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CHF appreciated 40% in 15 minutes and then retraced about half of it. That's Bitcoin-comparable levels of volatility.

by qnr 12y ago

maxerickson 12y ago
One difference is that the primary currency manipulators involved with bitcoin are unknown (I guess it is not even really known how much the price is manipulated, I'm sure some insiders have an idea though). Whereas the Swiss National Bank is known to be the manipulator here, and they publish a lot of information about their activities: http://www.snb.ch/en/iabout/stat/statpub/statmon/stats/statmon http://www.snb.ch/en/iabout/stat/statpub/statmon/stats/statm...
- beagle3 12y ago
  Still, assuming that Bitcoin is inherently less stable / more volatile than a "hard" currency like the Swiss Franc is, as we've just seen, not supported by evidence. (We have just witnessed a "fast-forward" view - but I have always assumed this happens on a daily basis, albeit at a slower pace)
  - crdb 12y ago
    No, these moves are extremely rare. The last one was three years ago - the day of the peg. I still remember it because the seemingly unstoppable crawl of the pair did stop - with a giant jump. The funnier story was how the SNB chairman's wife insider traded the move: http://www.bloomberg.com/news/2012-01-09/hildebrand-quits-as-swiss-national-bank-chief-after-wife-s-currency-trade.html http://www.bloomberg.com/news/2012-01-09/hildebrand-quits-as...
    - fnordfnordfnord 12y ago
      >“I came to the conclusion that it’s not possible for me to deliver definite proof that my wife requested the currency transaction without my knowledge,” Hildebrand, 48, said.
  - quonn 12y ago
    Nope. The national bank decided, during a crisis, to artificially push down the value of the currency for the benefit of the economy as a whole (in their opinion). Now they've given that up and the franc has moved to it's natural value. While the information spread and the market tried to find the correct price there was brief volatility that is already gone. Not like bitcoin at all.
    - beagle3 12y ago
      Well, depends on your point of view if it's "not like bitcoin at all". If you have your retirement in Bitcoin or something that is effectively short the Swiss Franc, it doesn't matter to you whether the jump was orchestrated by people with names and Ph.Ds sitting in the SNB office, or unknown people with mining equipment - the money is gone either way (or, if you managed to be short bitcoin or long CHF, has been created). In economics, just like any other subject, stories matter much less than actions.
      - quonn 12y ago
        But investment, into "something that is effectively short the Swiss Franc" is not the real purpose of currency anyway. Indeed, excessive speculation is the reason why bitcoin is in so much trouble. It never became a proper currency. For Swiss people, the value of their money has not changed, except if they travel abroad or import - in which case they have gained something. Foreigners who have put their money into it have not lost anything either. The main point is, that the Franc works as a currency, because it is actually really stable, and Bitcoin currently does not work.
        mike_hearn 12y ago
        > excessive speculation is the reason why bitcoin is in so much trouble. It never became a proper currency. I'm not convinced such arguments have legs these days. CHF and ruble are seeing massive volatility, are they not "proper currencies"? Bitcoin is a proper currency. It's just that it's economy is tiny, so just like little Switzerland the currency gets battered a lot by speculators looking to make money.
antr 12y ago
you missed the part where the "SNB Unexpectedly Gives Up Cap on Franc, Lowers Deposit Rate". When a central bank artificially sets an exchange ceiling/floor, and lets it float again freely expect the currency to adjust. That's not "market volatility", that's just the market adjusting to a true free-float.
- bdcs 12y ago
  Look back to Sept 2011 to see the Franc do similar price swings without a cap in place... In fact, that's WHY the cap was put into place (also to prevent deflation, recession, and a huge slump in exports).
- mike_hearn 12y ago
  All the cap did is try to hide the volatility that was already there.
- venaoy 12y ago
  Doesn't matter what the cause is. A 20%+ variance in mere minutes _is_ volatility, by definition.

