Bitcoin Forum

Hi,

I tried in trading section but it seems I should have asked here.

It is claimed briefly in this Bloomberg note that this morning price fell because of USGov selling seized bitcoins from Silkroad - but why would price fell 10% because of this announcement - what's logic applies? huh

"The U.S. government plans to start selling one of the largest caches of bitcoins, which it seized from the Silk Road marketplace used for buying and selling drugs. The virtual currency’s price fell."

http://www.bloomberg.com/news/2014-06-12/bitcoins-seized-from-silk-road-to-be-auctioned.html

The price didn't fall because of this, and it will not.
It's a private auction and has nothing to do with exchanges and therefore nothing to do with the current Bitcoin/USD price.

Depending on the motivations of the auction winners, the buyers may hodl, or they may place their newly acquired coins onto the open market.

Because the auction winners are an unknown and therefore the motivations of these unknown buyers cannot be known, some folks are understandably skittish.

The total represents about eight days worth of mined coins, so it shouldn't change things too much.

I don't think someone would dump these coins on the market. Why buy them in the first place?

Why do you think so...?

http://www.forexlive.com/blog/2014/06/12/us-government-auction-30000-bitcoins-silk-road-market-13-june-2014/

Buying them cheap(er) is not a bad idea...right... ;)

So, don't be so sure...

ZiG

So, the logic would be: 30k will be bought cheaper on the private auction, then sold on the public exchange for higher price, resulting in lowering the price?

Is there any explanation/guide on internet how selling of 30k would impact the price - I mean some basic calcs?

Hardly would impact the price. 27k BTC isn't much. It's 0.1% of all that are in circulation. This much is mined in a week.

LAst night 10k of sold BTC dropped price of BTC for 100$. It all depends on market deapth in that time what will happen with price. If someone puts buying wall it can all be sucked up w/o price ever noticing it. If there is no wall, it can bread price down to whatever...but thing is, it would rebound quickly (like it's rebounding right now)

Yup! Look, we're back in the 600s :)
Time to start buying again.

The impact should be huge if it were to sell on exchange, but seems like they are selling on auction?

Yes, but noone knows what will new owned do after auction ends and he get's his BTC. He can cold blooded sell it on exchanges all over the world if he pays low enough on auction.

That's only speculation brother.

You have to know that if the government sell a big quantities of Bitcoin, this is not good for all of us.

So, news is very bad, and thanks to it, much of investors sell its bitcoin on the market, and the price drop of 10%, understood? :)

Simple… at auction they will go for near market value.. they will be dumped quickly to turn a quick profit .. do you think they are not getting a discount on this purchase ?

The thing I find fishy is how BTC looks to have been manipulated upward prior to the auction ..

Say what you will, but something don't look good for BTC …

As much as I hate to say it .

Nope, I think the coins will be sold above the market price. After all, it's a piece of history.
Nevertheless, you're right - they could be dumped anytime they would make a profit. Be it a week later or a month later.

Actually this could be the main reason that the price plunged today.  ::)

It's a good thing that they released the coins through a bidding. Selling them in an other way would have been harder for them also. But no buyer was prohibited to dump the coins as soon as he got them. Besides thet, the news went mainstream. Eventhough the bidding couldn't have a direct impact on the price maybe some holders could have decided that now it's the time to sell because of the news.

I think the recent drop in prizes has more to do with the 51% share of the mining pools and not with this sale.

As a bargain hunter, I love low prices. Too risky holding too much fiat, stock markets look frothy.   

Market participants do not seem to agree with your right given the drop today.

The 51% situation contributed a lot to the drop. Don't disregard that.

I'm enough worried about price of Bitcoin because the news that U.S. Government  wants to sell 30.000 BTC yesterday evening had drop the price of 60$ !

So, only time will give us the answer !

The price change could have been caused by something else. News and price are not always directly correlated

So please, you can teach me why price of Bitcoin is dropped when the news of U.S. Government which wants to sell Bitcoin after only few minutes?

Thank you  :)

GHash.io 51% ?

No, problem of GHash.io is borned one-two weeks ago, not yesterday. I think that the drop of price is due to the news of U.S. Government.

