Broker Leaks and Bitcoin Biases

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 tenth 1,000 shares at like $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 the price is going to fall further. So they'll back away, and only buy from you at $45. Or they will even short the stock that you are trying to sell, since they know your selling will bring it down, and then they'll cover their shorts when you are done selling.