Bitcoin price discovery apparently takes place largely in unregulated exchanges such as Bitfinex, which has some serious questions raised about manipulation, see here
. Well aware of problems with off-shore exchanges, 6 months ago the SEC rejected
the Winklevoss application for an ETF. If the price discovery is substantially manipulated, then it just gets passed through to Coinbase/GDAX. Ditto for the upcoming CBOE and CME bitcoin derivative markets. Also, the SEC is said to be reviewing their earlier ETF rejection, so we may get an ETF yet.
I believe this putative manipulation is an open secret. If so, I will guess the typical bitcoin trader thinks of this much like some Madoff fraud investors -- yes, things seem fishy, but let's play along for the ride. After all, there are many plausible rationales for why it's not 'too good to be true'. And, since all traders think of themselves, like the children of Lake Wobegon, as all above average, they're pretty sure they'll be able to cash out before a serious crash. And, even if not, there's no legal liability attached to coat-tailing some off-shore manipulators.
OK, so now we are at $8000.
Question -- if you were pretty certain a market was being manipulated to the stratosphere, would you invest?