...and the time is telling us...:

DUMP...buy LOW...PUMP... sell HIGH...old Wall Street strategy...

Who do you think is participating in US Gov's auction(s)...?

Whoever got Millions ...like 17+ Mill... ;)

I don't...unfortunately ...

This is the answer that I like !

So, I think that if a group of investor that have 20 million+ may manipulate quietly the market  ;D ;D ;D

And it is not difficulty to find 20 million $ for only one investor  ;D

Depends on how BIG is this ONE investor... ;)

For Wall Street sharks 20 Millions are pocket change...Phone call to Feds... ;D

Hey boss, I like you, I like your thought !

So, maybe we would have to call Warren Buffett and ask something, or The Wolf of Wall Street  ;D

Thanks, buddy...

This is the way how they work...Day-trading since 1997... ;)

ZiG

I'd say yeah. There was a huge sell wall at some point if I remember right.

Nobody know if a stock drop or move up, to the exception of Warren Buffet  ;D

So invest with a high safe and try to make money :)

Quite a drop over the past 24 hours but a decent rebound.

Makes you wonder what'll happen when they announce they're going to sell the 144k coins

Hence people investing in bitcoin is really no different than gambling.

Psychology coupled with market technicals seem to be missing from the discussion here, so I think I'll add them. :)

The recent rally from $450 was starting to get stale.  We had two very strong moves upward to about $690, and then the price just kind of dropped to the $625-$675 range and stayed there a while--probably too long, as it turns out.  My general feeling was that the market was waiting for an excuse to sell off.  This is part of how auction markets work.  They never move in a straight line.  They go a ways, pull back, and continue on.

Think about the psychology behind this.  If you bought in at $450 and you're sitting there at $650 with a nice $200/BTC profit, and it doesn't break out to the upside, and then it still doesn't break out to the upside, how are you going to feel?  You'd probably start to get nervous because you don't want to give back part or all of your profit.  But you also don't want to miss out on more profit if it does eventually continue up.  So you wait it out, looking for a reason to either sell or stay in your position.  A potentially negative piece of news hits (the auction announcement), so you sell to lock in your profit, figuring the price will drop and you can buy back in lower (if you want to continue to trade).

In the short term, the market simply ran out of buyers around $650, and it looked like the auction news was a reason for some people to sell.  Whether or not the auction will actually affect the price after the auction is irrelevant.  We had reached a point of buying exhaustion and needed to pull back.

Some people I hang out with think bitcoin will go up to 20k usd per coin. These people are playing a really long game.

Noone can really tell you what will happen to the price of anything over the short term.

If you can properly analyze the underlying fundamentals of an investment then you can predict how well it will perform.

Investing is often a kind of gamble. For examples, in stocks most of the people do not know if they will go up or down in advantage.

This is technically true, however if you do your research and put your money in companies/investments that are less likely to fail then this is less like gambling.

Any choice we make is not really different than gambling. We choose based on our knowledge and experience and hoping the choice of one outcome is better the choice of another outcome.

That is true but the odds are more in your favor

This is true but in gambling generally the house has an edge and most people come out behind over the long run. Proper investing, stocks, bonds, gold, real estate most be -should- come out ahead in the long run.  Where does Bitcoin fall?  Hopefully in the investing side. :)

As far as the price drop.  It was certainly due to the news.  More coins to hot the market.  Same thing happens to stocks all the time.  Shares get released by insiders, price drop.  Simple dilution.  If a smaller company does a secondary stock offering (ie, more dilution) the price will drop.  This happened to Bitcoin.  The difference being 30k in coins is not a major dilution, but its certainly something.

The auction will certainly have impact on price.

Will be interesting to see which big whale will openly bid on controversial coin and how much discount will be given on the size.

Short term it will but longterm no way.

It will certainly have some impact on the price. It might drop a bit but will recover as it always does.
A whale might buy it all and sell it for the profit, who knows.

It depends how many prospective investors there are out there who have not bought, waiting for an opportunity like this. Could be a lot of pent up buying pressure off the exchanges.

Will the sale price be released after the sale?  I don't think these coins will be dumped on the market and I venture to guess that Winklevii, SecondMarket, or an exchange may purchase these coins.

