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Sitarow, I moved up your summary of the BIT into the first reserved comment slot.
Squawk if you'd like any changes, or if you'd like me to remove it, or your attribution.
Thank you for putting that together.
I have a few more reserved slots, because I think there are a few community knowledge gaps.
The big one where I think Grayscale Invest could have done better is to provide a
"Trading GBTC For Dummies" page.
They have a unique (?) experience where their primary market base will be comprised of people previously inexperienced with OTC trading.
I went through this experience, learning on the first day, and trying to communicate and clarify those ambiguities.
Fear keeps people from trading.
I would have LOVED to see a page.
Top 5 commonly asked questions, with simple answers. Explaining the common misperceptions that seem like 'bugs'. Explaining at a high level the relationship between $GBTC shares and the coins held in the BIT.
Not seeing your trades show up, or having questionable price-range displays. Perfectly normal for someone accustomed to OTC prices. Scary to someone inexperienced, and coming from a background of BTC where price discrepancies can be a canary for an exchange about to have big problems.
Sorry to state the obvious, but I'm too wordy to put together concise answers to "the big questions".
If someone thought it worth creating, that is what one of the other reserved spots was for.
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Peter, can you extend the chart out to the right so we can see what year the 20MB size would be hit?
 Thx for that. It shows quite clearly that attempts to outgrow most of the scaling problems that vex Bitcoin by doing simplistic scaling are pretty futile which is a point of view that I held since before I bought my first BTC (on e-bay IIRC.) I'm using the same computer now that I put together around the time Bitcoin was invented. It's obsolete, but not horribly so. i5 chipset (Nehalem), 4G, a few TB of mirrored encrypted storage, etc. Sure, I could build a much better computer now (although not all that much better), but the ONLY reason I would have any need to do so would be to try to run a simple transfer node. My network capacity has decreased by orders of magnitude since I moved out of the silicon valley so even at 7 TPS I probably would not try and if I did I would only activate it at hours when my data was not metered. Upshot: I could still play a constructive support role in infrastructure support if I had good reason to. One of the main reasons I do not is that if my contribution made much of a difference in a stressed situation where it would be of value is that my efforts could be nixed at a flip of the switch by simple injunctive measures (network censorship.) Because Bitcoin dev has not focused on (or even acknowledged) this potential failure mode I feel little incentive to waste my time and money trying to support the robustness of the solution. The chart shows that in roughly the short time I've been involved (mid 2011) we will be right back to where we are again with 20 MB (forgetting for a moment the little issue that is supposed to be forgotten that many people's 20MB has an exponential growth factor beyond that.) There was a huge amount of low hanging fruit codebase-wise to harvest getting 1MB to work to the extent that it does. That luxury will not be present moving into the 20 MB limit by the nature of how computer science is done. I made several mis-calculations about Bitcoin at the time I put some actual fund into the blockchain: 1) That things would naturally centralize around such entities as blockchain.info, coinbase, etc, and thus alleviate the need to grow the transaction rate. (A positive mis-calculation.) 2) That it would be so blatantly obvious that Bitcoin's only realistic trajectory would be as a backing store for similar solutions by the time we stressed the transaction rate limits that nobody could argue otherwise. (A negative mis-calculation.) edit: slight. Also: I would again note that the issue charted is UTXO which is not particularly related to transaction rate. An attack I thought of years ago would be to formulate UTXO's systematically to chain blocks together in such a way that 1) their count would stress the working database (currently implemented in RAM most often) and 2) verifying them would touch as many blocks as possible making rendering of much of the actual blockchain itself require for many transactions. I'm sure there is a name for such an attack. If not, call it the 'tvbcof attack' I suppose. I've not 'done the math', but it seems somewhat intuitive to me that such an 'attack' would happen organically upon reasonable use rates (which we have yet to even approach in the real-world to this point if Bitcoin remains a 'one-size-fits-all' exchange currency solution.) This could be a high visibility chart. We are extrapolating a line. I want to point out a risk. The drawn line extrapolates based on an assumption of linear growth from some point midway along the function into the future. If we drew a linear line from the start of the dataset through the current time, we would hit 20MB at a different, earlier date. If we drew the line of best fit as a polynomial function (which is currently above the line and returning to it), we would hit 20 MB at a different, still earlier date. If we drew a sigmoid function where we are approaching a ceiling, it is possible that limit would never hit 20MB. If it is within anyone's capacity, I think it would be worth throwing these data points into some statistical software and determining line(s) of best fit, with correlations and such. It would turn something that is subjectively interpretible into something objective. I think that's important in this debate, for many of the reasons Zangelbert mentioned above. |
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I would strongly prefer, at this point, to keep the rule the way it has been.
