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Rereading my prior post, it was a little unclear. Let me expand on my prior point. The Bitcoin market is neither liquid or large enough to absorb 30k new coins and remain stable. That means the US government isn't going to get $850 per coin. The effects on the market will likely depend on how the coins are sold.

Scenario 1:

There is a single large buyer. Assuming the buyer and US goverment are smart, they will recognize the liquidity risk of Bitcoin. The buyer will then get a discount for this and be able to purchase the coins at a below market rate. Assuming their plan is to hold onto the coins for the long term (or at least not short term), I wouldn't expect a large movement in the general Bitcoin markets.

Scenario 2:

There are many small buyers. Each sale would slightly effect the price of Bitcoin as each sale would slowly satisfy demand. The US government might receive $850 per coin for the first sale, but certainly wouldn't for the last sale. This would cause the biggest harm to the market as the price would drop more than in scenario 1.

TL;DR - The US government either needs to accept a lower price for the sake of liquidity or accept that their sales will quickly lower the market rate for Bitcoin.



You are absolutely correct on the price they get for them being dependent on how they are sold. The industry jargon for this is how you execute the buy or sell. One option is they could sell the bitcoins using a VWAP algorithm.

http://en.wikipedia.org/wiki/Volume-weighted_average_price

For all other asset classes VWAP execution is a thing and a common one at that. Basic idea is split your large order up into slices and sell small amounts during a given interval. Bitstamp & BTCE have 24 hour volume of ~18k bitcoins. As a fun aside, if you don't randomize your time slice someone like me will see what you're doing and move the market to screw you :).


Or Scenario 1.1:

Buyer and Gov settle as a well below market price, possibly to rid of these e-tokens. Buyer then floods the market with cheap coins that are still a markup from what he bought them at. Market panics ($1000 vs $100), price of bitcoins drops.




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