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The Feds Are Ready To Sell $25 Million of Bitcoin Seized From The Silk Road
- watcherfeds 13y agoThis service is wathing Feds coffers: http://www.bitcoinburn.com/ http://www.bitcoinburn.com/ (if green then all ok, and they not spending bitcoins)
- ck2 13y agoSo that will depress the price right? Time for some cheap BTC
- jrockway 13y agoI honestly don't think the Bitcoin market is sophisticated enough to react to events like this. Certainly, if the feds really want to sell and someone puts $0.01 on the order books for that size of a trade, and nobody else is around, it could be filled, but I don't see that happening.
- BlackDeath3 13y agoIt wouldn't be unprecedented. I believe that mass sells have caused price crashes numerous times in the past. Perhaps I misunderstood you?
- jrockway 13y agoSort of. To me, it looks indistinguishable from randomness with /r/bitcoin trying to explain the randomness with news stories. But maybe I'm wrong.
- quannabe 13y agoHuh? Why would they sell it all at once and crash the price? They won't. That is like Warren Buffet deciding he wants to exit a position and dumping tens of millions of shares on the market. No one does that.
- beedogs 13y agoquannabe: It looks as though your account has been hellbanned.
- asperous 13y agoActually it might be interesting. Technically yes if they sold at any price they'd burn through the orderbook and the price would crash. But if they set a flat sell price then that'd make a buy (edit: sell) wall (price can not go above this amount until all 25 million have been purchased). The sell wall could help stabilize the price.
- nostromo 13y agoIt's just $25 million of $11,386 million.
- dclusin 13y agoProbably. To understand price changes it's important to consider how they change. Price movements occur as a result of a buyer or seller aggressing into a market and submitting an order such that the parameters of the aggressor's order match the opposite sides unfilled orders. This process is typically referred to as order matching. If a buyer aggresses into the market and matches against unfilled sell orders the price increases because they have removed the lowest prices from the order book. If a seller does something similar the price will drop because the highest prices have been removed. Another reason price movements occur is because people are also reacting to the market and trying to predict where the market is going. As a consequence they will either enter the market at an off market price attempting to predict it, or cancel their outstanding orders and re-price them. But this is another topic entirely and I will leave it out as it's pretty complex and my understanding of that topic is newb level at best. The second thing to consider is the why. Why do price movements occur? Mainly because people are consuming information and trying to predict where the market is going. For other assets such as FX & commodities there are non-speculative market participants who buy and sell based on their business need. An example from Foreign Exchange is a company such as Google having a stockpile of dollars and needing to pay employees in euros. The end result of these non-speculative market participants is greater price stability because they are always buying or always selling, not because they want to, but because they have to. But since bitcoin is largely a speculative currency (the majority of bitcoin trading volume is the result of speculation, not legitimate commerce) the news has a disproportionate effect on it's prices. My 2 cents say that this will temporarily depress prices but they will quickly recover because someone such as myself recognizes that those bitcoins haven't entered the market, so nothing has really changed.
- minimax 13y agoYou seem like someone who knows something about markets and you accept that there are very few, if any, natural buyers of bitcoins, and that the price of bitcoin is largely driven by speculators. I'm just trying to understand how you think this thing doesn't end up at $0 some day in the not too distant future.
- dclusin 13y ago
- philip1209 13y agoBased on bitcoin architecture, is it possible to short Bitcoin directly?
- jrockway 13y agoNo. Someone has to take the other side of that trade. Typically, a brokerage will loan you shares to sell short, and then you buy them back to pay back the loan. If nobody will loan you bitcoins, you can't sell them short.
- TrainedMonkey 13y agoIt is not possible to short anything directly. Only direct actions are to buy and sell. Options are derivative products that other people offer. They looks at statistical volatility and price their options, such that they make some $ on average. This means you can short bitcoin, just like anything else - you need to find someone offering the service.
