I'm guessing this must be why the price of bitcoin just decided to take a downward spiral. It's good timing for me, at least if it keeps it up for a while, since I'm planning on buying pretty soon.
Perhaps, or perhaps it was the GHash.io scare. But I do not find either explanation convincing.
To understand why the price is falling we would need to understand first why it rose from 450$ (Apr/25--May/20) to 650$, since this fall is only starting to undo that rise. That explanation had better explain also why the price rose in a few discrete jumps, due to large concentrated buys, rather than in a steady ramp with broad market support. Pseudo-explanations like "bitcoin is like that" or TA astrology will not help of course.
As far as I can tell, the rise (like almost all the major moves since October) was generated and powered by the Chinese market, and copied to the "West" by arbitrage. The spurts could be explained by a few big traders getting inside information of some imminent development with expected positive impact on the Chinese market, such as opening of offshore branches of Huobi and OKCoin, trading in offshore yuan (CNH).
If that is the case, the cause for the current drop should be sought in China too. Neither the FBI auction nor GHash.io thing could have much impact there.
Anyone who was minimally familiar with how the US government deals with seized property, and had some feeling for the way civil servants think, would have guessed that the sale of the SilkRoad coins would happen, and could tell exactly how it would happen: by public auction, in lots, to the highest bidder, at whatever price he offered. And indeed several people predicted that in this forum. There was absolutely no chance that the FBI would sell the seized coins through private deals or on the exchanges, or would try to keep them. (The US government has no more motivation to own bitcoins than it has to own Apple stock or gold-plated Rolls Royces.) So, their sale must have been "priced in" for months. Moreover, the amount is not large compared to other bitcoin hoards that could be dumped (it is less than 8 days worth of the miners' output).
The GHash.io thing is an obscure technical issue that, per se, does not threaten bitcoin immediately. (It is far less worrisome, IMHO, than the recent developments at the Shrem Karpeles & Friends Foundation, also known as the Bitcoin Foundation; or than restrictive regulations that large nations might easily pass; or than several other threats.) I cannot imagine the Chinese traders being impressed by it.
My best guess is that some of those same Chinese insiders who caused the recent rise just got tired of waiting for the expected event, or started doubting the news. Or other Chinese whales became pessimistic about the solidity of the rise, and decided to dump.
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