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Author Topic: Winklevoss ETF... What are the likely scenarios.  (Read 2108 times)
johnyj
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July 03, 2013, 03:50:15 AM
 #21

What I like to mention here, like I already described before is the dangerous game the Vinklevoss are playing if they decide to "prop up".

If they leave it at the 200K and be done with it it wouldn't have any dire consequences, maybe siphon a few buyers off mtgox but overall stabilize the price.
However if they do prop up it will lead to a very chaotic market where due to insufficient liquidity prices rally up crazy and crash instantly after the liquidity returns.
There is an interesting academic work on the subject which you can observe here:
http://demonstrations.wolfram.com/TheHazardsOfProppingUpBubblesAndChaos/

I'm not too concerned about the prop, due to limited supply of coins

In a normal bubble, the asset's supply will increase following the price increase, so when price finally reached a turning point that the amount of fiat money supply is not enough to support the price, the added asset supply enter the market at the same time at its biggest scale, so the price will crash hard and long

But for bitcoin, supply is always the same, when the price rised, the liquidity will immediately become a problem, so price rise quickly and crash quickly, like a storm in summer, shake out speculators, but does not really have big negative effect for long term investors(The rise and crash is so quick that most of the investors just do not feel it  Grin )

And a fast rise in price and crash will attract a whole new group of investors who were watching on the side line. Previous owners might have incentive to sell the coin when they had great profit, but why cash out to USD if bitcoin itself is even better in holding values? So most of their sales will be small scale, or not at all if they could spend coins to buy other things

Zaih
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July 03, 2013, 03:57:02 AM
 #22

I feel as if this is just going to attract more speculative volume, therefore demand, therefore heightened price. Sure, that's great. But aren't we all after a society that uses a decentralized currency to conduct payments etc.?

It's not exactly great for Bitcoin.. But for the price, I don't see how it can be anything but a positive, I guess.
MikeH
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July 03, 2013, 11:49:33 AM
 #23

I'm not sure what to think, yes it may bring about more investment and stability however will the price of BTC end up being determined by the ETF as with gold and silver?

We know the price of gold and silver have been manipulated by the ETF for a long time, supply and demand doesn't play a part.. even the most recent drop in gold price coincided with a big increase in demand for physical gold and even most of those selling their ETF's did so in order to buy physical which in turn caused the price to drop below the cost to mine.   Seems a great time to buy but what has to happen before we see the real price based on supply and demand?  I dunno, it's messed up and I can't imagine how a BTC ETF will work out.
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