- baddox 13y agoWhen you think about it, even "buying and selling" don't exist as far as the Bitcoin protocol is concerned. There is only creation of new Bitcoin (via mining) and transferring them around. Granted, there is a lot of potential complex functionality based on Script, but as far as I know not much is supported by widely-used Bitcoin clients.
- matthewsimon 13y agoThere's no magical shorting mechanism -- you'd have to find a counterpart and enter into a futures contract. A few exchanges offer this as a service. [0] http://finance.fortune.cnn.com/2013/12/05/betting-against-bitcoin-bubble/ http://finance.fortune.cnn.com/2013/12/05/betting-against-bi...
- sandieman 13y agoIs this an opportunity for financial firms?
- samstave 13y agoI am sure the Winklevii are salivating over this.... I wouldn't doubt they are trying to use their network to get hold of these...
- Alex3917 13y agoGreat, so this will basically be a giant free handout to wall st because no one else will have enough money to bid on a block.
- yelnatz 13y agoSo the feds are gonna give the bitcoin to people who owe them money so they can pay the feds back?
- viraptor 13y ago> approximately $25 million worth of Bitcoin will be auctioned off soon At least they won't sell it via usual exchanges in one go. That would make quite a mess... (bringing price down to ~0 for a while before everything rebalances)
- alexcroox 13y agoMaybe that's exactly what they want to do to this rogue currency...
- sebastienros 13y agoBased on the current price it makes roughly 25K bitcoins, and using the current BUY backlog on MtGox, selling them would push the price back to $550. However such a volume will certainly create a panic wave and it could go below that. If they are clever, they won't put everything on the market like this.
- icey 13y agoWhy would the feds care about crashing BTC? If anything, it seems like it might be a desirable outcome for them.
- Crito 13y agoBecause they want the money. Same reason they auction off the cars of suspected drug dealers, instead of just handing them out at random.
- mmanfrin 13y agoYou mean those police auctions that advertise how cheap you can get cars? Selling at the immediate price they can get in a very volatile vehicle is not 'handing them out at random'.
- Crito 13y agoCars at auctions are typically pretty damn cheap. That happens because there is risk for the buyer when buying a car at auction. If cars at police auctions were unnaturally cheap, everyone would be making a killing with arbitrage. (To be clear, many people do, but as more people get in on that, prices at police auctions go up... the balance that is struck gets you relatively close to the legitimate value of a car at a police auction). Trust me, they love that money. They use it to buy fun new toys for themselves. That's when the property itself isn't their new toy: http://www.clumsycrooks.com/media/files18/pictures/drug_dealers_car.jpg http://www.clumsycrooks.com/media/files18/pictures/drug_deal...
- samstave 13y agoWhat was the price at time of seizure?
- justincormack 13y agoHold on they haven't found anyone guilty in a court yet have they?
- bradleyjg 13y agoCivil forfiture doesn't require a criminal conviction. In fact there's hardly any process at all. Just one more twisted doctrine justified by the War on Drugs.
- Crito 13y agoTo expand on this, from wikipedia: "In civil forfeiture cases, the US Government sues the item of property, not the person; the owner is effectively a third party claimant. The burden is on the Government to establish that the property is subject to forfeiture by a "preponderance of the evidence." If it is successful, the owner may yet prevail by establishing an "innocent owner" defense. In civil cases, the owner need not be judged guilty of any crime; it is possible for the Government to prevail by proving that someone other than the owner used the property to commit a crime. In contrast, criminal forfeiture is usually carried out in a sentence following a conviction and is a punitive act against the offender. The United States Marshals Service is responsible for managing and disposing of properties seized and forfeited by Department of Justice agencies. It currently manages around $2.4 billion worth of property. The United States Treasury Department is responsible for managing and disposing of properties seized by Treasury agencies. The goal of both programs is to maximize the net return from seized property by selling at auctions and to the private sector and then using the property and proceeds for law enforcement purposes." http://en.wikipedia.org/wiki/Asset_forfeiture#United_States http://en.wikipedia.org/wiki/Asset_forfeiture#United_States Since the Government sues the property itself, and since property itself has few if any rights, you can understand how the entire process becomes rather... one sided.
