Re: [ANN][Pool][Profit-Switch][Optional Auto-Exchange per Coin][Vardiff] ~ Hashcows
Furthermore. In a declining market there isnt a sturdy base of buyers on exchanges. Usually a few small buy orders. With under that a lot of people who set a low buy order just in case.
With the amount of coins we dump on the market you often have more coins then genuine buy orders. So after the few coins that are sold at regular prices, you end up getting as much as 20% less for the coins. Since they have to be sold asap.
If you watch cryptsy, often you wil see a huge drop in price with a very high number of traded coins. Im pritty sure these are mostly multipools.
In an up market the demand is much fermer. So prices drop less while trading big amounts quickly.
With full disclosure that I don't use this or any other auto-switching auto-exchange pool, and have a strong dislike for their effect on alt-coins in general and normal market functioning in particular:
The quoted part of an excellent post is the money shot IMHO - pun fully intended. As far as I know, there is no particular need for the coins to be "dumped" on the market and sold ASAP. I have seen this many times in WDC which seems to be a regular target for this pool, and I don't doubt that it happens elsewhere too. If payouts happen once per day, then what is the urgency to dump (e.g.) 10,000+ coins on the market all at once? Doing so guarantees with 100% certainty that the price obtained is below market price, well below in thin markets, and does a disservice to both investors and the pool's own users. They could be sold in 20 lots of 500 over a period of many hours, or 10 lots of 1,000 etc that would be far more easily absorbed.
If a mutual fund wants to sell 1m shares of WMT and the average daily volume is 5m shares, do you think they advertise the whole block at the offer, or dump the lot with a market order? No, they exercise some patience and discipline and sell throughout the day in smaller tranches.
It may be argued that the supply and demand is the same either way, but that ignores two critical factors: the depth of the bid side, and market psychology. If investors see that large blocks of a particular coin are periodically dumped with no regard to price, then who is going to step up and buy? Using the WDC example again because it's a market that I watch all day, and not saying that it was this pool in this particular instance, I watched it get taken down from the 44000 level to 40000 in a matter of seconds yesterday as thousands of coins were dumped. Whoever the seller was averaged at least 5-6% less than a more disciplined approach would have yielded, and meanwhile the charts show a high volume spike down of almost 10%. That's not healthy for anyone.
Please understand that my intent is not to flame or insult this particular pool or indeed any other pool. I do however feel that if the various auto-switching auto-exchange pools took a more disciplined and less disruptive (dare I say professional) approach to exiting their large accumulated positions, then they might simultaneously improve the general perception of them as well as increasing their users' profits.
Very good post, well explained - I do agree.
I wish there would be more of those well-thought and considerate posts in this particular thread.
