Imagine how much money you could make by creating a bogeyman bitcoin wallet!
Step 1, Consolidate 94,000 BTC into one single address the entire crypto world is now watching.
Step 2, Send 1,000 BTC from bogeyman bitcoin wallet to exchange crypto wallet.
Step 3, Freak the shit out of the market. Promptly sell the entire lot in one single market sell order.
Meanwhile you've got another 50,000 BTC or whatever sitting on contracts leveraged with 100x margin in a short position across multiple accounts... essentially netting you 100,000 BTC profit if you can manage to tank the price just 2% on the 3 funds that Bitmex follows to create their index price... and you totally would selling 1,000 BTC at once from a well known superwallet.
Rinse and repeat... Eventually, I imagine you wouldn't even need to sell the coins on the exchange... just moving them there would be enough... (which would probably be illegal at least in the USA, see below)
And when the market gets wise... and everybody else starts shorting the price when you move your coins... you BUY 1,000 BTC in a single market order... stop hunting everyone's "sure things" (with mostly tight stops) and probably making you 500% return on a 5% move the opposite way... placed on longs of course.
(I am working on an algo bot, I think about this kind of stuff all day long!)
I had better start saving!
Side question... would this be legal? Moving the coins to exchange, signalling that you were going to sell based on precedent, and then not selling would be illegal by the nature of equities laws on fake bid or ask walls to move the price... like some trader at goldman was just arrested over for doing the same in the gold markets.
But just selling a lot of coin while you have another lot of coin in short positions would be perfectly legal, right?
I'm not a trading expert but I guess smarter and richer people/entities will probably also run bots and a whole lot more complex trade monitoring and market making strategies or algorithms.
In your example, somebody interested in keeping the price at or above a certain level and that has a couple of million to waste on that could potentially place a 900btc buy wall as soon as you managed to market sell the first 100 of your 1000 and so you'd sell the rest into the wall and not move the price as much as you'd wish. And market psychology is a strange thing that could actually even make the price move in the other direction as thousands of traders would see the huge buy wall and assume the price could only go up and therefore buy more to go long which would increase the price even more.
If that or similar happens then your "shorting at X while dumping at Y" strategy won't be as successful as you would expect and you might just end up dumping your 1000 btc at mostly the same price. 1000 btc is a lot of money for most people but not that much on a daily bitcoin trading day. Even the 1 billion dollars in bitcoin isn't really capable of damaging the market all that much as most alarmist articles made it seem once this transaction got noticed imho. Remember that there are/will be about 21 million bitcoins.
I'd say its safe to assume that whatever "big idea" one has to manipulate trading or financial markets has already been thought of, implemented, tried and failed or succeeded to some varying degrees, especially on deregulated crypto markets.
No this would not be illegal under spoofing laws as you haven't posted a bid or ask.
What you described would work if the goal was to obtain more bitcoin. If you want more dollars this strategy carries to much risk and this is distinctly a long bitcoin strategy.
Now add some hedging in the futures market and now we’re talking
Step 1, Consolidate 94,000 BTC into one single address the entire crypto world is now watching.
Step 2, Send 1,000 BTC from bogeyman bitcoin wallet to exchange crypto wallet.
Step 3, Freak the shit out of the market. Promptly sell the entire lot in one single market sell order.
Meanwhile you've got another 50,000 BTC or whatever sitting on contracts leveraged with 100x margin in a short position across multiple accounts... essentially netting you 100,000 BTC profit if you can manage to tank the price just 2% on the 3 funds that Bitmex follows to create their index price... and you totally would selling 1,000 BTC at once from a well known superwallet.
Rinse and repeat... Eventually, I imagine you wouldn't even need to sell the coins on the exchange... just moving them there would be enough... (which would probably be illegal at least in the USA, see below)
And when the market gets wise... and everybody else starts shorting the price when you move your coins... you BUY 1,000 BTC in a single market order... stop hunting everyone's "sure things" (with mostly tight stops) and probably making you 500% return on a 5% move the opposite way... placed on longs of course.
(I am working on an algo bot, I think about this kind of stuff all day long!)
I had better start saving!
Side question... would this be legal? Moving the coins to exchange, signalling that you were going to sell based on precedent, and then not selling would be illegal by the nature of equities laws on fake bid or ask walls to move the price... like some trader at goldman was just arrested over for doing the same in the gold markets.
But just selling a lot of coin while you have another lot of coin in short positions would be perfectly legal, right?