The Willy Report is an analysis of leaked trading information which has been released as a blog post about trading activity during the MtGox era, which I found earlier via Reddit. If you haven’t already seen it, it makes a very interesting read, I’ve reposted the link here.
The Willy Report: proof of massive fraudulent trading activity at Mt. Gox, and how it has affected the price of Bitcoin
As I understood it from quick read through, main thrust of the report is that constant purchases of bitcoins were made via trading bots, probably under control of Mtgox insiders and without even needing to use actual fiat to make the purchases during the run up to April and May bubble tops. At the time to dump the bot would switch to selling. In other words it seems alleged huge scale pump n dump manipulation of the market has occurred.
In fact I have suspected this as a possibility in the past. I wrote a Fake Top post after the April price collapse in which I wondered if ‘someone acting on behalf of central banks’ might be pumping up the market, however didn’t point any fingers at MtGox in that post. However I still think pump and dump is the most obvious way, maybe still the only way, bitcoin can be manipulated. Other more sophisticated manipulations such as those that occur in commodities markets aren’t yet easily achievable in bitcoin because there is still no furtures market or ETFs to divert investment into paper.
Many people will be wondering what is the impact of this information on the market? Does it mean bitcoin won’t have any further bubbles? Or is it overvalued? Without going into great details my reaction is that nothing has really changed except one manipulator has been revealed. That manipulator was part of the market despite not acting fairly, this can easily happen again. There are many reasons bubbles can start, someone manipulating the market might not be the only way that things become ‘over enthusiastic’.
The fact that bitcoin is unregulated is nothing to do with it either. Gold is regulated by the CFTC, (who also incidentally want to regulate bitcoin too btw) ‘regulation’ in that sense seems to mean turning a blind eye to governent and large corporate interest.
I could go on but for now I’ll post. As always any comments are very welcome. I’m interested to hear other views and reaction.