My idea of fun is watching the Bitcoin price on Coinbase — preferably the 1-minute candle charts. I favour Coinbase because it’s the biggest exchange dealing in actual US dollars. You can see the pumps and dumps happening in real time!

There was a purchase of over 1000 BTC around 12:10 UTC today, which pumped the price $120:

I got email asking about it. I explained that this sort of thing happens all the time — because the crypto markets are really thinly traded.

You’ll typically see huge pumps, then stability for a few hours, then a huge dump. Crypto watchers call these “Barts”, ‘cos they look a bit like Bart Simpson’s haircut.

These aren’t just a crypto thing — you’ll see them for all manner of thinly-traded commodities in ill-regulated markets, or in forex.

The motivation is to burn margin traders, whether short (betting the price will go down) or long (betting it’ll go up) — you’ll see a Bart when it’s profitable to manipulate the number that a derivative depends upon. Pump or drop the price a hundred dollars, win the margin bet against someone who bet the other way.

(And … they eat your shorts.)

Some think this is the exchanges deliberately burning the shorts. This is possible — crypto is all but unregulated, though this sort of thing is why the CFTC is engaged in a criminal investigation into the Bitcoin markets — but really, it could just be the large traders — the whales.

(Who work very closely with the exchanges, so.)

This is why the SEC keeps refusing to approve a Bitcoin exchange-traded fund — the market is too thin, and really obviously and easily manipulated. Other cryptos are even worse. I’m still surprised the CFTC lets the CME/CBOE Bitcoin futures happen.

Finance journalists need to stop treating crypto as an efficient market that responds to concerns. It’s a thinly-traded unregulated playground for whales, out to wreck the margin traders. A $400 dip in fifteen minutes is not a “market signal” — it’s a deliberate dump to manipulate the price.

Though there’s still downward pressure on the price — all the suckers from the bubble have gone home, so they’re not buying … but the miners still have to sell coins for actual money to pay for their electricity.

And even more so now that the price of mining one bitcoin is at — or above — what you could get for selling that bitcoin.

So one minute you’ll see a sudden $100 increase in the price that cost 130 BTC of dollars — and those are actual dollars going in — followed the next minute by a matching $100 drop that came from selling only 30 BTC. It’s much easier to drop the price than raise it.

I expect much more soap-opera fun for the sort of people who watch crypto market charts, e.g. me.