pull down to refresh
If these purchases aren't on the order book, then do actual price movements only come from retail, or have I missed something?
Sort of(?)
I think the main point to recognize is that when we say "price", we usually mean some average of the last traded price from various exchanges.
So in that sense, it's mostly driven by retail (or institutional traders who use the exchanges)
However, OTC and the exchanges are connected because in the end there is a single underlying stock of bitcoin, and the assets are the same. If the "price" via either OTC or exchange get too out of balance, they should get arbitraged back towards each other.
It hurts my brain to think too much about.
max supply = 21 million coins...right?!
that suggests that exchange orderbooks are only a small fraction of the latent supply of bitcoins in the market, since Saylor is buying OTC.
I'd say if one was genuinely interested in my somewhat lighthearted analysis of Strategy's actions, this is a pretty good conclusion.
I am curious how one would discover if there is some trend between what we see as "the price" (my impression is that "the price" is usually taken from an average of various exchanges' APIs -- or just one exchange if you are poor) and the trades that happen OTC.
Do the prices at which OTC trades are confirmed lead the exchange prices? Do they lag? Do they fluctuate somewhat independently?
If the OTC market has so much more volume than exchanges, do they almost operate as separate markets? Clearly there is some connection, else all the exchanges would be constantly getting wiped out.
Your post has inspired me to dive deeper into this subject, which is all the more enabled because you've done the public service of trawling through Saylor's X feed to get the list of purchase announcements and their sizes. Amazing work!
Your post sparked my curiosity and I wondered how much buying 22,500 bitcoin and Coinbase would push the price up on the order book.
The answer is: a whole lot. To buy even just 4300 bitcoin off Coinbase's current orderbook (the max it'll show), would push the btc/usd price up from $88k to $155k.
Of course, Coinbase is only about 5% of global market share for bitcoin trading volume (accordingt o ChatGPT). So, assuming the orderbooks are similar, that would be saying 86,000 bitcoins would move the market from $88k to $155k.
So what would be the equivalent for 22,500 when factoring in that Coinbase is only 5% of volume? Using Coinbase's orderbook, an equivalent purchase of 22,500 bitcoin would move the market from $88k to about $99k. Smaller, but still significant and much larger than any moves resulting from a Saylor purchase.
If Saylor's buys truly don't move the market consistently in any direction, that suggests that exchange orderbooks are only a small fraction of the latent supply of bitcoins in the market, since Saylor is buying OTC.
The exchanges themselves may also be willing to sell Bitcoin on a very elastic basis, since they probably don't have a strong preference for either dollars or Bitcoin, they make money off volume and they only need enough holdings to cover withdrawal events.