CHF appreciated 40% in 15 minutes and then retraced about half of it. That's Bitcoin-comparable levels of volatility.

by qnr 12y ago

CHF appreciated 40% in 15 minutes and then retraced about half of it. That's Bitcoin-comparable levels of volatility.

One difference is that the primary currency manipulators involved with bitcoin are unknown (I guess it is not even really known how much the price is manipulated, I'm sure some insiders have an idea though). Whereas the Swiss National Bank is known to be the manipulator here, and they publish a lot of information about their activities: http://www.snb.ch/en/iabout/stat/statpub/statmon/stats/statmon http://www.snb.ch/en/iabout/stat/statpub/statmon/stats/statm...

beagle3 12y ago
Still, assuming that Bitcoin is inherently less stable / more volatile than a "hard" currency like the Swiss Franc is, as we've just seen, not supported by evidence. (We have just witnessed a "fast-forward" view - but I have always assumed this happens on a daily basis, albeit at a slower pace)
- crdb 12y ago
  No, these moves are extremely rare. The last one was three years ago - the day of the peg. I still remember it because the seemingly unstoppable crawl of the pair did stop - with a giant jump. The funnier story was how the SNB chairman's wife insider traded the move: http://www.bloomberg.com/news/2012-01-09/hildebrand-quits-as-swiss-national-bank-chief-after-wife-s-currency-trade.html http://www.bloomberg.com/news/2012-01-09/hildebrand-quits-as...
  - fnordfnordfnord 12y ago
    >“I came to the conclusion that it’s not possible for me to deliver definite proof that my wife requested the currency transaction without my knowledge,” Hildebrand, 48, said.
- quonn 12y ago
  Nope. The national bank decided, during a crisis, to artificially push down the value of the currency for the benefit of the economy as a whole (in their opinion). Now they've given that up and the franc has moved to it's natural value. While the information spread and the market tried to find the correct price there was brief volatility that is already gone. Not like bitcoin at all.
  - beagle3 12y ago
    Well, depends on your point of view if it's "not like bitcoin at all". If you have your retirement in Bitcoin or something that is effectively short the Swiss Franc, it doesn't matter to you whether the jump was orchestrated by people with names and Ph.Ds sitting in the SNB office, or unknown people with mining equipment - the money is gone either way (or, if you managed to be short bitcoin or long CHF, has been created). In economics, just like any other subject, stories matter much less than actions.
    - quonn 12y ago
      But investment, into "something that is effectively short the Swiss Franc" is not the real purpose of currency anyway. Indeed, excessive speculation is the reason why bitcoin is in so much trouble. It never became a proper currency. For Swiss people, the value of their money has not changed, except if they travel abroad or import - in which case they have gained something. Foreigners who have put their money into it have not lost anything either. The main point is, that the Franc works as a currency, because it is actually really stable, and Bitcoin currently does not work.
      - mike_hearn 12y ago
        > excessive speculation is the reason why bitcoin is in so much trouble. It never became a proper currency. I'm not convinced such arguments have legs these days. CHF and ruble are seeing massive volatility, are they not "proper currencies"? Bitcoin is a proper currency. It's just that it's economy is tiny, so just like little Switzerland the currency gets battered a lot by speculators looking to make money.

antr 12y ago

you missed the part where the "SNB Unexpectedly Gives Up Cap on Franc, Lowers Deposit Rate". When a central bank artificially sets an exchange ceiling/floor, and lets it float again freely expect the currency to adjust. That's not "market volatility", that's just the market adjusting to a true free-float.

bdcs 12y ago
Look back to Sept 2011 to see the Franc do similar price swings without a cap in place... In fact, that's WHY the cap was put into place (also to prevent deflation, recession, and a huge slump in exports).
mike_hearn 12y ago
All the cap did is try to hide the volatility that was already there.
venaoy 12y ago
Doesn't matter what the cause is. A 20%+ variance in mere minutes _is_ volatility, by definition.