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Ask HN: How liquid is Bitcoin?

192 points by AznHisoka ↗ HN
Let's say I have $1 million in Bitcoin? How easy would it be for me to sell it all in 1 day and get $1 million in cold, hard cash back?

If it's not feasible in 1 day, how many days roughly would it take to sell it all?

107 comments

[ 1.8 ms ] story [ 146 ms ] thread
meric
If you had existing accounts with all the exchanges then yes you could do it in a couple of days. A lot of them have $10k or $20k limits. Also it can take some days to verify your account, which needs to be done for most exchanges.
jjawssd
1e6 USD / (1e4 USD / account) = 100 bitcoin exchange accounts

Any other solutions?

wc-
If you open an account with Gemini (large, legitimate US-based exchange) and go through their standard AML / KYC processes they will do unlimited USD wire transfers, both incoming and outgoing, for either personal or institutional accounts.

If you go through the standard AML / KYC processes at any of the other US-based exchanges the wire withdrawal limits go up significantly (hundreds of thousands) and there are similar upgrades in withdrawal limits across the major euro exchanges.

drewblaisdell
Follow-up: the same question, but for $1m in index funds through Vanguard.
wapz
I'm gonna take a guess and say 5 minutes or less. I've moved much less index funds (magnitude of 10x less) and it was no problem.
SirLJ
For SPY for example instantly with no or max few cents slippage...
brainflake
Average daily volume of VOO over the last 60 days is about 2,000,000 shares. At ~$200/share (it's actually about $220 right now), that's about $400m dollars daily, so unloading $1m would be well under 1% of shares traded in a typical day.
ajross
And notably the fraction of VOO shares traded on any given day to the total market cap of the fund is about 100:1. With bitcoin it's more like 10k:1. Thus the liquidity worries.
ajross
One security isn't really the right point of comparison though. Someone with a ton of money to park in "the market" obviously has the choice of doing so in a diverse portfolio from which they can sell in enormously high volume.

Bitcoin is just one thing.

dreistdreist
No, lots of index fund investors don't have a diverse portfolio, they get the diversity through the index fund (see bogleheads).

A worldwide index fund from Vanguard is all you need if you want to own the whole market. Optionally add a few bonds to reduce volatility.

ajross
Unless you have millions of dollars to park, in which case a single security is a liquidity risk (which has nothing to do with diversity risk) and you take the obvious path of manually diversifying. Same treatment, different problem.

The point was that you can't "diversify" Bitcoin holdings like this. It's inherently illiquid on these scales.

monochromatic
What liquidity issues have there ever been with the big index funds?
ajross
If you try to dump $100M in shares of VOO (to finance a luxury hotel purchase, say), you'll flood the market and the share price will drop, and you either won't have access to your funds quickly or you won't get all your money back. There simply aren't enough interested buyers for your single security to absorb your giant sell order. This would not be true if you had manually diversified that holding, which is why no one with liquidity requirements holds single securities in anything like that kind of volume (i.e. people do it, but they do it for e.g. corporate board vote share reasons).

Again, though, the point is that while holdings in big funds only hit this level at really obscene order volume, bitcoin sees liquidity problems at something more like $1M orders.

Veratyr
Held as ETFs? Assuming it's in big ones like VOO, they can see $400M turnover in a business day, so if you're not picky about getting the best fill price and just sell at the bid, you should be able to do it within a minute or two. You can then call your broker for a wire transfer and have it in your bank account within the same day.
aminorex
Or ask for a Bitcoin transfer and have it in seconds.
patio11
By what pathway do you believe it is possible to start a day with money in Vanguard, end the day with money in Bank of America, and hold ~$1 million in Bitcoin for some portion of the day.

Wiring a million dollars from Vanguard to BoA is a routine transaction, despite the degree of surprise that causes some geeks. More interesting commerce happens every day.

The Bitcoin transaction you have outlined, though, is not a routine transaction. I'd go further than that: it is impossible.

rb808
The S&P500 index funds are linked to the S&P500 where there are multiple ways to trade and are arbitraged to the nearest cent. People have mentioned VOO & SPY already but most liquid are futures which are super liquid. Eg yesterday there was 2,394501,116,312=$78 Billion traded in the Chicago e-mini contract alone. Which is more than $3mil a second.

http://www.cmegroup.com/trading/equity-index/us-index/e-mini...

socialist_coder
probably a question better suited to r/bitcoin or some similar subreddit
wmf
You could easily sell $1M in one day (e.g. in the Gemini auction) but you'd lose money due to slippage.