- jrockway 13y agoYou have to admit, whoever came up with that law was being pretty clever. If only they would use some of that cleverness to just send me a bill for my taxes.
- slg 13y agoThe article speculates these Bitcoin will be auctioned off. I wonder if that would be the entire wallet as one lot. Not too many people have the resources and willingness to throw $25 million into Bitcoin outside of the Winklevoss twins and hedge funds. Odds are they might get a good discount, but that might be preferable to the Bitcoin economy than the government selling the coins in smaller lots. 30k coins suddenly flooding the market at once would cause a pretty dramatic drop in price.
- dclusin 13y agoOnly if they try to sell them in a trading venue. Anyone with the bankroll to buy that many probably understands how markets work.
- slg 13y agoRereading my prior post, it was a little unclear. Let me expand on my prior point. The Bitcoin market is neither liquid or large enough to absorb 30k new coins and remain stable. That means the US government isn't going to get $850 per coin. The effects on the market will likely depend on how the coins are sold. Scenario 1: There is a single large buyer. Assuming the buyer and US goverment are smart, they will recognize the liquidity risk of Bitcoin. The buyer will then get a discount for this and be able to purchase the coins at a below market rate. Assuming their plan is to hold onto the coins for the long term (or at least not short term), I wouldn't expect a large movement in the general Bitcoin markets. Scenario 2: There are many small buyers. Each sale would slightly effect the price of Bitcoin as each sale would slowly satisfy demand. The US government might receive $850 per coin for the first sale, but certainly wouldn't for the last sale. This would cause the biggest harm to the market as the price would drop more than in scenario 1. TL;DR - The US government either needs to accept a lower price for the sake of liquidity or accept that their sales will quickly lower the market rate for Bitcoin.
- wcfields 13y agoOr Scenario 1.1: Buyer and Gov settle as a well below market price, possibly to rid of these e-tokens. Buyer then floods the market with cheap coins that are still a markup from what he bought them at. Market panics ($1000 vs $100), price of bitcoins drops.
- loceng 13y agoI somewhat would think they'd actually want to maintain ownership - but create the illusion they no longer do, so then they can make transactions. It'd be smart to track how those Bitcoin move and all accounts it touches.
- tomphoolery 13y agoI feel like they should just hold onto it so it will increase in value. ;)
- lowglow 13y agoIs it legal to buy/sell bitcoin as a person or as an exchange?
- eudox 13y agoBut thanks to the public ledger that is the blockchain, we know which coins came from the Feds, and as such, which not to accept! Don't let them get away with it, folks.
- allannienhuis 13y agoget away with what, exactly?
- GigabyteCoin 13y agoFirst they came for the Feds coins, and I did not speak out--Because I was not a Fed.
- FireBeyond 13y agoSo, if convicted, should he be able to keep the estimated $100MM of bit coin, the proceeds of a criminal enterprise (regardless of your thoughts on legalization, it remains that trafficking or facilitating/conspiracy to abett trafficking -is- a criminal offense)? Or is your argument based solely on the lack of conviction - which is more worthy of discussion?
- LanceH 13y agoCounterpoint: The feds selling the bitcoin would be an endorsement of it and the market they used to sell as being legal. This could push the price up.
- ksrm 13y agoHe could have kept an encrypted copy of the wallet with a trusted friend, and given them the password when he was caught. The FBI would be powerless.
- losvedir 13y agoIt's not clear to me whether this drives the price up or down. Sure, naively, it's more supply therefore lower prices. However, it does lend an air of legitimacy to Bitcoin and will likely raise awareness as it gets played out on mainstream media. In other words, it will likely affect both the supply of and demand for Bitcoin.
- true_religion 13y agoWell the government considers bitcoin to be a commodity and not a currency. So they're selling the commodity they seized, no different than selling a fleet of ferraris and armani suits seized in another drug raid.