Re: Wall Observer - MtGoxUSD wall movement tracker

This can get real interesting real fast if pirateat40 in indeed in caught in such a trap.

Why would this affect pirateat40?

Supposedly, in his own words, he is using other people's BTCs instead of pocketing the entire lavish profits himself as a hedge against the exchange rate fluctuation for when he converts his BTC into fiat. Obviously if he is telling the truth then a huge rise in the exchange rate is the event he's hedging against and his clients should bare the losses.

Perhaps people should withdraw their BTC from Pirate's "program"?

Before its too late?

The whole point of borrowing BTC is to hedge against a fall not a rise in the BTC price. The "pet rock" scenario. The risk is that if the BTC price rises fast enough one can get caught in a short squeeze. Now if piratat40 is in fact in this situation and people start withdrawing from his program then this would force piratat40 to use his USD reserves to buy the BTC at market in order to meet redemptions further driving up the price. This is a classic short squeeze. Furthermore setting up an ask wall here can be very dangerous here if there is a buyer waiting in the wings that simply buys the ask wall at market. Now all of this assumes of course that pirateat40 is in fact caught in a short squeeze which may not be the case.

Right. His exposure to up moves is at most a couple hours. We just have to hope it wasn't that hour, but he does most of his trading during normal business hours so he should be okay.