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Comment by mensetmanusman | Hacker News Reader

The US could crash BTC by trying to sell all of this now.

No. There isn't enough liquidity in the market to even sell that amount. They also do these things over the counter, in auctions, which wouldn't have an effect on market pricing at all.

“ There isn't enough liquidity in the market to even sell that amount. “

That’s exactly my point ;)

If they overwhelm liquidity, the price can collapse because they can always underbid those trying to sell.

Except, that isn't what happens, so it makes your statement incorrect.

The US could also overwhelm [insert any free market] by simply executing eminent domain and/or printing enough money.

OK, fine. The person who buys these Bitcoins at auction could cause BTC to crash on all the exchanges.

Why would someone spend a bunch of money to buy bitcoin and then crash the price?

Is that like the ultimate tax loss write-off? ;-)

Who says they have to spend a bunch of money? The amount of money anybody would pay for it is the amount they could get from selling it, which is limited by liquidity. Add the fun they would get from crashing the market, and that is fair market value that these Bitcoins can get at auction.

They could buy futures at a lower price before crashing the markets.

The lack of liquidity is what would push the price down, since demand is higher at lower prices.

Yes, that is generally how markets work. However there is no central exchange for bitcoin, nor is there enough liquidity in any single exchange. So, the seller would need to open accounts in multiple exchanges and sell in all of them. Sure, bringing down one exchange could have consequences for price, but it wouldn't cover this large of an amount of BTC. Plus, half the exchanges with enough liquidity to even begin with, aren't even allowed to be used in the US.

Again, that's not how the US govt works with these things anyway (OTC auctions), so it is all a moot point.

There absolutely are HFTs running off arbitrage on the major exchanges, so you wouldn't need to hit many, just a couple major ones.

We are talking about theoretically crashing the market, not an auction, and illiquidity won't protect it.

Ok, so someone buys the bitcoin at auction for pennies on the dollar, turns around and undercuts every other seller out there.

It is an auction, it won't be pennies on the dollar.

The last person who got that good of a deal was Tim Draper in 2014, which was a brilliant play and even then, I doubt he's sold it all.

https://www.cnbc.com/2021/12/19/what-the-us-government-does-...

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