Bitcoin Forum

Place your guesses. There are many unknown factors at play.

Depends very much if it is revealed prior or past Pirate ran off with all the money

Up.

Mmmkay, you're going to have to explain that.

Is this based on your theory that Pirate is a huge ol' bear that might hang over the market to drive down the price, but if it's revealed that he's "only" a scammer, no one will stand in the way of bitcoin growth?

Even if we assume Pirate is only a scammer, there is still going to be a lot of people out there that thought they had BTC who find out that they no longer have those BTC. They cannot sell BTC they no longer have; however they may buy in order to replace at least some of the lost BTC. This is especially the case in an otherwise rising market. We may have seen some of the same effect already in the case of Bitcoinica.  

It is like a bank collapse in the days of the gold standard. The remaining cash outside the collapsed bank actually becomes more valuable.

By the way my theory is that Pirate can only drive temporarily drive down the price in an otherwise rising market. Eventually something will give and when this happens there will be a significant rise in prices other things been equal. 

If the BTCST defaults /gets hacked /pirate forgets the password etc and everyone loses those coins i can only presume coin price would rise

i could be wrong but it may balance itself out again ,were pirate to sell the stolen coins on the markets but i doubt hes so stupid as to do that

a shortage of 400,000 btc shoould have some effect on the price

Those coins don't ever have to have existed for there to be a huge shortfall.

Imagine pirate takes X BTC, promises tons of interest, returns all money but no interest, no people have fewer coins than they thought, but pirate dumped 0.

Also, honest or not pirate may have already dumped a lot of coins.

I agree that it could be net positive, assuming:

A: Pirate has sold most of the coins along the way (likely)
B: people who get burned will replace at least some of their coins

Point A means there would actually be a reduction in supply of coins for sale. Point B means there'd be increased demand to buy. Both net positive.

BTCST probably has fostered some additional artificial demand for BTC, as you need BTC to invest in it. But it seems he's mostly taken investments from people who already had BTC, not people who had dollars and bought into BTC just to invest in BTCST. And any additional demand would also be equally matched by the supply of Pirate selling BTC back on the market if point A is true.

+1

I say down briefly, Then up. As it whould be more bad publicity for Bitcoin's, But ultimately the rest of us would get up, Dust ourselves down, Then start again, Proving the Bitcoin is not at fault, It's the way it's used.

I see two aspects determining the resulting effect of this. One is the shortage of supply (in mid- and short term, as long as Pirate holds onto the coins). Two is people demanding less coins in result of either being bankrupt (like PPT, lenders,..) or repelled from bitcoin until more secure.

This is the timeline of events as I would imagine them:

1. At arrival of news: High volatility, as many people buy/sell in panic according to their believes what will follow

2. Consolidation phase, while the difference of pre-news price to the price in this phase indicates the way this effect will have on prices (if the price is UP in consolidation phase, the effect will be positive, if DOWN the effect will be negative)

3. Resume of underlying trend, influenced by the resulting effect which either slows/accellerates price rise/decrease

That's funny. I laughed. :)

(The best security in the world will not help the man who deliberately chooses to be an idiot.)

Very true, but a slightly tragic aspect of human nature is that people will blame anyone but themselves.
I fully expect to see some of those burned by this leaving bitcoin forever.