"Flooding" of the market

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TheWittyHawk

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So I've never really traded all that much myself but I started learning some when I got into bitcoin. I'm trying to understand the economics behind the LTBc distribution.

What happens to the market when the weekly distribution is sent? I know with bitcoin, at least the distribution of new coins is about every 10 minutes so flooding the market would require someone to slowly gain enough coins to make an effect or to just have a large bankroll. The way LTBc is distributed, everyone is getting all of their coins for the week all at the same time. It seems to me this would cause the price to crash at an almost predictable rate if we assume a certain percentage of users, or percentage of each users coins, will always be sold after the distribution.

Can anyone else provide some more insight into this? I know it already costs a good amount of bitcoin in counterparty fees so trying to do it more often then weekly could be an issue.

Posted on July 24, 2014 at 9:16 AM

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• Mike

  

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  @thewittyhawk So I've never really traded all that much myself but I started learning some when I got into bitcoin. I'm trying to understand the economics behind the LTBc distribution.

  What happens to the market when the weekly distribution is sent? I know with bitcoin, at least the distribution of new coins is about every 10 minutes so flooding the market would require someone to slowly gain enough coins to make an effect or to just have a large bankroll. The way LTBc is distributed, everyone is getting all of their coins for the week all at the same time. It seems to me this would cause the price to crash at an almost predictable rate if we assume a certain percentage of users, or percentage of each users coins, will always be sold after the distribution.

  Can anyone else provide some more insight into this? I know it already costs a good amount of bitcoin in counterparty fees so trying to do it more often then weekly could be an issue.

  Your point might be valid if everyone's goal was to immediately sell out on distribution. I haven't seen this to be the case so far. Rest assured I'm monitoring the market very closely for patterns to develop. So far there haven't been any and it seems that most users are holding onto their LTBc.

  Hopefully I'll have more data to go on as I add depth to the exchanges. I've only just started making markets for LTBc, so perhaps people were holding out because they simply didn't want to crash the market.

  Posted on July 24, 2014 at 9:25 AM
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• Rob

  

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  I would guess most people like LTBc either because they are fans of the LTB network, and/or because they want to use LTBc to buy valuable ads etc. And even those who just want to cash out of LTBc, they may not want to sell the moment they receive their coin -- perhaps other selling strategies make more sense. I would assume the LTB network audience is generally increasing, and the coin distributions are decreasing, so I don't think an immediate sell is necessarily the most profitable action.

  Just my gut reaction.

  Posted on July 24, 2014 at 9:49 AM
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• Spengler

  

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  My knowledge of markets and economics is extremely limited, but there is one important element which I imagine is playing an important role here. It's the fact that the people to whom LTBcoin is being distributed have had to get involved with the network and the community. Effort and time has gone into contributing and learning about the LTB network and the coin which comes with it. I imagine in most cases this will result in the distributees feeling quite attached to the space in which they've found themselves immersed. They perhaps will assign significant value to LTBcoin because they associate it with the work they've done in order to acquire it, and also because they have learned how groundbreaking LTBc is in itself. This means that for people with LTBc there will be less inclination to dump the coins the moment the distribution occurs, (or at least to ask a high price for it).

  Personally, I prefer to

  HODL!!!

  at least for a while.

  Posted on July 24, 2014 at 10:06 AM
  Last Edited: August 23, 2014 at 5:28 AM
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• dpc

  

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  To answer your question directly, yes if everyone sold their weekly LTBc distributions at the same time the price would dip significantly or higher priced orders would hang around un-sold. Currently a minority of LTBc distributions are being sold so that isn't happening. This has more to do with the scarcity of buyers than the distribution schedule.

  In the future this will become less and less of an issue:

  1. The weekly distributions become a smaller percentage of the total LTBc issued.
  2. There should be a deeper market (more buyers, more sellers), and more places to spend and earn LTBc.
  3. Distributions are known ahead of time. Buyers know exactly how many LTBc will be in existence each week for the next two years. If the market is deep enough all new distributions could be sold without affecting the price/value of LTBc much if at all.

  I'm amazed how well the price at melotic.com is holding this early in the game.

  Posted on July 24, 2014 at 1:57 PM
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• Spengler

  

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  @dpc, you reminded me that I meant to mention the scarcity of buyers in my previous post. It could be possible that "earning" LTBc is at the moment preferable to buying it.

  Posted on July 24, 2014 at 2:58 PM
  Last Edited: July 24, 2014 at 2:59 PM
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• Ronniejames

  

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  Great post

  Posted on July 24, 2014 at 4:33 PM
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• angrycanuck

  

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  The thing with LTB is it seems that it has some sort of value attached to it. Other coins don't really have that as its all speculation. A lot of people are holding the coin and waiting, thus no crash every Saturday that you might expect...

  Posted on July 25, 2014 at 7:50 PM
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• BikerGSX

  

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  Location: UK

  I am HOLDING, and the only time they will leave my wallet is to buy something to get them circulating.

  Will not be selling at all.

  Posted on July 25, 2014 at 8:55 PM
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• CDJ990

  

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  Location: Sydney, Australia

  I am holding. Even if it drops in value like I believe it will a lot from here I still would rather have a stake in the network (even if its a small one).

  Posted on July 26, 2014 at 8:53 PM
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• shopnhowler

  

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  @angrycanuck The thing with LTB is it seems that it has some sort of value attached to it. Other coins don't really have that as its all speculation. A lot of people are holding the coin and waiting, thus no crash every Saturday that you might expect...

  Agree. Creating the value was primary (although I think this was out of sheer luck because it wasn't so easy to create tokens when LTB's first podcast started).

  Posted on July 27, 2014 at 1:31 AM
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