All the people saying that a government auction of Silk Road seized Bitcoins won't affect the price of Bitcoin are wrong.

They assume that the people buying Bitcoin at government auction would not have bought Bitcoins otherwise. This is almost certainly false in the majority of cases. They are mostly people who want to buy Bitcoins, and decide to buy them at the government auction instead of an exchange. This means fewer bidders on the auctions, which will drive down the price.

I agree on this point which is why I was wondering if the sale price will become public.  If it does become, public and it is much lower than current market rate, it could cause a correction in the marketplace.

Usually, the auctions are very transparent, with disclosures of number of bids as well as the bid amounts.
Have a look at the auction of this Toyota Tacoma
http://gsaauctions.gov/gsaauctions/aucitdsc/?sl=41QSCI14219001

If this is the case, then there will be price swings as each bid comes in during the auctions.

Oh - that will be fun to watch... I could see a whale push the price up and affect exchange rates upward as well.  I wonder what the duration of the auction would be.

What about the people that lose the auction?  They may decide they still want bitcoins and start buying off exchanges.

That would push the price upward. But it's unlikely to happen. No one will drop 3M USD on a market.

Did you see the article that said the Marshals accidentally leaked the potential auction bidders list? Pretty much well to do people and long term investor types. Nobody who gets these auction coins will be dumping them on an exchange any time soon.

If the price is lower then the market rate then the buyers would have a greater incentive to attempt to arbitrage the market.

First of all if the US had not seized them they would be on the market under sell orders pushing the price down "right now" so this "if" logic is pretty irrelevant.
Secondly I can see so many reasons why a whale would buy from a auction a not from a exchange. It's impossible to buy 3M$ woth of BTC from the exchanges without creating a "huge" price spike. Not to talk about 18M$ ::). So an auction is an easy way to get hold of a big chunk of BTC at current market prices.
It's also way easier to pay those sums with a simple wire transfer than it is to get 3M$ into an exchange.
I wouldnt be suprised if they are sold above market price  ;) Historical event with a lot of eyes on it. Some whales could easily buy it up with a little premium at which the market will almost certainly follow.

And it's a "good thing" that same works in another way. Whoever buy that BTC can not sell it all at once on exchanges without loosing HUGE amount of money. Best they can do is set up sell wall that will hold price at some max for long time (untill it all sells). Noone is stupid enough to dump large sum of coins on really shallow exchanges and loose his investment.

I would think that anyone looking to use that mich liquid cash to buy that big of a chunk of BTC,is doing so as a medium to long term investment. With that being said, I think it is highly unlikely that these coins get dumped back on the open market

They would likely not buy the bitcoin simply to sell it on an exchange via a "dump" although they may attempt to do an arbitrage.

Of course it impacted the price but, 630 So far...

Bitcoin still have red numbers, before the auction i saw a $700 peak so, let's see what happens in a few days

There is only 1 winner on the auction. He paid over 700 usd per coin, well above market rate.

Long term investor...BUY & HOLD... ;)

Looks like all of the 30k BTC was scooped up by one buyer.   They did not disclose the buyer.   I think there is a good chance that it was the US gov't itself that purchased the coins.   There is literally no accountability at the highest level, so it is very feasible that if in fact it was the US gov't that bought the coins, that they did not even have the highest bid...  I find it hard to believe that Second Market was outbid on every block

We know who bought the coins check the press section lol

How do you know he paid over 700?  I haven't been able to find that info.

Do you have a source on the price? The media reports that I have read have said that he declined to comment on the price.

Who are we talking about anyway? Or is the identity kept secret?

You may want to read the following 2 coindesk articless.
http://www.coindesk.com/tim-draper-revealed-silk-road-bitcoin-auction-winner/
http://www.coindesk.com/silk-road-auction-winner-tim-draper-world-embrace-bitcoin/

The winner is Tim Draper, but I don't see him talking about the price. :)

He is not going to release the price. He is also going to do very good things with the bitcoin he purchased.

I am very excited about this! Tim is going to try to expand the acceptance of bitcoin to places where it is not widely used today (even less widely used then the much of the world)

I don't see the reason behind all this secrecy.

He likely wants to release as little information about his finances as he can. If people know that he has a certain level of assets then he will be open to more attacks.