You pay your money and you take your choice…..
Professional tradesmen who attend auctions on a regular basis, whether in the world of automobiles, property or art, are familiar with the many unexpected outcomes that can arise in the very short time between opening bids and the falling of the auctioneer’s gavel.
Speculation at auctions, however, can often catch both sellers and buyers unaware, a circumstance which is most certainly applicable in the case of this week’s auctioning of 3,000 Bitcoins by the US Marshal Office as reported by LeapRate last week.
The intention was for this particular division of the US Department of Justice to provide a clean re-entry into the marketplace for Bitcoins which had been previously seized by law enforcement agencies as a result of illicit activity conducted by using virtual currency.
A novel idea, demonstrating the US government’s willingness to allow Bitcoin to flourish and also an economically sound measure in order to recoup some of the expenditure in rooting out criminal activity, the auction itself ended with all of the Bitcoins having been sold to one bidder.
From the 45 registered bidders, 63 bids were received, with all participants having been outbid except one, who returned home with all of the Bitcoins.
This in turn caused yet another drop in the value of Bitcoin, which fell to $640 yesterday afternoon.
Whilst new exchanges in safe jurisdictions such as Switzerland spring up, the US government takes on the auctioning of virtual currency to further demonstrate its legitimacy, it is clear that the valuation of the currency can be adversely affected even when events occur in favor of Bitcoin, just as the value can be positively affected by disasters such as the Cyprus banking crisis or Argentina’s capital control laws.
In the aftermath of MtGox’s demise this year and the seizure of Silk Road, values of Bitcoin floundered and recovered in the same vein as investor confidence, and now the auctioning of Bitcoins from the most reliable source possible has dented the value.
Going once, going twice, sold.