people offered to sell bitcoins at a certain price, and other people decided to accept that offer. One side decided that they prefer x USD to y bitcoins, and the other side decided that they prefer y bitcoins to x USD. So they agreed to swap.
This is tautology, though. It's just the definition of a market.
The couple hundred I refer to are those who (a) have thousands of bitcoins, and (b) enter and exit the market with some frequency. Those are the people who determine the current price of bitcoin. I say there are only a few hundred of them because bitcoins have been distributed according to a power curve (as is all wealth), and those few hundred are the ones who have the temperament to wager large sums of money on a monthly, weekly, or daily basis.
When one of them decides to exit the market, the price drops noticeably. When one of them decides to jump back in, the price jumps noticeably, causing others to follow their lead and buy in, which drives up the price even more.
If you have currency equivalent to thousands of bitcoins, you can place a large buy order, which triggers a price spike, which causes some upwards "momentum" because a bunch of other people will feel pressured to enter the market due to your large buy order, which of course makes the price rise even more; hence, momentum. Gamblers with thousands of bitcoins can take advantage of this phenomenon to grow their holdings: place a large buy order, wait for others to follow your lead, then sell. It's obviously not guaranteed to work, but nonetheless that seems to be what these gamblers are doing.
Announcements serve to trigger a bunch of these "gambler whales" into action all at once, so you get large fluctuations in price. But there isn't a fundamental reason for this price drop beyond the game theory presented above. The claim that the price movement is based on underlying fundamentals or logic simply doesn't match the available evidence. Evidence thus far indicates that the price fluctuation is due to a combination of market manipulation and gamblers with thousands of bitcoins actively trying to hoodwink their fellow gamblers.
Of course it's the definition of a market. Why is that a problem? Nothing in your comment contradicts what I said, although I don't agree with everyone you said.
This is tautology, though. It's just the definition of a market.
The couple hundred I refer to are those who (a) have thousands of bitcoins, and (b) enter and exit the market with some frequency. Those are the people who determine the current price of bitcoin. I say there are only a few hundred of them because bitcoins have been distributed according to a power curve (as is all wealth), and those few hundred are the ones who have the temperament to wager large sums of money on a monthly, weekly, or daily basis.
When one of them decides to exit the market, the price drops noticeably. When one of them decides to jump back in, the price jumps noticeably, causing others to follow their lead and buy in, which drives up the price even more.
If you have currency equivalent to thousands of bitcoins, you can place a large buy order, which triggers a price spike, which causes some upwards "momentum" because a bunch of other people will feel pressured to enter the market due to your large buy order, which of course makes the price rise even more; hence, momentum. Gamblers with thousands of bitcoins can take advantage of this phenomenon to grow their holdings: place a large buy order, wait for others to follow your lead, then sell. It's obviously not guaranteed to work, but nonetheless that seems to be what these gamblers are doing.
Announcements serve to trigger a bunch of these "gambler whales" into action all at once, so you get large fluctuations in price. But there isn't a fundamental reason for this price drop beyond the game theory presented above. The claim that the price movement is based on underlying fundamentals or logic simply doesn't match the available evidence. Evidence thus far indicates that the price fluctuation is due to a combination of market manipulation and gamblers with thousands of bitcoins actively trying to hoodwink their fellow gamblers.