Could price have been kept "stable" for the Winklevii news?

[BitChick]

This is going out on a limb, but there has been talk that "someone" has been keeping the price hovering around $100 for a while now.  There has been much discussion as to the purpose of this.  I was just thinking that maybe the Winklevoss Twins would want to do that before this great press release:

http://blogs.wsj.com/moneybeat/2013/07/01/winklevoss-twins-file-to-launch-bitcoin-exchange-traded-product/

If the price has been kept lower than it would be otherwise, with more money flowing into their "product" and the value of the BTC increasing quickly they will look like geniuses to their investors and then even more money will flow their way.  Of course, we will all benefit from this if we are holding some coin.

What do you think?  My husband thinks it does not make sense.  It just seems like the price has been kept artificially stable though.

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[hmmmstrange]

I would argue that it would be in their best interest to buy OTC and sell on the market in order to get as many coins as possible at the best price to fund the ETF. I suspect there are some poor saps in the OTC world that just got Winklevossed!

[DeathAndTaxes]

What do you think?  My husband thinks it does not make sense.

No.  S-1 is the first step in a very long process.  Once approved, underwritten, accepted for listing on exchange, and initial investors lined up the initial baskets will be sold at market price (whatever that is, whenever that is).  Even if approved by regulators and accepted by an exchange it may be the better part of a year before it begins trading on the open market.  Keeping the exchange rate "steady" in June 2013 when your IPO may be in April 2014 doesn't really do much does it?

[BitChick]

I guess it would be pointless for them to keep it at 100 when it will take so long for there IPO to go through.

I would think if the Winklevii can pull this off it is still a good thing for BTC.

[BitChick]

I would argue that it would be in their best interest to buy OTC and sell on the market in order to get as many coins as possible at the best price to fund the ETF. I suspect there are some poor saps in the OTC world that just got Winklevossed!

Perhaps they have been doing this?  I guess we will never really know.

[Raize]

No.  S-1 is the first step in a very long process.  Once approved, underwritten, accepted for listing on exchange, and initial investors lined up the initial baskets will be sold at market price (whatever that is, whenever that is).  Even if approved by regulators and accepted by an exchange it may be the better part of a year before it begins trading on the open market.  Keeping the exchange rate "steady" in June 2013 when your IPO may be in April 2014 doesn't really do much does it?

Sorry D&T, I respect your opinion greatly, but this isn't entirely true. IPOs can go quickly, especially if you have experience or were planning on it. Though, "quickly" here still means about 4 to 6 months. It may be that, because of the political implications, you were imaging that a Bitcoin ETF could take longer...

Google, for example, went from S-1 to full IPO from April 29th to August 19th in 2004. The Facebook S-1 was in February of 2012, IPO in May. Even Groupon, which filed on June 2nd, 2011 was seen as having been "mired in accounting corrections" yet still had their IPO by November of that year.

[champbronc2]

OK, so 1,000,000 shares representing .2 BTC each at $20.09 per share ends up being $100.45/ BTC. But

200k BTC. But they must be distributed in 50,000k chunks.

The Trust may be required to terminate and liquidate at a time that is disadvantageous to Shareholders.:

If the Trust is required to terminate and liquidate, such termination and liquidation could occur at a time that is disadvantageous to Shareholders, such as when the Blended Bitcoin Price is lower than the Blended Bitcoin Price at the time when Shareholders purchased their Shares. In such a case, when the Trust’s Bitcoins are sold as part of the Trust’s liquidation, the resulting proceeds distributed to Shareholders will be less than if the Blended Bitcoin Price were higher at the time of sale. See “Description of the Trust Agreement—Termination of the Trust” for more information about the termination of the Trust, including when the termination of the Trust may be triggered by events outside the direct control of the Sponsor, the Trustee or the Shareholders.

Gox volume is over 1 million. This will follow Gox.

Anyway, to answer your question, I think these guys probably could've been accountable for recent market manipulation. Recent big moves have been in the 15,000 up to 50,000 range I think.

[Raize]

I don,t get it. Each share is 1 bitcoin. Each share costs $20. The cost of BTC will crash!

Each share is 1/5th of a Bitcoin. It won't necessarily be $20. Whoever buys a basket will be determining the price. All the Winklevoss twins are trying to determine is if someone is willing to, for lack of a better term, *underwrite* the value of a Bitcoin.

