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I'm going to start with the second part of this comment and circle back to the first, which is very meaty and I think will be sufficient to put a bow on this discussion.
It seems to suggest that Saylor tends to get his bitcoin at below market rates when the price of bitcoin is going up and he tends to get his bitcoin at above market rates when the price is going down. It's exactly the opposite of what I expected!
This is exactly what you'd expect from my version of events, where he's lining up these big purchases ahead of time. The prices they're settling on are lagged prices.
Yes, this makes a lot more sense than my zany interpretation. I would have expected the size of trades Strategy does even to take months to set up. Yet, it is the case that his announced trade price is rarely more than +-3% from the closing price on the day he makes the announcement. So the actual price negotiation can't be concluded too far from when he actually concludes the trade.
Either way, couldn't we still hope to pick up some signal from this buy? Perhaps by expanding the date range or shifting it earlier?
It depends what the counterfactuals are. If he's convincing people to sell who weren't otherwise going to sell, then there wouldn't be anything to see.
Just like there's a question of why Saylor buys when and how he does, there's a question of why people sell to him when and how they do.
Yes, if you assume identical preferences on both sides, then there will be no implied price movement from either side's dumping. There may be some slight movement due to differences in negotiating/trading ability, but you'd roughly expect a 1:1 transfer between the two sides and everyone ends up with twice as much of their preferred coin.
This is why I keep pointing out that not knowing, a priori, which side are the dumpers and which the dumpees was a keen insight.
In reality, there will be differences between the two sides and the uncertainty will be whether you're on the dumping side or not. Dumping will crash one of the coins eventually, though.
The other part that matters is that people, including no-coiners, have reservation prices for each coin. Those reservation prices inform how much of other resources, including their own time, they're willing to exchange for the coins. There will also be an asymmetry here that drives a wedge between the values of the two coins.
Those are the static considerations, but there are also dynamic considerations. When you talk about a person's decision to dump having no impact, it depends on when that choice takes place.
If the two sides had balanced preferences and then someone changes their mind, that's a demand/supply shift and it will shift the exchange rate. Then, seeing one side becoming more valuable than the other may change other people's minds about which side will win and further shift preferences.
I think that I tried to be too cute with this post and thus introduced too many distractions.[1]
So, I will try again in order to see if @Undisciplined can't put this wrong-headed explanation of mine to bed:
Imagine you had a nice stack of 2 bitcoins when the fork happened. You hate this fork, and you think forkcoins are going to zero, so you put in a sell order in for all of your 2 forkcoins. Nobody knows what the price of forkcoin should be in terms of bitcoin, but you really want to crash the market, so you decide to put your order in really low: you will sell each one of your fork coins for half a bitcoin.
Not only that but you also convince a couple of your friends to sell their forkcoins, too. They aren't quite as convicted as you, but they are all good bitcoiners, so each of them offers their forkcoins for bitcoins at a less than a 1 to 1 trade.
Here's a depth chart for the BTCFKC trading pair at an exchange. Forkcoin buy orders on the left in green. Forkcoin sell orders on right in red.
Look at that sell wall! This seems like it pretty obviously is going to crash the price of forkcoin.
But let's express this in terms of demand for bitcoin. If we reverse the trading pair from FKCBTC to BTCFKC so we can look at your dumping of forkcoin as your demand for bitcoin expressed in terms of forkcoin. Here is what your bids for bitcoin look like:
But this is mistaking a personal view for a view of the whole market. The whole market involves both sides of the order book.
Since we're interested in being reasonable, we'll assume the forkcoin supporters are just as convicted of the merits of forkcoin as you are of the merits of bitcoin. And we should also assume that they have the same amount of pre-fork bitcoin as you and your friends did, because otherwise we are just assuming that our side has more bitcoin which is another way of saying more people will want bitcoin than forkcoin.
If we assume the forkcoiners also have 5 bitcoins to sell and that they demand forkcoin no less than you demand bitcoin (all forkcoin sellers were willing to pay at least 1.43 forkcoins for 1 bitcoin), we must admit that these forkcoiners would also be willing to trade 1 of their bitcoins for 1.43 forkcoins.
Using the same assumptions for both sides of the fork, here is what both sides of this orderbook look like:
Things do not look so good for bitcoin.
If we're being reasonable, we cannot deny our opponents the same assumptions we are going to make for ourselves. To view the market as a whole, we have to view both sides with the same assumptions. Otherwise, it's just wishful thinking (I just know our side is going to win...)
When you combine these two separate views of the market with equal assumptions, it is *never the case that one side dumping their coins causes a drop in price...unless there is actually less demand for the coin being dumped.
So I still maintain that the only reason the price of a coin goes down is because there is less demand for the coin, and that therefore a person's choice to dump a coin does not mean the price will go down. It will only do so, if there is less demand.
It may feel like this is a distinction without a difference: but it's important, because if bitcoiners think that they don't need to do anything other than dump their forkcoins to defeat an opposing fork, they are wrong. There must be demand for the side of the fork they want to win. And we have to do the work to convince the world to demand bitcoin. If we think dumping forkcoin will be enough, we may find out we were wrong about which side was actually forkcoin.
[1]: From the OP, I'm most interested in this chart:
This chart is really surprising. It seems to suggest that Saylor tends to get his bitcoin at below market rates when the price of bitcoin is going up and he tends to get his bitcoin at above market rates when the price is going down. It's exactly the opposite of what I expected!
What do we make of this? It's possible I'm totally screwing up the data somewhere here or that there's a wrong assumption I'm making or at least that I'm over-indexing on the importance of this, and it's probably just a difference between OTC and exchange pricing -- but it's backwards of what you'd expect. I figured it would be more difficult to buy OTC when the market is hot and the bitcoin price is rising...yet that's the opposite of what I find.
But you'll notice that the above chart is not the same as the one I put in the OP. In the OP I flipped the y-axis to be sats/dollar like below. But then I made a mistake. I should also have reversed the below/above market labels, because now we are referring to dollar dumping.
Saylor tends to dump his dollars above market rates when the price of dollars is going down and tends to dump his dollars below market rates when the price of dollars is going up.
Another way to say this is that Saylor is able to get more for his dumped dollars when people want fewer dollars.
I spent more time than I should have trying to figure out why this trend should exist and I sure couldn't grok it.