Predatory brokers and exposure to bitcoin: a user’s guide
Brokers want to make their best clients happy (and who can blame them), and bitcoin is really difficult to sell
Brokers It is no fun to have to sell a lot of securities quickly. If, for instance, you are a hedge fund whose clients have demanded their money back, and you need to sell all your stocks and bonds to get it, you will have a hard time selling them for what they are worth. (Or at least, for what they were trading for the day before you started selling.) If you have a lot of stock to sell you will probably do it in chunks, and each time you sell you will drive the price down, so you’ll end up getting a much worse price on the last chunks than you did at the beginning. You’ll sell your first 1,000 shares at $50, and your second 1,000 shares at $49.50, and your 10th 1,000 shares at, maybe, $45. But even worse, other people might figure this out and get ahead of you: if you sell your first 1,000 shares at $50 and everyone figures out that you actually have 10,000 shares to sell, then no one will want to buy from you at $49.50 or $49. They know that you are dumping a lot of stock and that...
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