Indeed that was a big drop. However the price recovered almost completely (only 4 dollars lower than before) and was stable for about 2 hours after that blip.

It may have had a delayed effect, but it is hard to see how.  There were small dips at about that time on other exchanges, but they recovered too.

Daily volumes of BTC trade to/from USD and other national currencies (in kBTC):


               !    Mon !    Tue !   Wed !   Thu !   Fri !   Sat !   Sun !   Mon !   Tue !   Wed !
  EXCHANGE     !  01/27 !  01/28 ! 01/29 ! 01/30 ! 01/31 ! 02/01 ! 02/02 ! 02/03 ! 02/04 ! 02/05 ! Currencies considered

  Bitstamp     |  25.19 |  20.04 |  7.04 | 13.13 |  7.73 |  8.30 |  4.07 |  4.93 |  7.59 |  8.48 | USD
  MtGOX        |  10.02 |  11.82 |  7.21 |  6.60 |  4.45 |  5.13 |  2.28 |  3.37 |  5.40 |  8.20 | USD,EUR,GBP,AUD,JPY
  BTC-e        |  21.02 |  16.82 |  6.53 | 12.54 |  4.65 |  6.30 |  4.74 |  5.75 |  4.51 |  6.55 | USD,EUR,RUR
  BitFinEx     |  15.63 |  13.62 |  3.87 |  8.18 |  3.91 |  4.54 |  3.15 |  3.45 |  3.36 |  5.22 | USD
  Bitcoin.DE   |   0.60 |   0.49 |  0.33 |  0.47 |  0.35 |  0.33 |  0.35 |  0.51 |  0.27 |  0.31 | EUR
  Kraken       |   0.63 |   0.54 |  0.24 |  0.37 |  0.20 |  0.23 |  0.15 |  0.21 |  0.29 |  0.23 | EUR
  CaVirtEx     |   0.40 |   0.22 |  0.21 |  0.25 |  0.24 |  0.24 |  0.20 |  0.08 |  0.17 |  0.18 | CAD
  CampBX       |   0.13 |   0.20 |  0.07 |  0.06 |  0.05 |  0.23 |  0.16 |  0.10 |  0.12 |  0.16 | USD
  Crypto-Trade |    .   |   0.01 |   .   |  0.01 |   .   |  0.01 |  0.01 |   .   |  0.01 |  0.01 | USD

  SUBTOTAL     |  73.62 |  63.76 | 25.50 | 41.61 | 21.58 | 25.31 | 15.11 | 18.40 | 21.72 | 29.34 |

  Huobi        |  63.13 |  92.88 | 32.14 | 29.27 | 15.26 | 28.86 | 26.27 | 24.77 | 18.65 | 19.55 | CNY
  OKCoin       |  35.41 |  52.37 | 29.11 | 18.56 | 17.11 | 20.38 | 20.00 | 18.09 | 12.77 | 12.33 | CNY
  BTC-China    |   4.43 |   6.45 |  1.94 |  1.99 |  1.17 |  2.31 |  2.21 |  1.70 |  1.33 |  1.54 | CNY (NOTE 1)

  SUBTOTAL     | 102.97 | 151.70 | 63.19 | 49.82 | 33.54 | 51.55 | 48.48 | 44.56 | 32.75 | 33.42 |

  TOTAL        | 176.59 | 215.46 | 88.69 | 91.43 | 55.12 | 76.86 | 63.59 | 62.96 | 54.47 | 62.76 |



All numbers were collected by hand from the site http://bitcoinwisdom.com. Beware of possible errors.

For each exchange, the numbers include only the trade volume to/from the currencies listed in the rightmost column. Trade between BTC and other cryptocoins, such as LiteCoin, is NOT included.

Coinbase is said to use Bitstamp for currency conversion.

Dates on the header line are UTC. Specifically, "01/15" means "from 01/15 00:00:00 UTC to 01/15 23:59:59 UTC". (Beware that Bitcoinwisdom uses your local time, so the date may appear to be off by 1 day.  For example, if you are 2 hours west of Greenwich, it may show "01/14 22:00" when the UTC time is "01/15 00:00".)

(NOTE 1) On 2014-01-30, BTC-China had a burst of extremely fast, regular and atypical transactions, all with similar amounts (a few tens of BTC) and prices (~4836 CNY), adding up to about 41,050 BTC.  The burst started suddenly around 17:00 UTC and and stopped suddenly around 19:30 UTC. Presumably those transactions were made by a faulty robot trading against itself or some other robot, and did not represent actual exchange of money and bitcoins between distinct individuals. Therefore those anomalous transactions were subtracted from the BTC-China volume for Jan/30.

