Quote from: Scott J on September 20, 2012, 09:23:54 PM

Silk Road revenue is said to be "approximately USD 1.9 million per month". If this demand suddenly disappeared then I think there would be a massive dip.

Yeah, but as others have already pointed out, approximately USD 1.9 million of supply per month also disappears at the same time (unless you believe that SR sellers keep their income in BTC form). So in a rational market, this is a market neutral event.

Quote from: Scott J on September 20, 2012, 09:23:54 PM

You can also add market panic to the mix.

Now there's a good point. It will almost certainly cause a price dip in the short term, because people will panic sell. Meanwhile, those who assessed the situation a little more thoroughly will snatch up cheap coins.

All of the above is under the assumption that SR shuts down due to some human error or bad luck (incorrectly configured server, inadequate money laundering allowing a known SR address to be linked to an address with a known owner, SR operators being busted for some unrelated crime in RL, or DPR being run over by a bus). In this case SR will quickly be replaced by one of it's competitors waiting in the wings.

But in the exceedingly unlikely event that SR was to shut down or be shut down due to some previously unknown weakness in TOR itself, that cannot easily be patched, the long term price impact on bitcoin will indeed be quite negative, since untraceable trade is one of the major bitcoin value propositions.