Ninjastic
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Re: Reason why MtGox can go to 0 - without arbirage opportunity with Bitstamp
by
Calavera
on 17/02/2014, 01:38:14 UTC
Quote from: nejat76 on February 17, 2014, 01:12:15 AM
Quote from: Calavera on February 17, 2014, 12:07:28 AM
Quote from: nejat76 on February 16, 2014, 11:51:35 PM
Quote from: Calavera on February 16, 2014, 11:32:40 PM
Quote from: nejat76 on February 16, 2014, 11:04:43 PM

Price drop then would not be necessarily just from the Gox or ones that bought in Gox cheap selling... Other people will follow selling... actually it's happening right now... 8.87 price decrease in one day... that's not Gox price on coinmarketcap.com

Sorry, but you haven't given any valid mechanism that's going to equalise the market on gox and the external markets without gox reinstatating their withdrawals or otherwise regaining the public confidence.  Gox has dropped much further than the other markets over the same day, so your final observation doesn't support your point at all.  

Well, please read what I wrote again. Gox and external price should find equilibrium somehow with a positive or negative offset after gox enabling withdrawals. Much or less that's what I said. A good news is a good news for all but the existing trend will be reversed. After the good news gox will increase and the other markets will just decrease. Then it's all about what's unknown in the story and the look to the general reception of bitcoin will determine the market price at gox and elsewhere.

Why does Gox allowing withdrawals create a massive price drop on the external exchanges?  If anything I would expect them to trade up on such an event, not down, but in any case the vast majority of the equalising price changes would take place on Gox, not on the external exchange.  

Because most of the international customers who bought cheap at gox will try to sell high on other exchanges. Price difference is big enough to cover the costs/risks of arbitrage.

The price difference will cease to exist if people are confident in mtgox.   More likely the other exchanges get a bump due to increased confidence in bitcoin in general.  If they do drop there's no reason to think it'll be a major one like you suggest.   People who end up having bought cheap coin on gox will do whatever they rationally see fit to do with it at that point, which won't necessarily be selling it on another exchange.   They can no longer buy cheap coin on gox so the price difference you speak of won't exist anymore.