Start time of the 2014-02-05 "mini-crash" on various exchanges,
estimated visually from the 1-minute charts at
http://bicoinwisdom.com:


  Time  ! Exchange ! Drop ! Un. ! Vol.BTC
  ------+----------+------+-----+--------
  22:50 | Huobi    |  5.0 | CNY |   24.25
  22:56 | MtGOX    |  8.0 | USD |  186.80
  23:03 | BTC-e    |  0.8 | USD |   20.54
  23:03 | Bitstamp |  2.5 | USD |   27.07
  23:03 | Coinbase |  3.0 | USD |     . 
  23:05 | BitFinEx |  5.0 | USD |   46.98
  23:06 | OKCoin   | 15.0 | CNY |   12.15


Date and times are UTC.

AFAIK, Feb/05 22:50 UTC = Feb/05 17:50 in New York = Feb/06 07:50 in China.

The start of the mini-crash is often hard to pinpoint objectively.
At Huobi, in particular, the price started to decrease slowly and then
accelerated.  Other people may pick completely different times
which may lead to different time orderings of the exchanges.

The Chinese pandas bears at Huobi took over at ~22:0 21:00 local time and undid most of what the bulls did over the last two days.

(Usually, almost all Huobi's traders are in bed at 02:00 01:00 am; but today it's 5:00 04:00 am and some are still trading.)

I have conflicting information about the bank holidays in China.  Some pages say that banks will reopen only on Feb/07, others say that they should be open today, but with reduced hours.  Which is right?

Even if they are open today, I suppose that it may take a coupls of days for deposits to reach the exchanges, right?

(BTC-China is still in zombie mode.)
 

My two cents of Dogecoin:


Perhaps because those "good news" are not meanigful for people who are not into bitcoin already?

Perhaps because people who are already into bitcoin know that those "good news" are not that great, actually? (E.g. "another merchant acepts bitcoins" actually means "another merchant accepts cash through Bitpay or Coinbase".)


Many people who have invested in bitcoins are not that confident about it.  Presumably they rush to sell, before waiting for the news to be confirmed, because they fear being run over by a crash.


I would think so.  They seem to be the driver also for tarde volume.  With or without holidays, they account for 70% or more of the total trade volume.


I think that I see the same thing at Huobi.

Could be arbitrage traders, pulling the price back towards the other exchanges.  (Crashes and rallies seem to be much slower now than they used to; presumably it is the same cause.)


After the Dec/01 crash and the failure to recover in 2 months, many people realized that the success of Bitcoin is not as certain as it seemed before.  The China actions showed that governments can stop bitcoin if they decide to do so.  Then altcoins blasted a big hole in the arithmetic that "proved" million-dollar prices in a few years.

People are becoming aware that the price is set entirely by the market, and the market does not seem to see those astronomical prices any time soon.

Thrue believers, who would buy BTC at any price, apparently ran out of money. The exchanges apparently became the playground of speculators who only expect the price will rise enough for them to sell at a profit; or fall by a fair amount but then rebound to the current level.  Thus they won't sell for less than X + 50 and won't buy for more than X - 50. And so the price stays at X.

The buying of bitcoins for use in commerce does not seem to be enough to affect the price, and should be offset by the sale of coins by miners and merchants.

Speaking of Bitstamp, is there any follow-up to this Jan/31 news?
http://www.coindesk.com/vancouver-atm-operator-wants-leave-bitstamp-following-breakdown/

This thread too is being manipulated, of course.  And most of the posts here are copied over from the Chinese bitcoin forum by arbitrage trolls; so that the level of silliness and pontification ends up being the same on both sides. 

It is a community consensus that China does not exist, so it would be Bitstamp, I guess.

If you want to be a pariah in the community, just say "Huobi and/or OKCoin" and suggest that the other exchanges just follow them.

In any case, there is no such thing as "a price free of manipulation" for Bitcoin.  Bitcoins pay no dividends, and there are no assets that could be auctioned to refund the holders if the concept collapsed; so there is no way to compute a "real value".

The market price - what *you* can buy and sell it for - is the only price there is.  It does not matter whether the other party in your transactions is a penguin shepherd in Mongolia or a robot programmed by Skynet.

I suppose that one should exclude Mt.GOX; from what I read, one cannot actually buy or sell bitcoins there, only donate coins and cash to the owners.

