Will The Bitcoin Investment Trust affect the price?

[bitcodo]

Price impact: Dramatically up

But not right away. Consider what will happen:

1) It will take X days, weeks, or months for the initial few million $ worth to be bought up. Those purchases have no effect on the exchange price, or maybe even a mild negative effect if some who were buying coins steadily via the exchanges switch over to BIT.

2) Once the initial few million in seed is bought up, Second Market will start to purchase more, maybe $5-10 million worth. If they do part or all of this on an exchange, the price impact will of course be strongly positive. However, given how many contacts they have for private placement, they'll likely acquire part or all of those coins from dark, non-exchange sources. If they purchase very few of those coins on exchanges, the immediate price impact will be negligible, but the medium-term effect will be dramatic.  

The reason why is a bit subtle but very real: Insofar as the people Second Market buys the coins from would have sold those coins on exchanges if it weren't for SM giving them the wonderful opportunity to sell without slippage, that much less BTC is going to be available on the exchanges. The same amount of money chasing fewer BTC means a higher price per coin. But there will be a time delay, perhaps days or weeks, maybe in some cases months.

The fun part is that those who understand the time delay get to make money off those who are fooled by the time delay. Translation: Buy before the price rises and get in on the ground floor of the next stage of the bitcoin rocket.

Then why does the price go down at all?

Unless—buyers make mistakes about how fast valuation actually gets priced in.

People are selling bitcoins because they need equipment for for this next stage of the bitcoin rocket.

bitcoin equipment

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[adamstgBit]

Price impact: Dramatically up

But not right away. Consider what will happen:

1) It will take X days, weeks, or months for the initial few million $ worth to be bought up. Those purchases have no effect on the exchange price, or maybe even a mild negative effect if some who were buying coins steadily via the exchanges switch over to BIT.

2) Once the initial few million in seed is bought up, Second Market will start to purchase more, maybe $5-10 million worth. If they do part or all of this on an exchange, the price impact will of course be strongly positive. However, given how many contacts they have for private placement, they'll likely acquire part or all of those coins from dark, non-exchange sources. If they purchase very few of those coins on exchanges, the immediate price impact will be negligible, but the medium-term effect will be dramatic.  

The reason why is a bit subtle but very real: Insofar as the people Second Market buys the coins from would have sold those coins on exchanges if it weren't for SM giving them the wonderful opportunity to sell without slippage, that much less BTC is going to be available on the exchanges. The same amount of money chasing fewer BTC means a higher price per coin. But there will be a time delay, perhaps days or weeks, maybe in some cases months.

The fun part is that those who understand the time delay get to make money off those who are fooled by the time delay. Translation: Buy before the price rises and get in on the ground floor of the next stage of the bitcoin rocket.

Then why does the price go down at all?

Unless—buyers make mistakes about how fast valuation actually gets priced in.

People are selling bitcoins because they need equipment for for this next stage of the bitcoin rocket.

bitcoin equipment

Yes, eventually the entire mass of the moon will be converted into a mining node.

thats a lot of 25 nm chips 

[SheHadMANHands]

Wonder how long price movement will take, or when BIT will collect their first $2.5 million.  I could see 5-10 investors/wealthy action junkies scooping that up in a few weeks.  It's not much money to some.

This is good news for bitcoin. The only question, I suppose, is "how good of news". 

[SheHadMANHands]

And "yes", the current price is reflected in that $2.5 million already purchased, but obviously this market is highly, highly speculative.  If the public sees this as positive news, with a positive expectation beyond that initial $2.5 million or whatever, then it seems logical for speculation to again start driving the price higher.  No..?

If the market cap reaches ~3-5 billion, we'll start seeing much more $$ thrown into bitcoin businesses.  Currently, it's more profitable to just purchase bitcoin than try to grab some small percentage market share of a not very large market.  It's self reinforcing, IMO.

[SheHadMANHands]

Wonder how long price movement will take, or when BIT will collect their first $2.5 million.  I could see 5-10 investors/wealthy action junkies scooping that up in a few weeks.  It's not much money to some.

This is good news for bitcoin. The only question, I suppose, is "how good of news".  

Perhaps the smart money has already priced it in. It's not exactly like Bitcoinland has fantastic controls for trading on inside information.

It'd be interesting to see some analysis of volume purchases on Gox/BitStamp over the past few months.  Has there been substantially more buying than what might be expected from the "collection" of $2.5 million in BTC (18k BTC or whatever) for this fund?  There are plenty of people not in the "smart money" sitting around, waiting to pick up btc when news arrives.  I would guess many of these people have just as much money on the exchanges as the "smart money", and are able to move the market and shift buying momentum.