The eight hour window is part of the nature of this game. Changing it would change the game midway into a different game. I am saying this having been burned by the window myself. got burned stuck In a trade myself
Sucks, but you definitely modify reading behavior accordingly.
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Speculating about a positive possible outcome: We are two steps away from the market revaluating to include ~135,000 BTC of buying pressure. (They track this in the BIT thread, a great synergy thread to the $GBTC: https://bitcointalk.org/index.php?topic=337486.0 ) Provided we: 1. Demonstrate growing demand for coins offered from BIT holders (Bid volume stays flat or grows). 2. See evidence of a BIT seller using proceeds to reinvest in the cycle (large, new BIT purchases). This would complete the loop, the market will have evidence of the full cycle. The trust functions as a microcosm of what Bitcoin's effect stands to be on a global scale. Investors profit. Profits are reinvested to grow the fund and create future profits. There is a race effect, a motivation for current holders to sell first (high demand and premiums), and also a race effect to rebuy. An example. We see 5,000 BTC get sold (50,000 shares GBTC released). A few days later BIT purchases 8,500 shares on market (the market coins were cheaper, fees paid, etc) Market price goes up $5. We now have a few extrapolations. 8500 shares / 135000 shares = 1/20th effect. If market volume remained constant, a $5 increase represents 1/20 of movement. Revaluated net effect of GBTC current holder cycling and rebuying, $100. But what happens then? The larger market will get to decide. If it rejects that valuation, volume will fill in on the Ask sides, and the same $ generated from the BIT->GBTC sales will move the price up less. Conversely, revaluated contracts and a 'race to get cheap coins' could cause a swift revaluation upwards. When thinking about the likelihood of this, one big question that comes to mind is - will current BIT profiteers reinvest? First thought says yes, who wouldn't sign up for another year when you just netted a 100% premium for your coins? But the window of opportunity is closing. Next year it is very unlikely (IMHO) that $GBTC will be the only investment option. To keep it simple, let's just say COIN is the only other emergent fund. You're not likely to get a premium in this way, investing in COIN. I speculated earlier that I expect GBTC and COIN prices to end up close to each other and close to Bitcoin prices. However, that is not to say that each won't carry a premium. Remember, in each case you are buying a stock for the future performance of that fund. Once it is demonstrated that a profiting fund allows that fund to buy more coins, thus increasing the value of that fund...the same principle will apply to GBTC and COIN. People will be willing to pay more today because of the expectation. The purchase of the stock includes the purchase of its future actions. An ongoing thought in progress. I wanted to share for rejection/refinement/general knowledge sharing. We're used to planning for future selloffs (auctions). It's novel to think through how a market will valuate a future buy-in. |
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Maybe Richy_T would be willing to post a GBTC version of his output to this thread. I don't know if an available data stream for $GBTC is in the same format as what he's currently parsing or receiving from.
Might be worth pursuing.
I appreciate Sitarow posting the book from time to time.
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2nd rename suggestion.
The intent was a parallel but specialized speculation/analysis/theorizing/watching thread specific to GBTC, and speculated interactions with the BTC market.
Throw out some suggestions (all). I'd say I'm all ears but there was a most excellent burn in masterluc's thread the other day that I don't want repeated in my direction :-)
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New ask
CSTI 50.00 4000 15:45
make that 4000
I first worried about this as a looming negative over the weekend. I think that was a nervous over-reaction. CSTI's bid shows an intent to buy at least 4k more at the same 50.00 rate that 4,000 new shares entered the market at today. My read - "Don't worry Maxim - we'll be here buying again at Monday. At $50. Not $49."
Why would one buy a BTC for $490, when the price on US-regulated exchanges is $244?
I posted the only logical theories I can think above a few posts above. Simplified, I postulate we will find GBTC equilibrium at the same price that COIN becomes available. I think this will be general market sentiment. Once COIN is available, it will be more desirable. At that point, GBTC purchases will track with it, for when it falls below, it will be an arbitrage opportunity. A nice day of trading. Nice to see real volume, a true middlepoint hit, and a first fight for which side will pull the other. Remember there are two camps of shares. Once sold, they become more liquid. I expect volume to ramp week to week as this liquid portion increases. |
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Sounds pretty low maintenance. We always welcome new participants, if you'd like to join the game.