There are brokers and dark pools that could handle $1M without slippage.

yownie
Gemini specifically auctions to avoid slippage.
xmodem
https://coinmarketcap.com/exchanges/volume/24-hour/

Trading volume on Bitfinex is in the 100s of million, and in the 10s of millions on most of the other exchanges.

You could do it in a day but it's probably the upper end of what you could trade without risking having an impact on the price. You'd want to be careful not to dump it all in one transaction.

Animats
That may not be real liquidity. It may be the same money going round and round. The famous "flash crash" of 2010 happened when a big mutual fund did a real sell, for cash, underestimating the real liquidity of the market. "Between 2:45:13 and 2:45:27, HFTs traded over 27,000 contracts, which accounted for about 49 percent of the total trading volume, while buying only about 200 additional contracts net." - SEC report.
davidgerard
In-exchange volume indicates nothing about actual US dollar liquidity.

That and the fact that you can't get actual US dollars out of Bitfinex. (Which is what triggered the present bubble - unable to withdraw their USD, people bought more cryptos with them because there was literally nothing else they could use them for.)

yial
So, and this doesn't answer the one million dollar question.

I recently liquidated a much smaller amount (in the thousands ) of Bitcoin.

Using Kraken (no affliation) it probably took me about a month from transferring my btc from My private wallet to them, to having the ability to finally transfer to my bank account. This was largely due to the verification time, and some issues with the verification photo.

Once it was all setup the process was quick and painless.

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fourstar
How'd you acquire them? What do you plan on doing with the profit? Congrats!
dexterdog
Who's to say there was a profit?
dnautics
since it's at more or less an all time high you would have to have had a series of spectacularly poor trades preceding it to not have made a profit.
jliptzin
Maybe he blew $5 million on GPU miners before ASICs came out
Scarblac
He doesn't say when he did the trade, or in return for what he received the bitcoins.
uiri
According to his comment history he bought them back in 2011 when they were super cheap and did partial cash outs.
adrianmacneil
Side note: speaking from experience, you need to be very careful about tying your public identity to any statements about holding this amount of cryptocurrency. I've seen extremely well targeted (successful) spear phishing and identity theft attacks to steal bitcoin from people who posted online about holding much smaller bitcoin fortunes.

I realize your username says `anon...`, but you've already made HN comments about where you live and I only did a 30s glance.

dsacco
It only takes 33 bits of unique information (at the most) to successfully deanonymize someone :)
objclxt
> you need to be very careful about tying your public identity to any statements about holding this amount of cryptocurrency. I've seen extremely well targeted (successful) spear phishing and identity theft attacks to steal bitcoin

...and hopefully you correctly reported the profit/loss on those coins to your friendly tax authority, otherwise it's not just thieves who will be out to get you.

Ntrails
> it's not just thieves who will be out to get you.

Man I hate the implication that the tax man is being unreasonable by applying basic goddamned tax rules to profits made in all of a persons enterprises. They aren't out to get you, they're out to collect a "fair" proportion of your earnings to pay for a crapload of services which you and your community use every god damned day.

topbanana
You say they're basic. But in the U.K. currency speculation profits are tax free
raverbashing
You have to check if it's considered as currency trade or capital gains (=profits)
qeternity
Not true. Spread betting is tax free, which most retail FX trading is conducted as. But people don't realize they are paying huge implicit trading costs to do this. And institutional investors (who certainly don't use spread betting accounts) pay ordinary rates on FX trading just like anything else.
logicchains
Assuming the person you're replying to is an American, the majority (> 70%) of the federal budget (http://federal-budget.insidegov.com/l/119/2016) goes to military spending, interest payments, pensions and welfare. If the person you're replaying to is a software developer, they're likely financially independent and not relying on any such services.
rjp0008
How is any American not relying on military spending? In any case, we decided as a society that even if you aren't using programs you still need to contribute to them. That's how they get funded... You think the people on safety nets pay enough in taxes to pay for the programs?
stale2002
Because 99% of the military's job isn't to protect us. It is to bomb counties that we should be ignoring.
Retric
Over the last 20 years 'War' has averaged less than 50% of US military spending. ICBM subs for example have been expensive and unused.
fivestar
The nuclear deterrent has prevented a world war that would probably wipe out our species, though.
fivestar
I actually think the "bombing other countries" is just a horrible side effect of the MIC system that is designed to absorb a tremendous amount of wealth and filter it to those corporations. They have us all living in fear while they create the enemies. As we saw in the UK yesterday, all that spending did not prevent another horrific suicide bombing.

