How does selling 1 coin at lower than market values effect the value of the entire fucking supply?
Like how can you say that the value of a coin is depreciated because one silly faggot decides to sell an insignificant amount at a really low rate?
Is this how stocks work? Can someone explain the logic behind this?
buy low sell high
get outta my thread
To put it simply, it's the old adage "something is only worth what someone is willing to pay".
If I sell shitcoin for 1 cent, then it's worth 1 cent. If someone else is willing to pay 2 cents, then it's worth 2 cents.
So if someone goes and sells their brand new lambo for $1, that means all other lambos are now worth $1?
No, because that lambo will come off the market almost instantly, and there will only be lambos at normal price on the market.
If it starts to make everyone else think it's worth $1 and everyone panic sells all their lambos for $1...yea.
Again... "something is only worth what someone is willing to pay".
At that moment in time, the lambo was only worth $1. You had a willing seller and a willing buyer. That doesn't mean the next lambo will be.
Exactly. The answer is NO
So next question... if selling one unit at a ridiculously low price is just an outlier and not reflective of the actual value of the product... then why the fuck does Bittrex (and I assume other exchanges) use the last transaction as a steadfast means to determine the value of a coin?
Why is it not the lowest value of the sell orders? or perhaps an average or median of the sell orders? or perhaps the median of the lowest sell order and the highest buy order? Isn't there a ton of different ways to calculate value that is more accurate than the last transaction... whether it be 1 coin or 1 billion coins...
?
You cannot sell at "lower than market values" on an exchange due to the way an order book works. The only way coins could be really sold at lower than market values is through an OTC transaction that definitely will NOT affect the value of the other outstanding coins.
If you have enough coins to sell on exchange, then yes you can deplete the bid side if there isn't enough liquidity to handle your order. These are the problems you run into and need to account for when trading low-volume shitcoins.
They don't actually use the immediate last one or you would see that number flashing around so fast you couldn't even read it. If someone sold 1 lambo coin for 1 sat you wouldn't even see it register, the bot who bought it would instantly resell it at the bid
Okay, I see what you're saying but that doesn't explain how there will be sell orders on the books that are for higher than what the last transaction went for WHILE that transaction occured.
Have you ever sold anything? If you had like, an old graphics card, say a GTX 970, when it was worth $450 retail, and you go to sell it, asking, idk $200 because it's used.
If I listed one for $50 in the same marketplace, in the same condition, would you expect not to get haggled down to that price?
It's literally how a "market" works, it's how competition works, it's a huge, deep, dynamic concept.
This is right actually, the exchange would take highest bid for you first, you need to sell through those to bring the price down
I understand how markets work (I think) but I'm moreso talking about the intricacies of how bittrex and similar exchanges report things
Clearing price and quantity are where the supply and demand curves intersect, but exchanges also rely on buyers and sellers matching prices, which is why there's a bid/ask spread. The "last" price you see is the current market clearing price, that's all. It represents the most accurate, most current understanding of a coin's value.
You do not understand how markets work.
listen to this guy.
If you try to sell a coin for way under the present bidding price, the exchange will just sell it for whatever the top bidding price is at that moment.
Go ahead, go try it. You can't bring the "last" price down even on the lowest volume coin on the lowest volume exchange without cutting through all of the buy orders.
Google "floating exchange rate."
Much of what you'll read will have to do with fiat, but the principles are the same.
>The "last" price you see is the current market clearing price, that's all. It represents the most accurate, most current understanding of a coin's value.
This is what I'm having trouble with... wouldn't the "accuracy" of this value change with relation to how many coins are being traded?
I mean if people are tossing around thousands of coins and someone sells a single coin at a lower rate, wouldn't that be a less accurate reading than if say, someone sold 1 of only 200 being exchanged?
I would think that the last transaction is one of the least accurate ways of calculating a coins value
will do, thanks
see
It isn't weighted in the way you're describing, and I think that's your problem.
If I ask 10,000 of a coin at 100, and the current bid is 90, nothing happens. But if the current bid is for 1000 at 105, 7000 at 103, and then 2000 at 101... Well now the prevailing price for everyone is 101. Not some janky weighted average of my sell order history. If you want to use that as an indicator, use an EMA.
exchanges auto match buy/sell orders, you can't buy for more than the lowest sell order or sell for less than the highest buy order, the last transaction only skews the apparent price if the spread is massive
You can't do that. The exchange will sell your coin for whatever the highest bid is.
see
If I offer you $2 for a sandwich you think is worth $5, we won't trade. But if you're busy had a -literally identical sandwich- he thinks is worth $2, guess what? I'm no longer hungry and your sandwich is worth $2 on the sandwich exchange. You can still value it at $5, but the marketplace says it's worth $2. Period. You can offer to sell it for $5, but until someone agreed to buy it for $5, it isn't worth $5.
Selling is buying and buying is selling.
There is a line of people waiting to buy with the highest price offered first. That price is the "value" of the commodity. When he trades his shekels for the commodity, he leaves the line and the next schmuck is up, with a slightly lower price. If no greazy cunt elbows in front of him with a higher price, for all intents and purposes, all such commodities are worth whatever the next current highest price on offer
Not sure if this is what you mean, but at least on Cryptopia I've seen volume bots acting in a way that adds either a bid or ask somewhere at the top of the book by (in some cases) a relatively wide margin, and immediately executes against it, creating a last price that falls well between the (occasionally quite wide, esp. with shitcoins) bid-ask spread.
I think the main problem you're looking at here is 'filling' the orders.
All the computer shit is trying to get you an actual price to pay, that's why there's an actual price field versus what you wanted to pay for it. You set the price, you made the order, they 'made' the market, which is why they are called 'market makers'. They are creating price as a byproduct of the transactions, and this behavior further encourages everyone to continue to participate.
So I think it gets complicated when you add in bots, which are scalping the fuck out of the market and not exactly caring where the price goes, just that they break even or profit. So you've increased market participation by tons, artifically. There's more money in the market, but there's not more people behind that money.
And the weird thing about price is that volatility decreases when you have more market participation.
So, all we would need to do to make the market extremely stable would be to integrate bots into every account on the exchange. You don't ever get to actually price your trades, you just control the risk percentage and a few other factors like the pairs you want to trade.
Everyone would make a sizable sum as long as you made sure that the total volatility was kept at a certain level, because everyone would be feeding off of each others gains so fast and furiously that they would never be able to tell if they actually were making money or not.
The future will be beautiful.