Quote from: Newbie1022 on June 27, 2014, 03:36:48 AM

I am hoping for a drop. I imagine that the price will soar within the year, but there is too much downside risk to jump in heavier around $580. Notably, I worry about Wall Street market manipulators intentionally tanking the market because they have derivative contracts referenced to Bitcoin. For example, in the lead up to the mortgage bubble, Goldman Sachs took out naked credit default swaps via AIG banking on a market collapse that they were responsible for. Notably, the payout of the naked credit default swaps was 10x the underlying dimunition of value in the mortgage market. This occurred because with this type of derivative, one needn't actually own the referenced security, commodity, currency, etc. that they are referencing the "insurance policy" to in order to receive a full payout. Moreover, they can contract for protection that is 100x the value of the underlying asset/currency/security/etc. Since these are unregulated contractual agreements there are no clearinghouses and nobody knows what negative positions people are taking. Resultantly, I think the intrinsic value of this innovation is multiple times its current value and, yet, it is way too easy to manipulate for me to want to get in at this price.

A couple other thoughts

(1) This is why a post-auction dump isn't unfathomable (albeit extremely, extremely unlikely)... an institutional player could use the acquired BTCs as a weapon to tank the market short-term in order to collect on a derivatives contract several orders of magnitude greater than their holdings;

(2) I think the argument for auctioneers buying at a premium is mildly flawed because, although they can buy without impacting the market, they cannot extract liquidity on that many BTCs without dropping the market unless they slow played it and in that case they'd still be holding a lot of risk. They probably will be expecting a jump in prices if they get in, but they'll still run into a similar problem if they look to unload down the line -- they'd have to be a true believer AND somewhat risk blind... they cannot actually utilize that many BTCs unless acceptance goes through the roof OR a major external economic event (Chinese mainland wealth migration). In short, I say it is mildly flawed because I think the reason for expecting a premium is spot-on, but I think it is outweighed by this second factor... I'd expect the auctioneers to buy at a 10% discount.

Full disclosure -- I own a very small holding of BTC (10), that I got at just over $400 a pop. I am holding for the long-term, but hoping for a short-term dump for another entry point. I am very biased in this regard. I missed the boat a while back on the best entry points so take what I say with a grain of salt. I am just curious what others think. I am short-term a mixture of anxious and giddy and long-term hopeful.

Welcome, Newbie... great first post. There are some good points there - and I don't think you have missed the boat at all. Do you think you will try and increase your holdings if there is no drastic change in price after the auction?