Monday, July 26, 2021

business

Bidders running up the price of bitcoin in government auction


Twenty-seven bidders are outdoing one another in a scramble to claim a fraction of a bitcoin, sending the price well above market rates in a first-of-its kind auction at the General Services Administration.

1,010

View

Officials at the federal agency placed a 0.7501 share of a bitcoin on the auction block for a two-day bidding event this week, marking the first time the GSA - which typically offers up surplus government vehicles and office supplies - has allowed the public to place bids on cryptocurrency.

With just hours remaining in the auction, the highest bid would claim the bitcoin share at $48,755. That's about 13% higher than the market value, meaning the government auction is set to generate a significant premium, so long as the price of bitcoin does not suddenly spike before Wednesday evening.

Bidders have one-upped themselves throughout the auction. The GSA's bidding history shows that the auction participants - who are not identified - have raised the top bid by more than $5,000 since Monday, in increments ranging from $5 to $600. The financial battle to win the bitcoin slice has outpaced the broader market, where the price of bitcoin has fallen slightly since the start of the week.

The auction comes amid an extraordinary rally in cryptocurrency markets, and as bitcoin recently surpassed $60,000 for the first time. Bitcoin's value has climbed 90% since the start of the year, riding a staggering comeback from the lows of last spring, when investors rushed to sell during the early weeks of the pandemic.

Experts say the recent bitcoin surge is driven in part by investors seeking protection from inflation and as an alternative store of value. "People buy it outright as an investment, but increasingly it's also being bought in order to diversify traditional portfolios," said Shane Edwards, global head of investment products at Diginex, a digital asset financial services company.

While the cryptocurrency bidding event is a first for the GSA, the U.S. Marshals Service has been auctioning bitcoin since 2014, following the FBI's crackdown on the digital black market Silk Road, seizing more than 170,000 bitcoin. The law enforcement agency has administrated a total of nine bitcoin auctions.

The GSA declined to share where its bitcoin fraction came from, citing privacy concerns. Items up for GSA auctions can come from a range of sources, the agency said, including seized property.

The winner of the auction must send the full payment by Friday, through a wire transfer, and needs to have a digital wallet to receive the piece of bitcoin.

Published : March 18, 2021

By : The Washington Post · Hamza Shaban