Quote from: jl2012 on June 15, 2014, 06:15:00 PM

Bears please try harder. SecondMarket will bid the FBI coins: http://newsbtc.com/2014/06/14/bitcoin-trust-secondmarket-btc-trading-desk-bid-u-s-marshals-bitcoin-auction/

Noblesse oblige, you leave me no choice ... Wink

If SecondMarket grabs those coins, they will then "sell" them to SMBIT investors (in the form of SMBIT shares) at market price, by definition. Therefore they will probably bid at the auction somewhat lower than market price. How much lower? The lower they bid, the greater will be their profit (note that the SMBIT investors will not get any of that profit, it will go all to the SecondMarket owners), but also the greater the chance of losing the auction. So it is hard to guess.

At their current growth rate, SMBIT will take many months to "sell" a substantial slice of those 30'000 BTC (say, 9'000 BTC) to new investors, in the form of SMBIT shares. If SMBIT does already own enough coins to cover for their current investors (as they are supposed to), then buying thousands of BTC at the auction, with their own dollar reserves and near market price, will be a big gamble about the future price of BTC and the future attractiveness of SMBIT. That is another reason to expect a bid significantly lower than market price.

SecondMarket is looking for partners for the auction, and maybe some of the partners will be short-term speculators who will then try to sell their share of the coins on the exchanges. If the auction closes 30% below market, they may not mind selling with 15% slippage.

Finally, we do not know whether the syndicate will gather enough resources to bid for all 30'000 coins; so that SM plan does not remove the fear.

(That said, I must also say that I don't see that auction as responsible for the current drop. I imagine that most traders knew it would happen, so they have it "priced in" already; and most traders should not see it as a big deal.)