MORNING BID – Crypto-sale of the Century
Details on the sale of about 30,000 bitcoin have been spare, but what can be inferred by reading through the lines is that the sale of about $18 million went a lot better than many expected – particularly those who expected to get the coins on the cheap somehow. The prevailing market rate at the end of Monday was about $639, according to Coindesk, currently the leader in the pricing world, and the chatter trickling out was that the unsuccessful bidders – including hedge fund Pantera and SecondMarket’s Barry Silber, who put together a consortium of more than 40 bidders – aimed too low in one of those “Price is Right” moves but without the warmth of Bob Barker to confront you when you lose on these things.
With that in mind the speculation on just where the auction ended up can run wild – did it go for $650? $700 for the lot? Perhaps; those commenting on twitter and to Reuters in a story from Gertrude Chavez and Nate Raymond on Monday were suggesting that there were plenty of newer bidders in the process, firms that have been just getting going in the bitcoin world and probably wouldn’t mind to get their hands on a large stake even at a somewhat elevated price.
Either way, it points to the possibility of more sales from the U.S. Marshals, who are still hanging onto another 144,000 bitcoin that it obtained off a hard drive from Ross Ulbricht, who is accused of running the Silk Road online drug ring, which was shut down last year. (Keep in mind of course the Marshals Service hasn’t released any results.)
Whatever its inauspicious beginnings, that the USMS was able to stage such a successful sale of the crypto-currency means the product has been given real legitimacy as it sold with substantial demand, and leads to more sales later. So there’s only so many times one can say this is fake before one has to think somewhat differently.
Bitcoin is down about 16 percent on the year, so it’s been a loser in a year where almost everything else has gone well in the first half. In a somewhat uncommon fashion, both stocks and bonds, along with gold and oil, are all higher on the year.
That’s a surprise in both the equity and debt markets, where higher interest rates were supposed to sap investor enthusiasm for bonds and reduce the attractiveness of stocks as well. But markets are funny and instead the second half begins with the S&P not far from a record and bond prices surging (high yield bonds, notably, were at their tightest rates against U.S. Treasuries in 2007). We’ll be looking at this a bit later, but suffice to say some people in the credit world are starting to get somewhat nervous about this, believing that the rally has come far enough.
With that there’s some adjustment going on among big credit managers who see the opportunities in riskier credit waning. Fund flows remain strong, though, so what’s a person to do? Either way, the excesses that many discuss when it comes to credit don’t seem to quite be there yet – but they are starting to move closer. The Fed remains very much in the game, but there are plenty of strategists who believe it won’t be more than a few months before they start to pull back, which means a rough ride for almost everyone else.