- Flow of cheap btc starts to decrease the btc value of external market... Through arbitrage prices in Mtgox increases and settles above Mtgox's average cost of btc buy. (Caveat : Mtgox should not / cannot make customers withdraw more than 250 BTC)
- Prices find equilibrium and Mtgox purchase BTC in the external market for average $400 each... 750 BTC that is ...Deposits this back to itself...
Gox don't have an unlimited supply of actual BTC. No way they can "sell" enough elsewhere to equalise the markets without the public perception of Gox's liquidity changing.
How do you differentiate between regular guy and mtgox in the external market? The actual market doesn't exactly know **who** sells **where** at **what** price. Even if you know the answer of "who" as mtgox, the others doesn't seem obvious.
- Through market manipulation with press releases & exchanges & closing withdraws say Mtgox acquires 500 BTC with average cost of $250 each.
unless the order book is completely fake, (we know its not, because we see our orders in the book), then why would rational traders sell 500 BTCs all the way down to $250?
- Mtgox sells these cheap BTC's in the external market for $600 each. Totalling $300000.
so MtGox is already short customer BTC, and is actively stealing more customer BTC, transferring it to [bitstamp], and selling it? thus generating more fiat? their issue is lack of BTCs not lack of fiat.
If its all a complete fraud then price analysis is useless. I believe MtGox is honest but incompetent. If what your saying is true, then everyone should be buying goxBTC, there should be no reason for a $350 discount to Bitstamp.
At the end of the day, the only market based explanation for the discount, is that customer BTC were stolen, and there is not enough BTCs to cover customer BTC deposits.
if MtGox is actively buying up goxBTC, and goxBTC is not real BTC, then they are in effect using their fiat to compensate their customers at .50 BTC for each BTC, which is exactly what would happen to all BTC deposits in an event of court ordered liquidation and insolvency.
i think we can all agree that this does not end well for MtGox.
Read it up, in my scenario they end up going up in BTC and equalise in Fiat. This is all conspiracy yet it shows the statement in OP may not always be the case.
Mtgox didn't spell the word theft yet so it's not the obvious Market based explanation of the discount. Closing of withdrawals and the FUD around it and/or market manipulation is responsible for the price drop. It's essentially a closed market now at mtgox. In my aforementioned scenario caveat is mtgox had the chance to take the btc deposits outside. customers? no for the past week. This way, they are not compensating actually, customer who bought at $1000 now sells at $250 because of FUD. The only way they can compensate is to actually keep selling the extra btc they get cheaper at mtgox after FUD starts to disappear. That's if any ripped off customer actually buys it at that price.
All this is conspiracy though and yes we are certain about the mtgox's fall.