**Exploring BTC Market Dynamics: Observing Price-Setting Mechanisms in Theory**
BTC Price Mechanism Analysis Overview
Exchange Price Reset Mechanism: “A single Post Only Sell Limit Order (good til cancelled), matched by an opposing Post Only Buy Limit Order (good til cancelled), can establish a stock’s price at a new specified level when executed, aligning the market price to that level.”
Theoretical Price Mechanism Analysis: A single Second Pair of orders- a Post Only Sell Order of 0.00000001 BTC (good til cancelled) at a price of $500,000/BTC ($0.005)..... matched in the Exchange's order book to another trader's identical/opposing Post Only Buy Order of 0.00000001 BTC (good til cancelled) at a price of $500,000/BTC ($0.005)...... may theoretically illustrate how a new price level could be established in the order book........ but only after an identical First Pair of Post Only Sell/Buy Orders (good til cancelled) is already recorded and open in the order book. Thus, the Second Pair of Post Only Orders increases order book liquidity at the $500K price level with repeated matching signalling active buy/sell interest, serving as a theoretical reference point for examining order book dynamics.
2 Matched Pairs: Exchange Protocol Rules require 2 Identical, sequentially Matched pairs of Post Only Limit Orders—one Buy Pair and one Sell Pair— with all unique traders- to move the price (without triggering an immediate self-match or violating exchange rules on self-trading):- 1. First Order Pair: A Post Only Sell Limit Order, matched by a Post Only Buy Limit Order at the same price and quantity, adds liquidity but does not immediately move the price.
- 2. Second Order Pair: A subsequent Post Only Order—either Buy or Sell—matched by an opposing Post Only Order at the same price and quantity completes the sequence and sets the new asset price.
If each trader places their Post Only Limit Orders correctly at the same price and quantity (two matched pairs),
there's little chance the orders won't fill. The sequence is designed to trigger the new price by matching opposing buy and sell orders.
Proposal for Collaboration:I’m looking to gather individuals interested in exploring theoretical price-setting mechanisms through a collaborative trading strategy using Post Only Limit Orders. This isn’t just about trading but understanding market dynamics and how strategic participation might impact BTC’s perceived value.
All interested participants are welcome to join in observing theoretical price-setting mechanisms using Post Only Limit Orders through a transparent, educational research approach. I believe BTC’s value could potentially be viewed differently based on current fundamentals. Together, we can discuss and observe how strategic order placement might offer insights into BTC valuation mechanisms and deepen our understanding of market dynamics.If you’re intrigued by market microstructure, strategy, or just want to be part of something unique, drop a comment or DM. Let’s see what we can achieve together!
Sources: - Market Microstructure Theory" by Maureen O’Hara
- Limit Order Markets by Thierry Foucault and Albert J. Menkveld
- Albert J. Menkveld’s work on High-Frequency Trading and Price Formation
- Trading and Exchanges: Market Microstructure for Practitioners by Larry Harris (2003)