Tim Draper Buys Nearly 30,000 Silk Road Bitcoins

The New York Times reported Wednesday Tim Draper’s Silk Road Auction bid for 29,656 bitcoins was accepted by the U.S. Marshals.

Monday announcements by losing bidders that their below market bids had been rejected ignited heavier volume than usual for bitcoin and drove the price from a low of $595 to a high of $647 on Bitfinex.

There had been rumors and articles written that there would be heavy volume last Friday and significant selling pressure. With one winner and many losers it appears the final sales price will be above last Friday’s market price.

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Coindesk reported 45 registered bidders submitted 63 bids. Unsuccessful bidders included SecondMarket, Pantera Capital, Circle and Binary Financial.

SecondMarket put together a syndicate of bidders to participate in the auction. The syndicate had more flexible participation rules and had 42 participating bidders enter 186 bids. SecondMarket announced on Monday their syndicate didn’t win any blocks in the auction.

Some bidders thought this would be a typical property auction or that bidders would be disqualified. This led to thinking or hoping that the coins would sell below market prices. Tim Draper instead used this auction as a unique opportunity to get 29,656 bitcoins to provide Bitcoin liquidity to emerging markets.

Impact on Bitcoin

This auction has placed a stamp of legitimacy on bitcoin, generated media buzz and set the price on an upward trajectory.

Valued around $18 million, this is one of the largest auctions in history and has generated a lot of positive attention on bitcoin. The big question now is how far will this news take the price?

Disclosure: At the time of this writing, David Smith has a long bitcoin position and owns So What’s Bitcoin?