[Herp]

Wonder how long price movement will take, or when BIT will collect their first $2.5 million.  I could see 5-10 investors/wealthy action junkies scooping that up in a few weeks.  It's not much money to some.

This is good news for bitcoin. The only question, I suppose, is "how good of news". 

Perhaps the smart money has already priced it in. It's not exactly like Bitcoinland has fantastic controls for trading on inside information.

Perhaps Matrix Oracle Choupacabra here is short bitcoin on CampBX or currently looking to load up on some fresh coins.

[adamstgBit]

Wonder how long price movement will take, or when BIT will collect their first $2.5 million.  I could see 5-10 investors/wealthy action junkies scooping that up in a few weeks.  It's not much money to some.

This is good news for bitcoin. The only question, I suppose, is "how good of news". 

Perhaps the smart money has already priced it in. It's not exactly like Bitcoinland has fantastic controls for trading on inside information.

Perhaps Matrix Oracle Choupacabra here is short bitcoin on CampBX or currently looking to load up on some fresh coins.

he must be short hes been expecting a reversal.

[bobdude17]

Wow if you google "Bitcoin Investment Trust" in regular search you will see that like every news outlet on earth has picked this story up.

[cypherdoc]

Wonder how long price movement will take, or when BIT will collect their first $2.5 million.  I could see 5-10 investors/wealthy action junkies scooping that up in a few weeks.  It's not much money to some.

This is good news for bitcoin. The only question, I suppose, is "how good of news". 

Perhaps the smart money has already priced it in. It's not exactly like Bitcoinland has fantastic controls for trading on inside information.

i'm not sure why you keep insisting on this.

i'm sure that a few insiders bought on insider information but it's not like this announcement was publicly known.  in fact, it came out of left field just a couple of days ago.  this certainly didn't include the vast majority of millionaires out there who might want to buy some Bitcoin shares now and in the future.

[SheHadMANHands]

Wonder how long price movement will take, or when BIT will collect their first $2.5 million.  I could see 5-10 investors/wealthy action junkies scooping that up in a few weeks.  It's not much money to some.

This is good news for bitcoin. The only question, I suppose, is "how good of news".  

Perhaps the smart money has already priced it in. It's not exactly like Bitcoinland has fantastic controls for trading on inside information.

It'd be interesting to see some analysis of volume purchases on Gox/BitStamp over the past few months.  Has there been substantially more buying than what might be expected from the "collection" of $2.5 million in BTC (18k BTC or whatever) for this fund?  There are plenty of people not in the "smart money" sitting around, waiting to pick up btc when news arrives.  I would guess many of these people have just as much money on the exchanges as the "smart money", and are able to move the market and shift buying momentum.

If there was any concentrated buying in particular it was done back in April.

Ideally.  Is that suggesting there wouldn't be a recovery following the crash if someone weren't heavily purchasing for this fund?

I would think they'd purchase closer to launch, so as to minimize risk (unless they just knew the price would continue to climb).

[cypherdoc]

Wonder how long price movement will take, or when BIT will collect their first $2.5 million.  I could see 5-10 investors/wealthy action junkies scooping that up in a few weeks.  It's not much money to some.

This is good news for bitcoin. The only question, I suppose, is "how good of news". 

Perhaps the smart money has already priced it in. It's not exactly like Bitcoinland has fantastic controls for trading on inside information.

i'm not sure why you keep insisting on this.

i'm sure that a few insiders bought on insider information but it's not like this announcement was publicly known.  in fact, it came out of left field just a couple of days ago.  this certainly didn't include the vast majority of millionaires out there who might want to buy some Bitcoin shares now and in the future.

In a market this size, it would only take a few.

that's my point.

it might have only taken a few to take the price up to where it is now.

can you imagine where we'll go when the thousands of other "few" start piling in?

[adamstgBit]

Wonder how long price movement will take, or when BIT will collect their first $2.5 million.  I could see 5-10 investors/wealthy action junkies scooping that up in a few weeks.  It's not much money to some.

This is good news for bitcoin. The only question, I suppose, is "how good of news". 

Perhaps the smart money has already priced it in. It's not exactly like Bitcoinland has fantastic controls for trading on inside information.

i'm not sure why you keep insisting on this.

i'm sure that a few insiders bought on insider information but it's not like this announcement was publicly known.  in fact, it came out of left field just a couple of days ago.  this certainly didn't include the vast majority of millionaires out there who might want to buy some Bitcoin shares now and in the future.

In a market this size, it would only take a few.

that's my point.

it might have only taken a few to take the price up to where it is now.

can you imagine where we'll go when the thousands of other "few" start piling in?