It's no surprise that if a Bitcoin ETF were to happen, it would trade at a premium (ie, more) to the value of the Bitcoin itself. This would be reflected in that fact that it is not technologically-simple for the average stock trader to participate in Bitcoin. If I understand things correctly, the Winklevoss Twins are attempting to provide the security of Bitcoin on a mass-scale to the US investing world. You can probably imagine it like people did Bitcoinica, which operated in a similar fashion.

While I don't think this bodes ill for Bitcoin itself, US investors participating in Bitcoin via an ETF would undoubtedly have an impact on value. They could sell puts or short the currency, and possibly make or lose millions of USD in the process. Alternatively, they could buy, buy, buy and drive the price exponentially to obscene levels. What the Winklevoss twins appear to be doing, to their credit or dismay, is to at least give investors and traders the option, and I can't hardly fault them for that. After all, it was something I had considered six months ago.

[sunnankar]

While I don't think this bodes ill for Bitcoin itself, US investors participating in Bitcoin via an ETF would undoubtedly have an impact on value. They could sell puts or short the currency, and possibly make or lose millions of USD in the process. Alternatively, they could buy, buy, buy and drive the price exponentially to obscene levels. What the Winklevoss twins appear to be doing, to their credit or dismay, is to at least give investors and traders the option, and I can't hardly fault them for that.

If Bitcoin wants to have a price that is determined by the market then the more market participants that can speculate on its price the more accurate the price discovery process because capital pools are deeper and more liquid.

While this type of shunt from traditional capital pools could be a weakness to Bitcoin in the short-term as it will make price manipulation by deep pocketed parties easier; it will be interesting to watch the medium to longer term as this will likely become a significant strength.

[monsterer]

This would be reflected in that fact that it is not technologically-simple for the average stock trader to participate in Bitcoin.

It's not simple for *any* outsider to trade bitcoin; it's damn near impossible if you don't have any coins and are trying to buy them. Being a stock-trader doesn't really change anything?

[weisoq]

Perhaps you should ask yourself why anybody would set up a relatively efficient taxable vehicle for an underlying untaxable (certainly to hold) asset if they had any intention except selling out, and why any bitcoin supporter would want to support that by buying the etf.

[DeathAndTaxes]

Sorry D&T, I respect your opinion greatly, but this isn't entirely true. IPOs can go quickly, especially if you have experience or were planning on it. Though, "quickly" here still means about 4 to 6 months. It may be that, because of the political implications, you were imaging that a Bitcoin ETF could take longer...

Google, for example, went from S-1 to full IPO from April 29th to August 19th in 2004. The Facebook S-1 was in February of 2012, IPO in May. Even Groupon, which filed on June 2nd, 2011 was seen as having been "mired in accounting corrections" yet still had their IPO by November of that year.

Noted.  For some reason I recall the Facebook IPO took much longer but I guess I was mistaken.  Still 4-6 months vs "better part of a year" I think we are pretty close.  The timeline is likely measure in months not days or weeks, anyone expecting less will probably be disappointed.  I think it is more likely the offering is simply rejected rather than approval taking years.  So we should probably know by the end of the year.

Since the S-1 is public record, is any rejection by regulators also public record?

[razorfishsl]

When this goes up a certain Creek, you will need a couple of professional rowers.
 

[tclo]

If the price has been kept lower than it would be otherwise, with more money flowing into their "product" and the value of the BTC increasing quickly they will look like geniuses to their investors and then even more money will flow their way.  Of course, we will all benefit from this if we are holding some coin.

What do you think?  My husband thinks it does not make sense.  It just seems like the price has been kept artificially stable though.

If anything the price is being propped up a bit.  It is probably heading lower  It has been going lower for quite a few weeks now and no reason to think that will magically change without some sort of catalyst.

[Paladin69]

Won't this open the door for the megabanks to naked short sell in massive quantities like they do with GLD & SLV?

Sorry, I don't know where the original thread is.

[Snail2]

Won't this open the door for the megabanks to naked short sell in massive quantities like they do with GLD & SLV?

Sorry, I don't know where the original thread is.

That door have been open since the beginning by design .
The twins just one single whale in the pond and there are more whales and lot's of sharks. So they can make a big fuss but I don't think they can take control. If I'm wrong then we can still escape by swapping to alts .

[doom309]

yeah, thank god for all those "useless" alts ...

im not sure i like this idea, effectively turning bitcoin into a wall st derivative, but we shall wait and see what eventuates, the traders among us will be able to use our fiat to long and short it, and make fiat that way, but for the goos of the btc economy we shouldnt really be giving this idea much publicity, i mean, we want people to buy actual bitcoins dont we