That said, I too feel that the market price at the price-setting exchange (whichever it is) is "manipulated", even though I cannot define yet what the word means.

Beware, I tried to zoom OUT and instead it suddenly zoomed in so much that my PC froze and I had to reboot.

In the UTC day that just ended (Tuesday Feb/04 UTC), China's volume was another record low,  ~33 kBTC; even lower than on New Year's (Fri Jan/31).

Exchanges outside China, on the other hand, did slighlty better than the last two days, at ~22 kBTC.  However they too have been feeling the effects of the extended Cinese holidays: their volumes since Fri Jan/31 have been less than half of the average in the previous week.

The "experiment" of the Chinese New Year holidays seems to show that the daily volume at the exchanges outside China is largely determind by that of the Chinese exchanges, specifically Huobi and OKCoin.  See the plots below.

Daily volumes of BTC trade to/from USD and other national currencies (in kBTC):


               !    Sun !    Mon !    Tue !   Wed !   Thu !   Fri !   Sat !   Sun !   Mon !   Tue !                     
  EXCHANGE     !  01/26 !  01/27 !  01/28 ! 01/29 ! 01/30 ! 01/31 ! 02/01 ! 02/02 ! 02/03 ! 02/04 ! Currencies considered

  Bitstamp     |   9.70 |  25.19 |  20.04 |  7.04 | 13.13 |  7.73 |  8.30 |  4.07 |  4.93 |  7.59 | USD                 
  MtGOX        |  16.11 |  10.02 |  11.82 |  7.21 |  6.60 |  4.45 |  5.13 |  2.28 |  3.37 |  5.40 | USD,EUR,GBP,AUD,JPY 
  BTC-e        |  10.38 |  21.02 |  16.82 |  6.53 | 12.54 |  4.65 |  6.30 |  4.74 |  5.75 |  4.51 | USD,EUR,RUR         
  BitFinEx     |   7.88 |  15.63 |  13.62 |  3.87 |  8.18 |  3.91 |  4.54 |  3.15 |  3.45 |  3.36 | USD                 
  Bitcoin.DE   |   0.34 |   0.60 |   0.49 |  0.33 |  0.47 |  0.35 |  0.33 |  0.35 |  0.51 |  0.27 | EUR                 
  Kraken       |   0.24 |   0.63 |   0.54 |  0.24 |  0.37 |  0.20 |  0.23 |  0.15 |  0.21 |  0.29 | EUR                 
  CampBX       |   0.05 |   0.13 |   0.20 |  0.07 |  0.06 |  0.05 |  0.23 |  0.16 |  0.10 |  0.12 | USD                 
  CaVirtEx     |   0.10 |   0.40 |   0.22 |  0.21 |  0.25 |  0.24 |  0.24 |  0.20 |  0.08 |  0.17 | CAD                 
  Crypto-Trade |    .   |    .   |   0.01 |   .   |  0.01 |   .   |  0.01 |  0.01 |   .   |  0.01 | USD                 

  SUBTOTAL     |  44.80 |  73.62 |  63.76 | 25.50 | 41.61 | 21.58 | 25.31 | 15.11 | 18.40 | 21.72 |                     

  Huobi        |  91.31 |  63.13 |  92.88 | 32.14 | 29.27 | 15.26 | 28.86 | 26.27 | 24.77 | 18.65 | CNY                 
  OKCoin       |  31.40 |  35.41 |  52.37 | 29.11 | 18.56 | 17.11 | 20.38 | 20.00 | 18.09 | 12.77 | CNY                 
  BTC-China    |   5.55 |   4.43 |   6.45 |  1.94 |  1.99 |  1.17 |  2.31 |  2.21 |  1.70 |  1.33 | CNY (NOTE 1)         

  SUBTOTAL     | 128.26 | 102.97 | 151.70 | 63.19 | 49.82 | 33.54 | 51.55 | 48.48 | 44.56 | 32.75 |                     

  TOTAL        | 173.06 | 176.59 | 215.46 | 88.69 | 91.43 | 55.12 | 76.86 | 63.59 | 62.96 | 54.47 |                     



All numbers were collected by hand from the site http://bitcoinwisdom.com. Beware of possible errors.

For each exchange, the numbers include only the trade volume to/from the currencies listed in the rightmost column. Trade between BTC and other cryptocoins, such as LiteCoin, is NOT included.

Coinbase is said to use Bitstamp for currency conversion.

