>>The volatility in the bitcoin price just demonstrates how the majority of the people trading it have no conception of how to value the underlying asset (i.e. demand for a low cost transaction system) and thus it is speculators leading speculators a la the blind leading the blind.
True, but discovering prices for things that otherwise have no price is something markets do routinely every day.
>>The current sharp price decrease is because people are worried that whoever wins this auction (and the subsequent auction of DPR's coins) will want to exit that position. Thus their will be an oversupply in the market and cause the price to decrease. Expecting this, people are taking that into account and trying to get out before the oversupply, causing a self fulfilling prophecy based on bad underlying analysis.
There's nothing unique about this situation from the standpoint of how markets work; the only unique thing is nature of the asset itself. Even so, bitcoins are not fundamentally different from a precious metal like gold. The price of gold isn't based on the value of the products you could make from it; very little gold gets put to any actual use. Gold is valuable primarily as a result of it's being scarce and the fact that people have given it value arbitrarily, just like bitcoin.
What I read in to the price shock is that the U.S. Marshalls probably should have anticipated this result of dumping the entire quantity at once, and they probably should have released it gradually to smooth out the effect on prices. The Marshalls may not have had the right backgrounds and somebody at the top failed to see it coming.
True, but discovering prices for things that otherwise have no price is something markets do routinely every day.
>>The current sharp price decrease is because people are worried that whoever wins this auction (and the subsequent auction of DPR's coins) will want to exit that position. Thus their will be an oversupply in the market and cause the price to decrease. Expecting this, people are taking that into account and trying to get out before the oversupply, causing a self fulfilling prophecy based on bad underlying analysis.
There's nothing unique about this situation from the standpoint of how markets work; the only unique thing is nature of the asset itself. Even so, bitcoins are not fundamentally different from a precious metal like gold. The price of gold isn't based on the value of the products you could make from it; very little gold gets put to any actual use. Gold is valuable primarily as a result of it's being scarce and the fact that people have given it value arbitrarily, just like bitcoin.
What I read in to the price shock is that the U.S. Marshalls probably should have anticipated this result of dumping the entire quantity at once, and they probably should have released it gradually to smooth out the effect on prices. The Marshalls may not have had the right backgrounds and somebody at the top failed to see it coming.