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I don't follow your logic. A forced sale of bitcoins to assuage creditors is different to speculators losing confidence in the currency and trying to exit their

I don't follow your logic. A forced sale of bitcoins to assuage creditors is different to speculators losing confidence in the currency and trying to exit their positions. The latter causes market volatility and price crashes. Temporarily increased liquidity is not inherently disastrous.

chiph 12y ago
Except that the quantity is roughly 11x the amount currently for sale (at that one exchange). It's going to depress the price like crazy, unless the court authorizes it to be sold in pieces over time.
bdcravens 12y ago
Not disastrous, but merely a matter of supply and demand. Also as an individual, if I don't like the market price, I can go "meh" and not sell. Court will order sales, so it'll be forced market incentive.
sillysaurus3 12y ago
Very true, and that's a solid theory. Unfortunately I've learned from experience that the market rarely follows anyone's theory. The simplest example: many moons ago, when people were trying to explain bitcoin's meteoric rise in price, the general consensus was that the price was linked to (or at least influenced by) Silk Road, because Silk Road was the only practical use for bitcoin. Then Silk Road collapsed, but bitcoin's price hardly moved. Theorycrafting is fraught with dangers like that. I noticed from some brief experience with bitcoin trading that if people suspect a huge downward plunge is happening presently, then people with a lot of bitcoin will step in and start putting up "floors", i.e. a large buy order about $50 to $100 lower than the current price. So they might offer to buy 1,000 coins for $75 less than the current price, because they expect it to plunge. However, when it actually does plunge, what happens is that the plunge eats into their buy order to the tune of about 50 BTC, and then they cancel that buy order and move it even lower. This makes sense because if there's downward pressure, you stand to earn even more if you adjust your "floor" as far down as possible in order to buy the cheapest coins. So, if 200k coins are sold off all at once, it seems like most of the big players in the market will set a "floor" of about $50/BTC, then sit back and watch what happens. And since everyone else will be completely panicking at that point, a significant number of people will probably hit "sell at current market rate" in order to get out of their BTC position as quickly as possible. (I've seen it happen; sometimes huge orders of 1,000+ BTC are sold at current market rate, which plunges the price way down, and then the price ticks back up as the market adjusts. But 200k BTC is two orders of magnitude higher; it seems like that will smash the price all the way down to sub-$10.) Hopefully whoever is in charge of Mt. Gox's assets will take a more nuanced approach to selling off 200k BTC than "put them on Bitstamp and sell at current market price."

chiph 12y ago

Except that the quantity is roughly 11x the amount currently for sale (at that one exchange). It's going to depress the price like crazy, unless the court authorizes it to be sold in pieces over time.

bdcravens 12y ago

Not disastrous, but merely a matter of supply and demand. Also as an individual, if I don't like the market price, I can go "meh" and not sell. Court will order sales, so it'll be forced market incentive.

sillysaurus3 12y ago

Very true, and that's a solid theory. Unfortunately I've learned from experience that the market rarely follows anyone's theory. The simplest example: many moons ago, when people were trying to explain bitcoin's meteoric rise in price, the general consensus was that the price was linked to (or at least influenced by) Silk Road, because Silk Road was the only practical use for bitcoin. Then Silk Road collapsed, but bitcoin's price hardly moved. Theorycrafting is fraught with dangers like that. I noticed from some brief experience with bitcoin trading that if people suspect a huge downward plunge is happening presently, then people with a lot of bitcoin will step in and start putting up "floors", i.e. a large buy order about $50 to $100 lower than the current price. So they might offer to buy 1,000 coins for $75 less than the current price, because they expect it to plunge. However, when it actually does plunge, what happens is that the plunge eats into their buy order to the tune of about 50 BTC, and then they cancel that buy order and move it even lower. This makes sense because if there's downward pressure, you stand to earn even more if you adjust your "floor" as far down as possible in order to buy the cheapest coins. So, if 200k coins are sold off all at once, it seems like most of the big players in the market will set a "floor" of about $50/BTC, then sit back and watch what happens. And since everyone else will be completely panicking at that point, a significant number of people will probably hit "sell at current market rate" in order to get out of their BTC position as quickly as possible. (I've seen it happen; sometimes huge orders of 1,000+ BTC are sold at current market rate, which plunges the price way down, and then the price ticks back up as the market adjusts. But 200k BTC is two orders of magnitude higher; it seems like that will smash the price all the way down to sub-$10.) Hopefully whoever is in charge of Mt. Gox's assets will take a more nuanced approach to selling off 200k BTC than "put them on Bitstamp and sell at current market price."