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Maxim is testing the market.
They put their Bid at $49 to see if the market will follow them down.
If they are rewarded for their efforts, I would expect them to rinse and repeat the experiment.
I think they're trying to accelerate the price discovery, let someone else soak up some shares, in case the final settled price is lower.
30 minutes left for the day's trading, very interested to see relative volume and price moves.
13,569 shares as of now.
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This is another one of those pure speculation, here's what's going on in my head posts.
Wanted to share my recent theorization. This is an interesting market dynamic.
There is no guarantee that any actor is correct. But I do feel understanding motives gives insight into how the market may behave down the road.
The million dollar question right now seems to be
"WHY are people paying these 100+% premiums? Who does that?"
I couldn't quite put my finger on it either.
There are lots of pieces, and I'm unfamiliar with most.
OTC. BIT holders converting shares after 12 month holding period. Tax deferred benefits. Value-add for convenience, safety, etc.
Put a black box around all that, and call it valuation. WHY are people willing to pay 100% premium?
I nearly liquidated my small existing position when I had the next thought:
As soon as COIN hits the market, GBTC will have a far more liquid, high volume competitor. The only possible way the premium could remain is if (close to) the same premium exists for COIN.
I thought, surely this means we will rocket down to current-BTC prices.
But we haven't.
Sure I just realized these things, but they have been true of the market all along.
A reasonable explanation was still missing.
IPO enthusiasm was the only possible candidate.
Then it clicked.
Simplifying the sale mechanism - the only way new shares are introduced is when a 12+ month holder sells their coins.
If 100% of the BIT holders sold their shares, no new ones would be available for purchase for 12 months. Except on the "aftermarket", from GBTC sellers that had originally purchased from these first-sellers.
So this initial supply is limited. It is large, but it is limited.
If we assume the following:
a) COIN will eventually launch.
b) Market prices will eventually drive both COIN and $GBTC to close-to-parity with BTC market prices, with a small, constant premium.
There is one explanation for why people are willing to pay $50/share for GBTC.
The market has indicated its belief that the exhaustion of the first wave of shares, reconciled against the aftermarket seller price, will result in an equilibrium on par with market prices when BTC prices are worth no less than $500.
Said more simply, buyers believe we'll run out of shares for sale before Bitcoin valuates to $500.
I think of it like a metric from a prediction market.
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A posted Bid of $50 and a posted Ask of $51.
I'll be watching how the market reacts to Maxim's presumable 'ever-renewing' Buy at 50.00.
The first few hours it led, then frontrunners got some fills, and now they sit at the top.
Bidders outbidding the leading bid shows demand outpacing supply.
Maxim holding the lead indicates a possible false floor, if sufficient new liquidity does not replace theirs.
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If and when other bidders 'get wise' to this action, the same process will repeat, with little bids front-running...and then we could have ourselves a _real_ rally and initial price peak.
Gonna have to think about whether I want to shift buy strategies based on all this or just miss out and wait...
That was fast. By the time I posted and looked at the market, NITE and CDEL put up 815 shares at 50.01. I grabbed a few again at 53 (and so did someone else to a larger degree, looking at the trade data. http://quotes.freerealtime.com/dl/frt/M?IM=quotes&type=Time%26Sales&SA=quotes&symbol=GBTC&qm_page=93229I expect us to touch at least 59 again today. After that, lots of possibilities. But seeing this Maxim strategic shift, and subsequent market reaction, on significantly increased volume in the form of new BIT sellers - I am liking it! |
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Given the volume, I think Maxim did what I had pegged as the least likely scenario - changed strategies.
Betcha they just keep relisting 100 BUY at 50, but did not want to communicate the 50K ask and just get outbid while serving as the floor.
If this proves to be correct, Maxim just raised the proverbial floor.
This would be in my view the best case, the one that left those price ranges estimates at 90%. There was a chance of utter crash or floor increase.
Watching with great interest.
If and when other bidders 'get wise' to this action, the same process will repeat, with little bids front-running...and then we could have ourselves a _real_ rally and initial price peak.
Gonna have to think about whether I want to shift buy strategies based on all this or just miss out and wait...
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I think Maxim realized the current market conditions and acted accordingly.
With their big buy present, 1 of 3 scenarios would play out:
-An initial fill from a holder, setting a confident floor to the price. (This failed to materialize.)
-A counteroffer in the form of a matching-size bid on the Ask side, creating price tension for the market to find the middle.
