Trading volumes continue to decrease. Second US Marshal bitcoin auction winner auction closes: Bitcoin auction winner Draper wins of them. In an Australian Senate Economics Committee inquiry, Mastercard argues for stronger regulation of bitcoin: Steve Stockman introduces bill to impose a moratorium on new legislation regarding cryptocurrency for 5 years: For tax purposes, the creation or purchase of bitcoin is not immediately taxable based bitcoin auction winner "fair market value" but only taxable after converting to fiat.
This can be somewhat mitigated by giving a disproportionally larger reward to members which find the actual block in a pool but it cannot be completely solved for open pools. This week, I'd like to delve into the second US Marshal bitcoin auction and how it affects bitcoin auction winner market. Markets should only react to new, unexpected information. The expectation that these Silk Road seized coins would be auctioned off by the government had already formed to some degree on the day the coins were seized and further bitcoin auction winner by the first US Marshal bitcoin auction.
Thus the event of the second auction, itself, should have little market impact because it was, with near certainty, expected by the market.
There are broadly two types bitcoin auction winner bidders in the auction. Those who bid under market price short and long-term value seekers and those who bid above market long-term investors. If an underbidder wins, they could either sell the bitcoin into the open market to lock in some profit or bitcoin auction winner onto the bitcoins for a bitcoin auction winner period of time.
Both of these behaviors are reasonable. However, if an overbidder wins, the only reasonable behavior bitcoin auction winner to hold. This is because the only reason someone would bid above the current spot price is because they are seeking to take a sizable long position in bitcoin while incurring less slippage than if that position was bought in the open market.
There would be no reason for someone to bid above market price only to win the auction and immediately it sell back to the market at a loss. Therefore, if an overbidder wins, we can be reasonably sure that those coins will not be dumped onto the market and create selling pressure.
If opinions about the market are distributed between pessimistic on one side and optimistic on the other, you would expect that some people belong to the pessimistic side and some others to belong to the optimistic side and most people are in the middle. If everyone was on the price-pessimistic side, some of them would bitcoin auction winner sell into the market until both sides become roughly balanced. So of the 11 bidders, we can expect some of them to be underbidders and some of them to bitcoin auction winner overbidders.
This is expectation is amplified by the fact that some of the 11 bidders represent syndicates composed bitcoin auction winner many smaller bidders who all likely have differing sentiments about bitcoin price. A lopsided split is more likely to happen purely by chance than a by chance. In light of that, I expect most of the auctioned coins to be won at above market price and for those coins not be be dumped for some significant time.
Up until now, we've considered how auction winner behavior affects post-auction price. How about the effect of expected winner behavior on pre-auction price?
If we expect most of the auction to close above market, does that lead normal market participants bitcoin auction winner buy and pump up the price knowing that there will likely be someone who bought at a higher price than them, who will not sell below that price? Intuitively that might make sense but I would argue that it can't be the case.
Overbidders by definition are willing to pay more than the rest of the bitcoin auction winner so the reciprocal is also true: The market sees the overbidder as overpaying in a sort of short-term winner's curse even if the overbidder ends up being right in the long run. Therefore, I think we can reasonably assume: The market expected the government to auction off those coins and continues to expect that the rest of the seized coins will be auctioned off at some time in the future.
A significant majority of the auctioned coins sold at a premium to market price. Those coins won above market price will not be dumped in the near future. Market price is a better reflection of short-term "true value" than the price at which the auction closes.
The last thing we haven't considered is that some bidders could trade on the open market leading up to bitcoin auction winner auction to influence the market price and subsequently the auction closing prices. This is worth exploring further. Just today those seized bitcoins should have been released into the wild, based on the US Marshalls saying December 8th is the day assets are paid out.
Nice analysis, of course someone wanting to get into the market but without affecting the market liquidity could also have taken this opportunity to buy at market rate. If they were sold under market rate, then it will be very little under market rate IMO. I agree with the "If they were sold under market rate, then it will be very little under market rate IMO".
One issue is what the analysis says: So this is pulling the price to overbidding. Why would people go to pool bitcoin auction winner buy BTC for overbid? If average wasthat means some had to be even below Low 3figures of BTC everybody can buy at open market and does not move the rate if he is not an idiot who wants to finish the trade in 5 minutes.
So I think little under market rate is good estimation. Also we have seen some bigger selld after the auction, it seemed to me like that some of the guys went for small profit.
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