We need real defense, not corporate welfare.

Ntrails
That's why I said "and community" - because even the most self sufficient person lives in a world surrounded by other people who do use services. Be that the person who packs their amazon drone, or makes their coffee, or sleeps on their streets.

If you want to claim that military spending is not something you should fund. I suggest getting out of your bubble and campaigning to help elect people who agree with you. The price of democracy, in the meantime, is a bunch of military spending.

mikeash
And if the Federal government stopped paying for all that stuff, what would happen? Financial collapse, chaos, and perhaps war. Would our hypothetical financially independent software developer be able to continue living his life in the same way when that happens? I doubt it.

It's foolish to think that you only benefit from government spending if it results in money in your bank account or services you directly, personally take advantage of.

stale2002
There would actually be less war, seeing as we are the one who starts them.

I'd argue that the "benefit" of getting rid of all the unnecessary wars would vastly outweigh all the "drawbacks" of the supposed chaos that would happen by getting rid of all the other programs.

IE, getting rid of all of it at the same time would be massive benefit to the overall world, in aggregate.

mikeash
Halting interest payments on the US government's debt would instantaneously crash the world economy. This would almost inevitably lead to massive wars, not these little brushfire wars we have today.
stale2002
You don't have to default on any debt.

All you got to do is pay it off.

We could solve the debt problem is the same way that Andrew Jackson did. By selling off a bunch of government assets. The amount of debt we half is a drop in the bucket, compared to total government assets.

mikeash
Like, find buyers for a dozen nuclear-powered supercarriers?
stale2002
No.... The USA has a lot more assets than just its military assets. EX: the gold in fort knox alone,a single USA asset, is worth 200 Billion dollars (or 1% of our total debt)

We really don't have that much debt, when compared to our total revenues.

We don't even have to halt everything at once. If we just get rid of the majority of our military spending, we would very quickly be able to pay off all our debts and then shut everything else down afterwords.

We could do it in 10 years if we really wanted, which is a very short period of time, as far as nations go.

mylons
tax collectors were public enemy #1 in the new testament.
Erik816
For the local colonized populace, not for Jesus.
bbcbasic
Id ask mods to delete the post. I'm no detective but reckon I could figure out your name from the info in your past posts, assuming they are truthful.
Chris2048
Unless we pull a Sparticus, and all claim to be bitcoin millionaires?
Temasik
That's why the world needs monero xmr
nodesocket
Curious question, since a one million dollar bitcoin sell is tiny in the schema of daily volume, why would it incur slippage?
runeks
Volume and order book depth are two unrelated figures.

Volume is roughly proportional to trading fees, while slippage is a function of order book depth.

It's easy to increase volume: relinquish trading fees. Getting people to deposit USD/BTC on your exchange, and lock it in a sell/buy order, is a different matter though, since it mainly depends on trust in the company behind the exchange (since you will lose that money if the exchange goes bust).

throwaway208471
> They did ask for information on the source of the bitcoins, but I had evidence of this.

What kind of evidence was required? Who asked you to provide the evidence?

RustyRussell
There are private brokers who will facilitate trades larger than this, and I know Xapo does (did?) as well. Transferring the money back to you may be the more difficult part, depending on where you are.
homero
Barry silbert can do it privately but any exchange can handle it
noway421
Depends on whether you want to hide the fact of the transactions. Going the legit way, suppose you don't

Then it is the matter of registering on an exchange and buying out all the bids. With 1m even now, you'll make a whole lot of turbulence in the market. After that just withdraw it to your bank accounts, you might have to have a chat with your exchange before that though

Veratyr
Because nobody else has asked, when you say "cold, hard cash", do you mean that literally? As in a case full of physical greenback?
adrianmacneil
$1MM is nothing. At current prices that is ~500 BTC. Looking at just the Bitfinex order book[1], you could sell this in one trade with <5% slippage. If you split it out in say 10 trades over 24 hours you would probably not move the market at all.

Most other exchanges also publish their complete order book so you can fairly easily view their liquidity and answer this question.