Dates on the header line are UTC. Specifically, "01/15" means "from 01/15 00:00:00 UTC to 01/15 23:59:59 UTC". (Beware that Bitcoinwisdom uses your local time, so the date may appear to be off by 1 day.  For example, if you are 2 hours west of Greenwich, it may show "01/14 22:00" when the UTC time is "01/15 00:00".)

(NOTE 1) On 2014-01-30, BTC-China had a burst of extremely fast, regular and atypical transactions, all with similar amounts (a few tens of BTC) and prices (~4836 CNY), adding up to about 41,050 BTC.  The burst started suddenly around 17:00 UTC and and stopped suddenly around 19:30 UTC. Presumably those transactions were made by a faulty robot trading against itself or some other robot, and did not represent actual exchange of money and bitcoins between distinct individuals. Therefore those anomalous transactions were subtracted from the BTC-China volume for Jan/30.

There may be buyers for their physical assets including computer hardware and software.  That may be worth a couple million US$ at most. However, no one will want to inherit their client accounts, since they are not assets but debts. I would guess that the sum of all account balances (coins and cash that they owe to their clients) is much more  than 100 million US$.  Do they have that much in their bank and wallet?

What would that mean?  

If an exchange's outstanding obligations (the sum of its client's account balances, plus pending bills etc.) are more than its assets (furniture, cash in bank, and coins in wallet), why would anyone want to buy it?

This CoinDesk article

http://www.coindesk.com/poll-mt-gox-withdrawal-issues/

says that


Isn't that the same as saying "we did not send those BTC, and we have no plans to do so"?

As I said, you need a substantial position at both exchanges (or you find an associate with accounts at the other exchange and agree to split the profits). It is not a game for small investors.  

Suppose that the effective exchange rate is 5 CNY = 1 USD.

You buy 1 BTC for 900 USD at Bitstamp when its price is too low. You send the BTC to your associate, who sells it for 5000 CNY = 1000 USD.   Now you have temporarily lost 900 USD and he has cashed in 5000 CNY = 1000 USD, so your society has made 100 USD net profit.

Later if conditions reverse he buys 1 BTC for 4500 CNY = 900 USD at Huobi, sends it to you. You sell at Bitstamp for 1000 USD.  Counting both operations, you made a 100 USD profit, he made a 500 CNY profit, and you are settled.

What if things do not even out? Suppose you were only able to do arbitrages of the first type above, and at some point you have accumulated a 10000 USD loss while he got a 70000 CNY gain.  Supose that at that moment the price is even, 1000 USD = 5000 CNY.  Then he buys 12 BTC at 60000 CNY, sends them to you. You sell them at Bitstamp for 12000 USD.  Now your net profit is 2000 USD, his is 10000 CNY = 2000 USD, and both are even.  

In ny case, each side can easily withdraw his profits in his own currency, without any currency conversion or international money transfers.

 

Suppose that the price of a BTC fell to 100 USD while its transaction volume kept increasing.  Would mining still be profitable?

Arbitrage trading seems to be a good explanation.  If the price drops significantly at Huobi but not at Bitstamp, for example, someone promptly buys BTC at Huobi and sells them at Bitstamp, until the prices even out.

To play that game well, one needs quick reflexes (= robots) and substantial accounts of BTC and national currencies at both exchanges.  It does not matter whether your profits end up in China or in Bulgaria, you can transfer them later with bitcoins or any other method.  

Because of arbitrage trading, market prices are  usually more or less the same in all markets, with due offsets because of trading fees or other exchange-specific factors (such as transportation, storage and customs costs in the case of material goods).

That's why that 130 USD premium at Mt.GOX is so worrying.  Arbitrage traders are obviously not operating there.  And who could be buying the overpriced coins that people are selling there?

PS. Arbitrage trading is considered good because it makes one large market out of the separate exchanges, so prices tend to be more stable and the spreads between buy and sell are usually lower.

Yesterday (Mon Feb/03 UTC) China's volume was again lower than the previous two days, but higher than Frdays (the Chinese New Year).  AFAIK Monday was still holidays in China.

Huobi's started moving around 11:00 10:00 am local time and went on evenly until 02:00 01:00 am of the next day.

BTC-China still seems to be dead; the few transactions there may be arbitrage.

Exchanges outside China had slighly higer volume yesterday than on Sunday Feb/02, but still less than the previous week.  

(MtGOX stayed in fourth place with only 3.37 kBTC traded.)

As a resut, the non-Chinese exchanges got somewhat larger slice of the market (~1/3 instead of the usual ~1/4).

