines?

  • This is the most tedious thread (Score:3)

    by ishmaelflood ( 643277 ) on Wednesday December 18, 2019 @08:20AM (#59531526)

    This is the most tedious thread I have ever read on Slashdot, Thanks for playing.

  • To wit, that, as of today, cryptocurrency is good for money launderers, speculators - and practically nobody else.

  • How many more times? (Score:4, Insightful)

    by Rick Zeman ( 15628 ) on Wednesday December 18, 2019 @10:17AM (#59531844)

    How many more times will Bitcoin be pumped and dumped before people realize that any currency without government backing is too volatile and thus too dangerous and worthless, and merely speculative like a penny stock--unless you're the pumper? (Yes, I'm well-aware that some currencies WITH government backing are near-worthless, but that's a separate political discussion.)

    • Bitcoin shoud be taken seriously! (Score:4, Interesting)

      by slashways ( 4172247 ) on Wednesday December 18, 2019 @11:03AM (#59532072)
      Gold was money for most of the humankind. Not because some governments with gun, protected Gold. But because Gold is scarce as a commodity in the free market (high stock-to-flow ratio: 55-60). The supply is inelastic. When the price increases, mining operations can't flood the market, because the yearly supply is very low against the total stock.

      Bitcoin is unique as the only digital asset genuinely scarce. Bitcoin is scarcest than Gold. In the digital world, nothing else is decentralized, and so, can even compete against Bitcoin. Bitcoin is definitely alone.

      https://medium.com/@100trillio... [medium.com]
      https://www.reddit.com/r/Bitco... [reddit.com]

  • The Dunning-Krugerrand Effect.

  • Now I can't buy my groceries this week.

    Oh no, wait, I don't buy groceries in Bitcoin. Whew.

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