[1] https://www.bitfinex.com/order_book

TylerE
Umm, isn't it impossible to actually cash out of Bitfinex?
throwaway32434
It is not. They do wire money back into your account. In fact, if you're a US person, then you are covered by FDIC rules. During the hack, Bitfinex didn't touch money that was in USD; for the rest there was a haircut.
csomar
USD or US citizen? I'm pretty sure my USD got a haircut.
aminorex
You can cash out using btc, xmr, eur,hkd, no problem. USD is the only unusable currency.
davidgerard
You specifically cannot cash out with HKD. The only ActualMoney you can get out of Bitfinex at present is Taiwan NTD to a local account.
aminorex
Thank you for correcting my error.
davidgerard
Given you still can't get actual US Dollars out of Bitfinex, it is poor advice to take them as indicative of anything whatsoever about Bitcoin except as a cautionary tale.
HockeyPlayer
> one trade with <5% slippage

5% slippage is huge. That is $50k on this $1m trade.

lajy
And that's to sell it all off instantly by putting in the absolute least amount of effort possible. The point is that exchanging a million dollars worth of bitcoin is not difficult.
Meekro
Yes, it is feasible to sell $1 million in BTC (444 BTC at present) in one day. Assuming you're in the U.S., my recommendation is to signup for a Gemini account and read about their daily auctions. They do more than enough volume to fetch you a good price. They're also a highly trusted and very professionally run exchange. I can't recommend them highly enough.

If that doesn't work for you for whatever reason, Bitstamp and Coinbase are both good options. Both have the daily volume to give you a good price on your 444 BTC. Coinbase has pretty strict daily withdrawal limits ($10k per day by default) whereas Bitstamp does not, so I'd try Bitstamp before Coinbase. However, Coinbase can increase those limits if you ask nicely.

Whatever you do, stay away from Bitfinex. They're currently not letting anyone withdraw money.

aminorex
The last point is not true. Bitfinex withdrawals in btc, xmr, eur, hkd all work just fine. USD is the only unusable currency.
RickS
The literalness of "cold hard cash" is going to be very important here.

Into a digital account somewhere as USD? Fairly easy. As a million bucks in literal physical cash? something tells me that would be an absolute shitshow, since 10k cash withdrawl is enough to trigger special processes at most institutions.

andai
You could arrange something in person, but you'd probably better bring those machines that check for fake money.
erikb
And a few guns, that are held by people who can use them.
easilyBored
Yeah really. A Craigslist post to do such a transaction at some back alley isn't going work; they'll wipe your entire family for $1 million. If you get ripped off, probably can't even complain, I'm sure cash transactions above a certain amount are illegal in many countries.
Scarblac
Does this mean that at $1 million amounts, bitcoin is more liquid than cash?
cavanasm
No, liquidity is the market's ability to make a transaction with an asset without affecting that asset's price, not how easily it can be exchanged. Cash transactions are pretty much as liquid as it's possible for anything to be. As another poster mentions above, a $1m bitcoin transaction has be to spread out over a day or two to not impact price, otherwise it can fluctuate several percent.
csomar
If you want to sell and not incur slippage, bitfinex has an OTC market and Gemini has an auction market. Millions are changing hand everyday.
davidgerard
Order books are often disconcertingly thin. When GDAX restarted with a configuration error only allowing sells, the price went from $1184 to 6 cents in about 100 BTC of trades. This quickly recovered of course, but that's how thin it is. http://www.newsbtc.com/2017/04/16/gdax-bitcoin-price-briefly...

Large sales frequently cause $20-30 dips. http://www.coindesk.com/high-seas-bitcoin-trading-whales-sti...

So you'll want to take it slowly, and across multiple exchanges if you can. Check Reddit that a given exchange isn't having (what's the phrase) "problems with the traditional banking system", i.e. you can get ActualMoney out.

Also, don't go within a mile of Bitfinex - users still can't get hard currency out without a local Taiwan bank account (if even that still works).

fivestar
Wow, this all sounds...sketchy.
davidgerard
Everything about Bitcoin, from the original software up, is built by amateurs from gaffer tape and string. (Bitcoinica->Bitfinex and Mt. Gox were literally "I know PHP, how hard can writing an exchange be?") It's reiterating the history of financial systems as well as financial regulation, in fast forward.
acarrera
Cumberland mining, itbit otc, gemini daily auction. You could sell them easily with a typical 0.1% cost. Silbert's otc division probably (never traded with them though). $1mm is a pretty common trade nowadays.
wc-
Given the proper completion of AML / KYC processes liquidating 1m and withdrawing is pretty painless (although I wouldn't recommend a single market sell) on the major US exchanges.

If the cryptocurrency markets interest anyone here, we are hiring for full time and contract positions for software engineers with python and go experience for market entry/exit algo dev, backoffice P and L dev, and more as well as data science / quant roles. Currently in stealth mode but should be public soon.

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