Daily volumes of BTC trade to/from USD and other national currencies (in kBTC):


               !    Sat !    Sun !    Mon !    Tue !   Wed !   Thu !   Fri !   Sat !   Sun !   Mon !                     
  EXCHANGE     !  01/25 !  01/26 !  01/27 !  01/28 ! 01/29 ! 01/30 ! 01/31 ! 02/01 ! 02/02 ! 02/03 ! Currencies considered

  BTC-e        |   9.34 |  10.38 |  21.02 |  16.82 |  6.53 | 12.54 |  4.65 |  6.30 |  4.74 |  5.75 | USD,EUR,RUR         
  Bitstamp     |   8.70 |   9.70 |  25.19 |  20.04 |  7.04 | 13.13 |  7.73 |  8.30 |  4.07 |  4.93 | USD                 
  BitFinEx     |   4.62 |   7.88 |  15.63 |  13.62 |  3.87 |  8.18 |  3.91 |  4.54 |  3.15 |  3.45 | USD                 
  MtGOX        |   9.52 |  16.11 |  10.02 |  11.82 |  7.21 |  6.60 |  4.45 |  5.13 |  2.28 |  3.37 | USD,EUR,GBP,AUD,JPY 
  Bitcoin.DE   |   0.30 |   0.34 |   0.60 |   0.49 |  0.33 |  0.47 |  0.35 |  0.33 |  0.35 |  0.51 | EUR                 
  Kraken       |   0.19 |   0.24 |   0.63 |   0.54 |  0.24 |  0.37 |  0.20 |  0.23 |  0.15 |  0.21 | EUR                 
  CampBX       |   0.04 |   0.05 |   0.13 |   0.20 |  0.07 |  0.06 |  0.05 |  0.23 |  0.16 |  0.10 | USD                 
  CaVirtEx     |   0.33 |   0.10 |   0.40 |   0.22 |  0.21 |  0.25 |  0.24 |  0.24 |  0.20 |  0.08 | CAD                 
  Crypto-Trade |    .   |    .   |    .   |   0.01 |   .   |  0.01 |   .   |  0.01 |  0.01 |   .   | USD                 

  SUBTOTAL     |  33.04 |  44.80 |  73.62 |  63.76 | 25.50 | 41.61 | 21.58 | 25.31 | 15.11 | 18.40 |                     

  Huobi        |  58.16 |  91.31 |  63.13 |  92.88 | 32.14 | 29.27 | 15.26 | 28.86 | 26.27 | 24.77 | CNY                 
  OKCoin       |  26.33 |  31.40 |  35.41 |  52.37 | 29.11 | 18.56 | 17.11 | 20.38 | 20.00 | 18.09 | CNY                 
  BTC-China    |   3.04 |   5.55 |   4.43 |   6.45 |  1.94 |  1.99 |  1.17 |  2.31 |  2.21 |  1.70 | CNY (NOTE 1)         

  SUBTOTAL     |  87.53 | 128.26 | 102.97 | 151.70 | 63.19 | 49.82 | 33.54 | 51.55 | 48.48 | 44.56 |                     

  TOTAL        | 120.57 | 173.06 | 176.59 | 215.46 | 88.69 | 91.43 | 55.12 | 76.86 | 63.59 | 62.96 |                     



All numbers were collected by hand from the site http://bitcoinwisdom.com. Beware of possible errors.

For each exchange, the numbers include only the trade volume to/from the currencies listed in the rightmost column. Trade between BTC and other cryptocoins, such as LiteCoin, is NOT included.

Coinbase is said to use Bitstamp for currency conversion.

Dates on the header line are UTC. Specifically, "01/15" means "from 01/15 00:00:00 UTC to 01/15 23:59:59 UTC". (Beware that Bitcoinwisdom uses your local time, so the date may appear to be off by 1 day.  For example, if you are 2 hours west of Greenwich, it may show "01/14 22:00" when the UTC time is "01/15 00:00".)

(NOTE 1) On 2014-01-30, BTC-China had a burst of extremely fast, regular and atypical transactions, all with similar amounts (a few tens of BTC) and prices (~4836 CNY), adding up to about 41,050 BTC.  The burst started suddenly around 17:00 UTC and and stopped suddenly around 19:30 UTC. Presumably those transactions were made by a faulty robot trading against itself or some other robot, and did not represent actual exchange of money and bitcoins between distinct individuals. Therefore those anomalous transactions were subtracted from the BTC-China volume for Jan/30.