In my mind, it is inevitable that Silk Road will either be shut down or cease to operate in the not too distant future.
It's funny you should mention this because you can now
bet on exactly that.
Disclaimer: I made that statement.
While successors will eventually spring up in its place, there will still be a large, sudden drop in demand for BTC.
How low will BTC go?
I think there will be a drop, but not as large as you might think. Most of the Bitcoin trade is currency trading, not black market sites. It really depends on what percentage of the market cap is handled by Silk Road if and when it stops running, whether it's shut down voluntarily or not.
How soon might this happen?
No idea. I picked the middle of next year for my bet just to keep it interesting.
Since I believe Bitcoin is bigger than Silkroad, I would welcome the opportunity to buy coins cheaply, but others may see this scenario as a disaster for the community.
I'm interested in peoples thoughts.
I'd certainly like to take advantage of such a drop, but I think Bitcoin is robust enough to survive the demise of Silk Road.
A bigger problem would be Mt. Gox closing suddenly. What we need is more exchanges covering more currencies.
For example there are currently only two exchanges listed on Bitcoin Watch which trade the Australian Dollar (AUD), Mt. Gox and Crypto X Change. The weighted BTC-AUD price is taken from the two. Over the weekend Crypto X Change stopped reporting the AUD price and as a result that weighted average now comes almost entirely (and it was entirely yesterday) from Mt. Gox, resulting in an average price that dropped $0.40 AUD or more.