You know full well what "priced in" means.

we've been pricing in the potential retracement to 90-70.

want proof?

ask yourself why did you sell.

[cypherdoc]

Wonder how long price movement will take, or when BIT will collect their first $2.5 million.  I could see 5-10 investors/wealthy action junkies scooping that up in a few weeks.  It's not much money to some.

This is good news for bitcoin. The only question, I suppose, is "how good of news". 

Perhaps the smart money has already priced it in. It's not exactly like Bitcoinland has fantastic controls for trading on inside information.

i'm not sure why you keep insisting on this.

i'm sure that a few insiders bought on insider information but it's not like this announcement was publicly known.  in fact, it came out of left field just a couple of days ago.  this certainly didn't include the vast majority of millionaires out there who might want to buy some Bitcoin shares now and in the future.

In a market this size, it would only take a few.

that's my point.

it might have only taken a few to take the price up to where it is now.

can you imagine where we'll go when the thousands of other "few" start piling in?

You know full well what "priced in" means.

we've been pricing in the potential retracement to 90-70.

want proof?

ask yourself why did you sell.

or go short.

[derpinheimer]

Are we there yet?

Are we there yet?

Are we there yet?

Are we there yet?

Are we there yet?

ITS REVERSAL TIME!?

[cypherdoc]

Bubbling Up!

[bitcodo]

[lucasjkr]

I fail to see why people think that the announcement for the eventual purchase of $2.5 mm of bitcoins over an unspecified period of Time will have any impact on the price of BTC? It's not like they're saying that tomorrow they have to spend that much, they have the freedom to do so over days, weeks or months even. No matter how illiquid bitcoins are, those purchases spread over any period if time wint make an impact in a $1+ billion market cap commodity. And after that, they won't be buying any bitcoins at all. When new shares are created, it will be because an authorized participant contributed bitcoins for shares. And when shares are redeemed, all that will occur is that an authorized participant turned in their shares and redeemed them for bitcoins. Whether that person then sells their coins is not assured.

That's how etf's work (which is how this vehicle is described). If this were an open end Mutual fund, then each days purchases and withdrawals would be accompanied by the fund buying or selling bitcoins on an exchange. But that's specifically not what this investment vehicle is.

[Herp]

I fail to see why people think that the announcement for the eventual purchase of $2.5 mm of bitcoins over an unspecified period of Time will have any impact on the price of BTC? It's not like they're saying that tomorrow they have to spend that much, they have the freedom to do so over days, weeks or months even. No matter how illiquid bitcoins are, those purchases spread over any period if time wint make an impact in a $1+ billion market cap commodity. And after that, they won't be buying any bitcoins at all. When new shares are created, it will be because an authorized participant contributed bitcoins for shares. And when shares are redeemed, all that will occur is that an authorized participant turned in their shares and redeemed them for bitcoins. Whether that person then sells their coins is not assured.

That's how etf's work (which is how this vehicle is described). If this were an open end Mutual fund, then each days purchases and withdrawals would be accompanied by the fund buying or selling bitcoins on an exchange. But that's specifically not what this investment vehicle is.

SecondMarket has customers rich enough to easily double Bitcoin value in just one month. There are plenty of billionaires among their customers not to mention billion dollar hedge funds. $1.5 billion market cap Bitcoin has is peanuts. Angry Birds has $7billion market cap.

[adamstgBit]

I fail to see why people think that the announcement for the eventual purchase of $2.5 mm of bitcoins over an unspecified period of Time will have any impact on the price of BTC? It's not like they're saying that tomorrow they have to spend that much, they have the freedom to do so over days, weeks or months even. No matter how illiquid bitcoins are, those purchases spread over any period if time wint make an impact in a $1+ billion market cap commodity. And after that, they won't be buying any bitcoins at all. When new shares are created, it will be because an authorized participant contributed bitcoins for shares. And when shares are redeemed, all that will occur is that an authorized participant turned in their shares and redeemed them for bitcoins. Whether that person then sells their coins is not assured.

That's how etf's work (which is how this vehicle is described). If this were an open end Mutual fund, then each days purchases and withdrawals would be accompanied by the fund buying or selling bitcoins on an exchange. But that's specifically not what this investment vehicle is.

they already bought their initial batch of bitcoins.

but i still think price will move on this news.

[msc]

I fail to see why people think that the announcement for the eventual purchase of $2.5 mm of bitcoins over an unspecified period of Time will have any impact on the price of BTC?

It's not so much that the buying will inflate the price right away, but the fact that there's a regulated investment vehicle buying BTC is a major plus for BTC in terms of being accepted by banks and investors.  That will make it easier for people to exchange and spend.