Another day, another bit of unusual trading activity on a Bitcoin exchange. As the Bitcoin price began to drop around 1 AM EST last night, at least one trading bot on BTC-e began to make some interesting trades. It seems that the trading bot has been caught in an endless loop, as it continues to either trade back and forth with itself or with other bots on the exchange. The unfortunate trading activity was first pointed out by Reddit user /u/nobodybelievesyou on /r/BitcoinMarkets. The details behind the bot or bots associated with this increase in trading volume are unknown at this time, but it’s obvious that something has gone horribly wrong.
On a normal trading day, the volume for Bitcoin trades on BTC-e is usually around 3000. The malfunctioning bot, which is still executing trades at the time of this writing, has already put the Bitcoin trading volume at over 28,000 for Sunday. By comparison, today’s volume on Bitfinix is currently under 7,000. BTC-e is usually ranked third when it comes to USD denominated Bitcoin trades, so something is definitely amiss on one of Bitcoin’s oldest exchanges. The increased trading volume started after a drop in the price of bitcoins has already started, so it does not seem as if this has affected the actual price of bitcoins at this point in time.
At the end of the day, this story is nothing but good news for BTC-e. As the bot continues to trade on the open market, BTC-e will keep earning a commission. BTC-e collects a 0.2-0.5% fee on every trade, which means the earnings from today’s volume alone can be estimated at around $50,000. It’s likely that the bot responsible for the non-stop trading is not aware of the unusual activity. Whether the trader is sleeping or just not able to currently track their trades, that individual will definitely be in for a rude awakening when they realize what has happened while they were away. It’s impossible to know the identity of the unfortunate trader at this point in time, and conspiracy theories are already starting to pop up on Reddit. Judging from the lack of subtly involved with this increasing trading volume, it appears that it is really nothing more than an accident.
While this kind of activity is rather rare in traditional markets, it seems like the Bitcoin trading community cannot go a month without some kind of “accident” taking place on a large exchange. There was a flash crash on Bitfenix earlier this month, and BTC-e had it’s own instant drop in the price of bitcoins earlier in the year. Perhaps the most notorious story available when it comes to unusual trading activity on Bitcoin exchanges is the infamous Willy Report. This was a report built from leaked MtGox data that seemed to show price manipulation from multiple bots on the exchange. Today’s mishap is another sign that we’re still dealing with an extremely immature market, and many traders who still think bitcoins are a Ponzi scheme will continue to point and laugh at this kind of bot activity.
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Last modified (UTC): September 4, 2014 12:07