-A second+ Bid creating additional market pressure upwards. (This failed to materialize.)
Until any occurred, the order was having an effect.
With where we stood after the 3 days of price action, my sentiment became:
-I will only buy above Maxim.
I believe a large part of their initial bid was to facilitiate price discovery. In the long run, this is good for Bitcoin.
Once volume was bootstrapped, pulling the bid was the right call.
They do not need to take on the burden of being the first big bidder.
The market can move to its seeming true price, and THEN they can re-post at an appropriate price.
(Or they could shift strategies and start accumulating, but I don't think this is as likely.)
Given their pull, and the subsequent market action, I am reading it as follows:
-The market is gaining confidence that by selling today, they will not be missing out on $100/share prices tomorrow. Willingness to sell is increasing.
I am seeing the trading range of 40 to 55 as likely (75%, 90% chance IMHO we end up within 35 to 55) to be where we settle into after our first wave of higher volume, followed by lower volume. (This volume is starting to increase, starting today 5/8/15.)
Yesterday I had bids at $36.69.
I'll probably be moving that to a half-buy at just-above $40 levels for today, and reserving the second half until equilibrium seems to be reached, or bitcoin-market rally mode is confirmed.
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Thanks for that, sitarow.
You can see the book now has 1127 Asks between $45 and $50.
With only 550 shares between the current, highest $40 and Maxim's $35.
Today is the first day there have been Asks, close to Bids, going unfilled.
That imbalance has grown as the day has gone on.
While still deciding, I think an eventual price between $35 and $65 is pretty probable.
That's still broad, but much more sane than the first day's $35-$200 range.
(1 share sold for $200.00 on the first day.)
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Let's get this speculation started!
We finally got real price discovery action today.
Looking at the orders which filled today, and the net effect on the order book, I am expecting us to bounce down into Maxim's $35 Bid before moving upwards.
I sold the few shares I had not sold at 133 and 65 at 50 today, and am hoping to rebuy just above Maxim.
While I would have been really excited about $GBTC rallying to >250% premiums over BTC...and it still could depending on what actors do over the next 2 days...but I do think consolidating in to a premium in that $350, 40% (!!!) premium range is more sensible to market participants.
If this occurs, we will suddenly move into a more liquid fund. Right now we have about 3.5k max in liquid shares. Maxim is offering up 50,000. That must be the catalyst, unless market activity compels current BIT holders to post large offerings at higher Asks, pulling the market upwards.
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I think this is the most commonly asked question, so I wanted to move it up to one of the reserved slots, at least for the first few weeks/months.
This is another one of those pure speculation, here's what's going on in my head posts.
Wanted to share my recent theorization. This is an interesting market dynamic.
There is no guarantee that any actor is correct. But I do feel understanding motives gives insight into how the market may behave down the road.
The million dollar question right now seems to be
"WHY are people paying these 100+% premiums? Who does that?"
I couldn't quite put my finger on it either.
There are lots of pieces, and I'm unfamiliar with most.
OTC. BIT holders converting shares after 12 month holding period. Tax deferred benefits. Value-add for convenience, safety, etc.
Put a black box around all that, and call it valuation. WHY are people willing to pay 100% premium?
I nearly liquidated my small existing position when I had the next thought:
As soon as COIN hits the market, GBTC will have a far more liquid, high volume competitor. The only possible way the premium could remain is if (close to) the same premium exists for COIN.
I thought, surely this means we will rocket down to current-BTC prices.
But we haven't.
Sure I just realized these things, but they have been true of the market all along.
A reasonable explanation was still missing.
IPO enthusiasm was the only possible candidate.
Then it clicked.
Simplifying the sale mechanism - the only way new shares are introduced is when a 12+ month holder sells their coins.
If 100% of the BIT holders sold their shares, no new ones would be available for purchase for 12 months. Except on the "aftermarket", from GBTC sellers that had originally purchased from these first-sellers.
So this initial supply is limited. It is large, but it is limited.
If we assume the following:
a) COIN will eventually launch.
b) Market prices will eventually drive both COIN and $GBTC to close-to-parity with BTC market prices, with a small, constant premium.
There is one explanation for why people are willing to pay $50/share for GBTC.
The market has indicated its belief that the exhaustion of the first wave of shares, reconciled against the aftermarket seller price, will result in an equilibrium on par with market prices when BTC prices are worth no less than $500.
Said more simply, buyers believe we'll run out of shares for sale before Bitcoin valuates to $500.
I think of it like a metric from a prediction market.
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