MtGox liquidation.. How will selling 200,000[btc] affect the price?

[AndersAA]

http://www.startribune.com/world/255457651.html

So... They are going to liquidate. Won't that completely crash the exchange rate?

[gentlemand]

IF they're permitted to sell them it certainly won't be anywhere near an exchange. I assume it'll be similar to the US silk road situation. The liquidator will field offers from private buyers. There were people lining up to buy the SR coins so it probably won't be any different.

[cryptomatt]

Ya, they won't just dump them on bitstamp.  It would be a private auction.

[AndersAA]

Still... If someone can buy 200,000BTC without using an exchange shouldn't that affect the price somewhere down the line nonetheless?
Who says whoever buys it will just sit on it?

[wiggi]

http://www.startribune.com/world/255457651.html

So... They are going to liquidate. Won't that completely crash the exchange rate?

"An administrator will try to sell the company's assets, and many creditors, including those who had bitcoins with the exchange, are unlikely to get any money back."

If this is true and not just sloppy reporting it would mean the bitcoins (and dollars) at the exchange are just subordinated debt and Gox owes someone else the equivalent of 200k BTC?

[Robert Paulson]

doesn't matter if they don't sell it on a public exchange.

someone who would have otherwise bought on bitstamp will instead buy from them and thus demand on bitstamp will be reduced.
this will lower the price temporarily until they are done selling and the old supply-demand equilibrium will be restored.

if they sell fast enough the price could really crash, this could be the buying opportunity of a lifetime.

[gondel]

Hi,
Think that the price will even go up if such a transaction is done..and also it is not sure if they will sell it for $ of other currencie or do it on small portions

[adrian33]

As terrible as it is to lose coins in this fiasco, I think selling large slabs of coins to big buyers is arguably a very good thing for the ecosystem. Power buyers with influence will want to see the coin succeed.

Also, the liquidation is a good step at moving forward in general.

[killinitsoftly]

The price will drop for a period of time, then begin to rise again.

[bryant.coleman]

Ya, they won't just dump them on bitstamp.  It would be a private auction.

But first of all... who is going to permit the liquidation? Those 200,000 recovered coins belongs to the Mt Gox users. When you liquidate a bank, you don't auction the cash deposits which are with the bank at that time.

[pening]

Who are their creditors?  I cant see it was costing alot to run the site, they shouldn't have run up large debts.  So the main creditors will be the Bitcoin account holders, so in theory at least most of the coins should be distributed back to the accounts on the basis of how much they had before.  Interesting, and very bad, precedent if this doesn't happen and they simply sell all then push cash to non-coin holders.

[Wolf Rainer]

It will not affect the Btc price... Private sale, these bitcoins are not going to be dumped in an exchange.

[AndersAA]

It will not affect the Btc price... Private sale, these bitcoins are not going to be dumped in an exchange.

Shouldn't matter if it's on an exchange or not. If someone can buy 2% of the worlds gold on the cheap one or more of three things will happen:

1) Buyer decides to make a quick profit and starts selling on exchanges - driving prices down.
2) Buyer doesn't have to buy 2% of the market on exchanges and demand falls - driving prices down.
3) Buyer just sits on the newly acquired "gold" - nothing changes (for now!).

Am I incorrect?

[adrian33]

Am I incorrect?

Price goes up if more people think buyer was smarter, price goes down if vice versa.

"wow someone bought 200,000 bitcoins?.. why? maybe I should buy some too"
"wow someone sold 200,000 bitcoins?.. why? maybe I should sell some too"

or else generally more attention given to bitcoins, which is overall positive.

The worst would likely be if they were put for sale, and no one bought any, or they were sold at a deep discount.

[thresher]

Personally I think price will go up slightly as it shows there is some form of recovery for shit like this.

Also who is going to sell 20 percent of their holdings that were anywhere from 600 up when they are now worth 500?

Even if your a dumbass and purchased some gox coins on bitocinbuilder because you didn't see how gox could possibly get away with this (who would do so something so dumb  ), you probably didn't buy in at less than 20 percent a coin.

[counter]

I'd say it depends on how the coins were sold and who bought them in a scenario like this.  But shouldn't those coins be returned to their right full owners?

[zzojar]

wow that would be so cool if someone dumped that many at the exchange all at once. That would mean cheap bitcoins for a lot of people. I'd love that!!

[STT]

you liquidate a bank, you don't auction the cash deposits which are with the bank at that time.

Depositors are creditors and the largest creditors are dealt with first so far as I know.   I dont think its done equally but basically the money left in gox was part of its assets not the customers.   Its not a trust fund, Ive heard no mention of ring fencing to account funds.  So this money is not customers but part of the business holdings though there is a liability to repay deposits, its further down a queue of debts.   It might be they pay out nothing to the smallest holders.

Just my guess but obviously theres no insurance or protection scheme like a retail bank.

One of my brokers liquidated like this.  In theory the cash was mine, I put it there but the company had (illegally) done like Gox and become a fractional reserve type operation.  So I only got a refund from a gov scheme, the overseer or taxer of these companies sent me a small cheque

[bryant.coleman]

I'd say it depends on how the coins were sold and who bought them in a scenario like this.  But shouldn't those coins be returned to their right full owners?

Japan recognizes Bitcoin as a commodity, rather than as a form of currency. If it was otherwise, then the users would have got Bitcoins back. But now... there is no such hope. They will only get a compensation in JPY, which most of the users should convert to their local currency, incurring significant currency conversion charges.

[Peter R]

I'd say it depends on how the coins were sold and who bought them in a scenario like this.  But shouldn't those coins be returned to their right full owners?

You just showed what people worried about the sale dropping the price are missing.  If the 200k BTC are liquidated, the funds raised will be distributed to the creditors (who a primarily Gox depositors).  These are the same people who just lost 750k BTC.  I would expect many of these people to purchase bitcoins once they receive their share of the fiat [which ironically was raised by selling their bitcoins in the first place lol]. 

So I don't think the direction of the anticipated price movement is clear.