Bitcoin Forum

GABI is a regulated OFFSHORE hedge fund for institutions approved to trade in BTC-first of the sort.
Why it is appealing to institutional investors such as pension funds and insurance companies?
Because the island of Jersey has NO cap gains tax.
The fund will start on Aug 1
http://www.bbc.com/news/world-europe-jersey-28247796
http://www.newsweek.com/ex-jp-morgan-trader-joins-bitcoin-bulls-launching-hedge-funds-258494

I expect accumulation during Aug, then the rocket launch a la GLD

 :o this could be big...

Do we any estimates on incoming investments into this fund?

Looks like $200M to start:


I like Daniel Masters, the guy running this fund, from what I read in the article. He seems genuinely enthusiastic about the technology:

WTF $200M THATS LIKE 5 TIMES THE BITCOIN ON ANY EXCHANGE AT ANY PRICE

Forgive my ignorance, but how will this affect the price?  Do they already have coins for the fund? Are they planning on purchasing coins for this fund? How will $200M be used?

They'll buy it, just like SecondMarket did.

The Winklevoss ETF has 200k btc already, so after they cover that with investments, they will buy too.

Do we have any idea how many coins they are starting with and where they will buy them?  I am sure that they will try to buy them off the exchanges but with SecondMarket and other funds opening soon it will get harder to do so I would imagine.  Supply and demand should really come into play very soon here!

Yeah, there is no off exchange supply big enough for 200 million. Much less the potential cumulative effect of these types of funds.

I would think knowing this is coming should cause some panic buys right about now.  Perhaps this is what triggered the 2000 BTC buy this morning? Seems like a good time to pick up as many coins as possible anyways.  ;)

Well, they could like start by purchasing like 1000 coins a day, split into several small bunches whenever we hit a reasonable wall so they can accumulate a bunch with reasonable slippage. I bet that would not make gigantic waves to the point of causing panic buys for some time, and they could accumulate a fair amount of the money supply before poeple start noticing.

Really? 200 million in buys secretly unnoticed? Hmmm. Ok.

It appears that there has already been a bot buying coins regularly and systematically during the past several weeks/months.  I suppose it could go somewhat unnoticed if the amounts were small enough and the time between buys was long enough not to cause panic.  Throw in a few sell-offs to cause people to dump more coins and then repeat. ;)  Who knows.

Probably not the whole 200 million, but they could get in what would otherwise be an unreasonable amount at a reasonable price with this strategy, I believe. Just have a bot waiting for a sell wall to put up right in front of price. Or even a bit in front, and wait till we get there. It would be the same as if the wall wasn't put there in the first place. Sure the price would drift upward, but its not as if people put a market order of the whole amount. Or even smaller market rders along the way.

this is what I've been saying for a while, the 600 ceiling has been artificially helped along to let big players position themselves better before things get out of hand. i just didn't realize they were going to be hedgefund big.

Hey Bitchick, that is exactly what happened during the last big spike in price.
There was a bot buying something around 10btc every minute or so.

Bot's are probably getting more advanced now to test the slippage and back off etc. but I think they will find it difficult to hide $200m in purchases..even over a period of a year.

 

According to the article, Masters is "co-principal of Global Advisors Jersey Ltd.—which trades up to $2 billion of energy and equities". The bitcoin hedge fund is launching in less than a month. Do you really think he hasn't already acquired a significant number of bitcoins?

He may, but not necessary all on behalf of the hedge fund.  ;)

And what? You think he's going to be nice enough to donate those to the hedgefund?

If he's starting this, he's clearly a bitcoin bull. While he may use his own coins as a buffer, he's not just going to turn his coins over like that. Hell, I know some fund managers actually lend their own assets to their own funds if they need to. What makes you think he won't do that with coins?

Youre right. Hes probably already acquired at least 200$ million worth. Nothing to see here.

The Winklevii are using their own coins to get their ETF off the ground. Assuming Masters has a big chunk of starting capital (and I don't actually know whether he does or not) why would he do differently?

I would like to add:

how much actual fresh fiat money do you think came into the exchanges during the last bubble? 10 million? 50 million? 100 million? 200 million? A billion?

I think, based on conversations I had with Bitfinex about money coming in during November 2013, that extrapolated across all the exchanges it was likely less than $250 million (I actually think it was less than 200 million) that took the price from $125 to $1100.

Remember as well, that the bubble literally started 1 week after SecondMarket opened and during the run up - Secondmarket and Pantera were buying a significant amount (less than 100 million though).

So what do you expect to have happen when hedge funds start popping up around the world?  The first gold ETF took in 1 billion in investment in its first 3 days 10 years ago. That was 1 fund.

I cannot see how this is not the catalyst for the next bubble.

Because a Hedge Fund is not an ETF.

The question is WHY WOULD HE?

Look, I'm not trying to downplay the significance of this. I think it's huge. Risto at one point calculated that every $1 of new money invested into bitcoin results in some very large (much larger than $1) rise in btc market cap. (I want to say a multiplier of 10 but I don't remember; that could be way off base.) I just tire of the logic behind "OMG what if he puts a single $200M buy order into the fifth largest exchange right now, the price would be 100 gazillion OMG OMG OMG!!"

Unless this guy is an idiot, the $200M purchase will be spread out over a long time period, and we can't assume that time period necessarily starts Aug 1. That's all I'm saying.

I don't know enough about the difference between hedge funds versus ET funds to know why it would make sense for the fund originator to pre-purchase the asset for the latter type of fund but not the former. Care to explain?

According to windjc's numbers, this coefficent is over 60. (200 Millions of fresh money increased bitcoin capitalization on 13 billion $). I don't remember Risto's number as well, but I think it was in 10-20 range.

EDIT:
The problem is he may not have long enough time. If he'll try to buy 1KBTC a day, as it was suggested, it may take the whole year. The prices won't wait for him.

I am sure 200mil is just a start. CALPERS is a single pension fund with 288bil in investments. 0.5% of such fund is 1.44bil.
Alternative investments are typically up to ~5-10%, so 0.5% is not unrealistic (eventually, of course), representing just 10% of alternative investments.
There will not be enough bitcoins for all of these guys (at the current price range).

So now we will have a Trust, an ETF, and now a hedge fund. This is happening awfully quick. Better get all the coins you want while you can.

They sure do have a neat promotional video. Can't wait to see what will come out of this.

http://vimeo.com/97754141

Wow this video almost implies that they have a fairly large degree of government support or at least cooperation. I guess that's what you get when you're a big hedge fund in a relatively small economy.

I don't think that these funds will have the luxury of time...

Look at Second Market for example....when an investor decides to invest with them, they have to purchase a nominal amount of bitcoin within a reasonable time to back the investment. It's simply a part of their fund rules and reg environment.

They can maybe delay the purchase for 7 days to wait for a drop in order to get a deal for the fund.


Also, much larger time constraints will add pressure as well....they can't take a year to buy $200m in bitcoin, at some time period the normal "price growth" will outstrip the risk of "price slippage"...and what happens if there is another peak before they are "all in", now they have greater "opportunity cost" losses.  

There is a delicate balance if you want to drop that much capital into bitcoin without either being the cause of your own price slippage, losing out to the average log10() growth, or missing the next big peak.

I always wonder who is making all the big buys when i see those big green bars.
we can only hope big green bars become more frequent

They're regulated, what could possibly go wrong?