Will The Bitcoin Investment Trust affect the price?

[adamstgBit]

The big news is that secondmarket has launched "Bitcoin Investment Trust"   http://www.bitcointrust.co/    also see https://www.secondmarket.com/education/learn/bitcoin-education-center

The Bitcoin Investment Trust (BIT) is a private, open-ended trust that is invested exclusively in bitcoin and derives its value solely from the price of bitcoin. It enables investors to gain exposure to the price movement of bitcoin without the challenges of buying, storing, and safekeeping bitcoins.

So let's speculate, will price be affected? by how much? and why?

[adamstgBit]

I'll go first

will price be affected?

yes.

by how much?

much!

why?

Because Bitcoin!

Because the barrier to entry for bitcoin has always been quite high, since you needed to be "good with computers" to understand how to acquire and store bitcoins. Non-tech savy people were highly discouraged from investing in bitcoin, because everyone always said that it was easy to lose your bitcoins, or get hacked, if you didn't know what you were doing... and it was good advice...

but no more!

now anyone can invest in bitcoin, and not have to worry about these SCARY technical things  


BIG NEWS INDEED

[superduh]

people will invest in it  because it really is true. most people can barely use computers but want in on the action! people should move their iras etc over to this asap! better than most overpriced  garbage they are holding now

[Kupsi]

will price be affected?

Yes!!!  

by how much?

10x maybe  

and why?

It's Bitcoin  

[adamstgBit]

Historical Net Asset Value

The Net Asset Value (NAV) of the Bitcoin Investment Trust is calculated daily at 4pm ET*. Historical NAV:
September 25, 2013: $12.88
*NAV per share for the BIT (capitalized on September 24, 2013) is calculated based on the historical price of bitcoin. If you would like to see how NAV is calculated, please refer to the private placement memorandum. The price of bitcoin is highly volatile and it is possible to lose the entire value of your investment.

you have to have an account there to see this "private placement memorandum"

I tried creating an account but i was hit with questions "like what is your net worth?" and got totally discouraged.

[adamstgBit]

look at "INVESTMENT DETAILS"

see this line

LIQUIDITY:   To commence no later than March 2014.

does that mean if you buy into this trust you won't be able to cash out till march 2014?

[derpinheimer]

Any effect on price is already worked in to the current value. Come on, we know this by now

[notme]

Any effect on price is already worked in to the current value. Come on, we know this by now

Pumpers gonna pump.

Buy the rumor, sell the news.

[adamstgBit]

Any effect on price is already worked in to the current value. Come on, we know this by now

lol what? no one knew this was happening...

[msc]

LIQUIDITY:   To commence no later than March 2014.

does that mean if you buy into this trust you won't be able to cash out till march 2014?

Yes, probably.  First they have to find buyers for all of their shares.  Then they can offer public trading.

will price be affected?

Not right away.  They're only selling $2.25 million of Bitcoin, or 0.15% of Bitcoin's market cap, if I'm right.  Still, this is excellent news.  And since it's an open-ended trust, it won't always be limited to the initial $2.25 million.

Also:

German parliament member and bitcoin advocate Frank Schaeffler commented: “we should have competition in the production of money. Bitcoins are the first step in this direction.” Kathleen Brooks, a research director at FOREX.com called the ruling “a good example of German forward-thinking” speculating that if the euro ever failed, bitcoin could now be a viable alternative.
https://www.secondmarket.com/education/landing/bitcoin-buzz-2

[nobbynobbynoob]

Any effect on price is already worked in to the current value. Come on, we know this by now

As is downside risk. You can't only view things from one angle alone.

[User705]

Hmm hard to say but think about this.  All people that buy the trust won't buy bitcoins directly since the trust presumably already owns the bitcoins.  Also if the trust ever gets derivatives on top of it that means again more fiat going somewhere else besides into bitcoin itself.

[cypherdoc]

the analysis of this is the same as that of the Winklevii ETF.  these are similar to the GLD and SLV ETF's which contributed to the run up in gold and silver.

yes, UP.

[User705]

Here is what I don't understand.  I can see a fund for gold or especially silver since storage and handling is an issue with PM but why would anyone want that for bitcoins.  They don't cost anything to handle or store.

[rampantparanoia]

They don't cost anything to handle or store.

You answered yourself! Maximizes profit 

[User705]

They don't cost anything to handle or store.

You answered yourself! Maximizes profit 

Good deal for trust bad deal for buyer.

[adamstgBit]

They don't cost anything to handle or store.

says the guy that stores his bitcoin on someone elses web server.

[Ares]

LIQUIDITY:   To commence no later than March 2014.

does that mean if you buy into this trust you won't be able to cash out till march 2014?

Yes, probably.  First they have to find buyers for all of their shares.  Then they can offer public trading.

will price be affected?

Not right away.  They're only selling $2.25 million of Bitcoin, or 0.15% of Bitcoin's market cap, if I'm right.  Still, this is excellent news.  And since it's an open-ended trust, it won't always be limited to the initial $2.25 million.

Well they said the minimum one can invest is 25k, and essentially only millionaires have the credentials to be involved with SecondMarket and so I suspect that 2.25 million will be gobbled up rather quickly. Should they be interested enough, I'm sure there are plenty of investors who would eat the whole thing in one bite

[Jumpy]

Note that this trust will almost assuredly be limited to accredited investors, which means those who make at least $250K a year or have a net worth over $1 million dollars.

Luckily, people with that much money are probably smart enough not to pay someone else to make transactions with bitcoins with NO ADDED VALUE.

As such, my guess is that the AUM for this trust will remain pedestrian and the price implications will only have to do with public sentiment and overreactions.

[Ares]

Note that this trust will almost assuredly be limited to accredited investors, which means those who make at least $250K a year or have a net worth over $1 million dollars.

Luckily, people with that much money are probably smart enough not to pay someone else to make transactions with bitcoins with NO ADDED VALUE.

As such, my guess is that the AUM for this trust will remain pedestrian and the price implications will only have to do with public sentiment and overreactions.

(bold added)
There is plenty of added value.

Until now, getting anywhere near a bitcoin was a tricky proposition, primarily because the two biggest bitcoin exchanges are outside the U.S. and unregulated.

"We incubated the BIT to alleviate the problems of direct bitcoin ownership, including having to wire money to newly established and potentially unregulated entities around the world," says SecondMarket Founder and CEO Barry Silbert.

Also the safety of not having to give all your personal info to these offshore exchanges, and also the convenience of not having to figure out and deal with Bitcoin wallets.

to quote Eric Vorhees:

YES!!!!!!!!! This is a long-awaited game changer. Why? Because institutional and wealthy investors who are interested in a Bitcoin position don't have to worry about wallets, storage, gox verification, hax0rs, etc. This is a professional, Wall St. level asset bringing Bitcoin exposure to the "real" financial world (and you know why I use quotes).

Everyone knew this would happen eventually. SecondMarket seized the opportunity and is an ideal firm to manage it.

For those who don't know, SecondMarket is an equity market for pre-IPO companies. Facebook and Twitter shares traded here before their IPO's. This will be big news in the morning.