Based on the current price it makes roughly 25K bitcoins, and using the current BUY backlog on MtGox, selling them would push the price back to $550. However such a volume will certainly create a panic wave and it could go below that.<p>If they are clever, they won't put everything on the market like this.
The article speculates these Bitcoin will be auctioned off. I wonder if that would be the entire wallet as one lot. Not too many people have the resources and willingness to throw $25 million into Bitcoin outside of the Winklevoss twins and hedge funds. Odds are they might get a good discount, but that might be preferable to the Bitcoin economy than the government selling the coins in smaller lots. 30k coins suddenly flooding the market at once would cause a pretty dramatic drop in price.
It's not clear to me whether this drives the price up or down. Sure, naively, it's more supply therefore lower prices. However, it does lend an air of legitimacy to Bitcoin and will likely raise awareness as it gets played out on mainstream media.<p>In other words, it will likely affect both the supply of and demand for Bitcoin.
I somewhat would think they'd actually want to maintain ownership - but create the illusion they no longer do, so then they can make transactions. It'd be smart to track how those Bitcoin move and all accounts it touches.
> approximately $25 million worth of Bitcoin will be auctioned off soon<p>At least they won't sell it via usual exchanges in one go. That would make quite a mess... (bringing price down to ~0 for a while before everything rebalances)
This service is wathing Feds coffers: <a href="http://www.bitcoinburn.com/" rel="nofollow">http://www.bitcoinburn.com/</a>
(if green then all ok, and they not spending bitcoins)
Counterpoint:<p>The feds selling the bitcoin would be an endorsement of it and the market they used to sell as being legal. This could push the price up.
But thanks to the public ledger that is the blockchain, we know which coins came from the Feds, and as such, which not to accept!<p>Don't let them get away with it, folks.