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How much does a Bitcoin dump cost? This is probably what many of you are wondering like me, because Bitcoin dumps happen extremely often in the cryptocurrency market, and we always blame the familiar characters called “Fish”. Fat” people who have so much money that they can manipulate the whole market. So how much does it cost for an ordinary person to dump Bitcoin, the author of this article has researched and tested it for you, and below is his report.
Just in the past September, the Bitcoin market has experienced many price dumps, and below I capture just a few of them:
This kind of price action is not really unusual, Bitcoin’s 24H trading volume on 10/10/2018, the day the price dropped from 6k5 to bottom 6k in just a few hours, was around 3.8 billion dollar. And the 24H volume on January 5, 2018 is 24 billion, which means the volume has decreased by 84%. With such a drastic drop in volume, it is becoming easier and easier to dump bitcoins.
But exactly how much money is needed to do a Bitcoin dump? I did a little experiment to find the exact number under different circumstances, and this experiment was done on Coinbase Pro, at 2:40PM on October 11.
How much does it cost to dump Bitcoin: Order Book Statistics
Before I get into the experiment, I need you to understand a few notes:
1. Bid and Ask
The Order Book is simply a table that records all the orders that people place on the floor. The bid price is the price at which people are willing to buy BTC, and the ask price is the price at which people are willing to sell BTC. All these bid and ask orders make up the Order Book table.
2. Percentile: For example 95TH and 75TH Percentile means “95% or 75% of all orders are at this price or below”.
3. Contents of Order Book: I have collected a total of 14,898 bid orders and 16,614 ask orders. The total number of bids is worth up to $42,123,500.44.
The ask order takes the majority of the bid order. With a total value of $3.37 billion ($3,371,962,925.86) ask on the order book, 4,579,053 BTC were placed ready-to-sell orders at prices up to $9,999,999,999.
Although the ask order is worth more USD, the total BTC value of the bid is larger simply because the bid prices are much lower than the ask. With enough data like this, I have determined how much money it takes to make the price of Bitcoin go up (pump) or down (dump).
How much does it cost to dump Bitcoin: Results
Remember that the BTC spot price at the time was $6,214.31.
How much does it cost to dump Bitcoin 7%?
The most recent dump of BTC coincided with the time of the US stock crash, at which time BTC plummeted by 7% (from 6k5 to 6k, losing $500 per Bit). At a spot price of $6,214.31, a 7% drop would mean BTC would drop to $5,779.31. To reach this price, one would need to sell enough BTC to fill 5,129 bids on the current order book, or 34.4% of the entire order book. To complete all of these orders, it would take $9,658,386.33 worth of Bitcoin to be sold. In other words, for less than $10 million, one person or a group of people can cause the Bitcoin price to drop 7%.
When the price per BTC drops 7%, it should be remembered that the prices of cryptocurrencies are quoted based on BTC. So by just lowering the price of BTC, you will drag down the entire market capitalization of many other altcoins. At this time, the market will be panicked and there will be an exit mentality, making the effect stronger and stronger.
You don’t even need $10 million, because of the snowball rule. On actual cryptocurrency exchanges, a lot of traders will place stop-loss orders. As long as you make the price of BTC drop 2-3%, a lot of stop loss will be triggered and drag the price lower.
When all of the above factors happened like a chain effect, the market panic started creating red candles. At this time, many traders will have to close their orders manually for fear that the price will drop further. So in practice, for the average person to drop the price of BTC by 7%, he would need at most $9,658,386.33 to do so. Sometimes much less than that number is completely doable due to the stop loss effect and panic leading to manual closing as mentioned above.
How much money does it take to dump Bitcoin to a few dollars or a few cents?
Still applying the same calculation above, according to the same order book table at 2:40PM EST on October 11, I calculated that an ordinary person with at least 69,037.26 BTC can pull BTC. price per BTC down 1 cent ($0.01) with only 1 market sell order.
Currently there are at least 9 people/group of people who own such a huge amount of BTC. The majority of them exist on crypto exchanges. I say “at least” because many people can use many different wallets for different needs: diversification of investment, purpose of use, etc.
Below is a chart that summarizes the amount of BTC needed to pull the Bitcoin price down to X, with the vertical column being the amount of BTC needed, and the horizontal column being the X price:
How much does it cost to dump Bitcoin: Meaning
I made this simple test so you guys can think differently after every BTC dump. For example, when you hear the press saying that $17 billion in crypto capitalization has been wiped out, it doesn’t mean that $17 billion has been literally taken out, simply causing the price of BTC to drop a few percent and the market will change. do the rest. A few million dollars can lead to several tens of billions of dollars in capitalization evaporated.
Above is a test to calculate the amount of BTC needed to dump the Bitcoin price, it’s not too difficult to calculate, right?
WARNING: Investing in financial products carries a lot of risk that may not be suitable for some investors. Therefore, please consider carefully and control yourself before making any decisions that are made up of the contents referenced here. CryptoViet.com.
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