GBTC Bitcoin Investment Trust Observer

[twiifm]

Then I guess it becomes a close end fund instead of traditional fund - people who wants to cash out needs to sell it on secondary market

If you mean by "close end fund" that they cannot take $$$ to create new BIT shares, you'd be (i'm 98% sure) incorrect.

I guess that he means that there will be no more liquidations (redemptions): the only way to get $$$ out will be to sell your shares at OTCQX to someone who would rather buy them instead of BTC.

Pink sheets huh?  Bitcoin has become exactly like a penny stock.

[JorgeStolfi]

Then I guess it becomes a close end fund instead of traditional fund - people who wants to cash out needs to sell it on secondary market

If you mean by "close end fund" that they cannot take $$$ to create new BIT shares, you'd be (i'm 98% sure) incorrect.

I guess that he means that there will be no more liquidations (redemptions): the only way to get $$$ out will be to sell your shares at OTCQX to someone who would rather buy them instead of BTC.

Pink sheets huh?  Bitcoin has become exactly like a penny stock.

OTCQX is a higher-class version of "pink sheets", with some very big, solid companies.

---------------------------------------
Situation by 01/Sep/2013
* Whales had 135 k BTC that cost them next to nothing
* Fund had nothing
* Clients had 67.5 M $
---------------------------------------
Happened since then:
* Clients bought 1.35 M shares from fund at average price of 50 $/share (say)
* Fund bought 135 k BTC from whales, at average price of 500 $/BTC (say)
----------------------------------------
Situation today:
* Whales have 67.5 M $, no BTC
* Fund has 135 kBTC worth 37.8 M $ today
* Clients have 1.35 M shares of fund, nominal value 37.8 M $ today
---------------------------------------

The number 500 $/BTC for the average buying price of the 135 k BTC is guessed, but could be easily computed from the buy dates and amounts, and a price table.

The 67.5 M $ that the clients put into the fund will never come out again.  They became the net and definitive profit of the Whales.

If the fund does not allow redemption anymore, the only hope of the clients to get their money back is that the BTC price will recover and they will be able to sell their shares to other clients, and so on.  So the clients will be passing the 67.5 M$ loss to each other forever.  Sort of like this:
http://www.ic.unicamp.br/~stolfi/bitcoin/2014-02-17-HowToMakeSomeEasyMoney.html

[twiifm]

Then I guess it becomes a close end fund instead of traditional fund - people who wants to cash out needs to sell it on secondary market

If you mean by "close end fund" that they cannot take $$$ to create new BIT shares, you'd be (i'm 98% sure) incorrect.

I guess that he means that there will be no more liquidations (redemptions): the only way to get $$$ out will be to sell your shares at OTCQX to someone who would rather buy them instead of BTC.

Pink sheets huh?  Bitcoin has become exactly like a penny stock.

OTCQX is a higher-class version of "pink sheets", with some very big, solid companies.

---------------------------------------
Situation by 01/Sep/2013
* Whales had 135 k BTC that cost them next to nothing
* Fund had nothing
* Clients had 67.5 M $
---------------------------------------
Happened since then:
* Clients bought 1.35 M shares from fund at average price of 50 $/share (say)
* Fund bought 135 k BTC from whales, at average price of 500 $/BTC (say)
----------------------------------------
Situation today:
* Whales have 67.5 M $, no BTC
* Fund has 135 kBTC worth 37.8 M $ today
* Clients have 1.35 M shares of fund, nominal value 37.8 M $ today
---------------------------------------

The number 500 $/BTC for the average buying price of the 135 k BTC is guessed, but could be easily computed from the buy dates and amounts, and a price table.

The 67.5 M $ that the clients put into the fund will never come out again.  They became the net and definitive profit of the Whales.

If the fund does not allow redemption anymore, the only hope of the clients to get their money back is that the BTC price will recover and they will be able to sell their shares to other clients, and so on.  So the clients will be passing the 67.5 M$ loss to each other forever.  Sort of like this:
http://www.ic.unicamp.br/~stolfi/bitcoin/2014-02-17-HowToMakeSomeEasyMoney.html

Thanks for the explanation.  I thought I saw a link to Silberts tweet earlier on r/button saying something to the affect that the drop was "entertaining". I suppose the trust makes money on fees so he could care less if his client eats the losses.  They can't even withdraw their money now til it's on OTCQX?? 

[JorgeStolfi]

Thanks for the explanation.  I thought I saw a link to Silberts tweet earlier on r/button saying something to the affect that the drop was "entertaining". I suppose the trust makes money on fees so he could care less if his client eats the losses.  They can't even withdraw their money now til it's on OTCQX?? 

https://twitter.com/barrysilbert/status/551533923663355904

https://twitter.com/barrysilbert/status/551553942745006080

[twiifm]

Thanks for the explanation.  I thought I saw a link to Silberts tweet earlier on r/button saying something to the affect that the drop was "entertaining". I suppose the trust makes money on fees so he could care less if his client eats the losses.  They can't even withdraw their money now til it's on OTCQX?? 

https://twitter.com/barrysilbert/status/551533923663355904

https://twitter.com/barrysilbert/status/551553942745006080

He tweeted on Jan 2 that the fund was $42.35M.  That's when price was around $315.  Lost $4.7M in less than 2 days.  Man it sucks to be investing in that fund w no way to close the position.

[N12]

No one has denied it for the simple reason it is true.

True til proven FUD IMO for this reason.

Can't go wrong with that rule.

For what reason did they suspend redemption? Were they forced to? Because I'm sure their investors aren't too happy about this. With this sort of condition, who will buy more BTC at this fund?

[wachtwoord]

Thanks for the explanation.  I thought I saw a link to Silberts tweet earlier on r/button saying something to the affect that the drop was "entertaining". I suppose the trust makes money on fees so he could care less if his client eats the losses.  They can't even withdraw their money now til it's on OTCQX?? 

https://twitter.com/barrysilbert/status/551533923663355904

https://twitter.com/barrysilbert/status/551553942745006080

He tweeted on Jan 2 that the fund was $42.35M.  That's when price was around $315.  Lost $4.7M in less than 2 days.  Man it sucks to be investing in that fund w no way to close the position.

Lol, he's unknowingly protecting people from their own stupidity.

[oda.krell]

No one has denied it for the simple reason it is true.

True til proven FUD IMO for this reason.

Can't go wrong with that rule.

For what reason did they suspend redemption? Were they forced to? Because I'm sure their investors aren't too happy about this. With this sort of condition, who will buy more BTC at this fund?

That's a rhetorical question, right?


All of the buys below took place after this became an issue:

Date	NAV ($)	Net	Est	Est Net	Est New	Actual
spaceholder		Assets	Holding	Buying	Invest	Holding
		(M$)	(XBT)	(XBT)	(M$)	(XBT)	Notes
26-Nov-14	36.37	49.96	134185	4555	1.70
25-Nov-14	37.52	49.79	129630	2123	0.82
18-Nov-14	37.21	48.56	127526	6335	2.42
11-Nov-14	35.77	44.36	121228	6837	2.51

They also stopped withdrawals.  No one is allowed to sell until their OTC ETF gets approved by the SEC.

[N12]

oda, I realize they came after, but it's possible that investors aren't aware of this restriction. If SecondMarket had informed about this, wouldn't we have heard confirmation sooner?

So, it will be interesting to see if there is a change now that the information is disseminating into the public.

[oda.krell]

oda, I realize they came after, but it's possible that investors aren't aware of this restriction. If SecondMarket had informed about this, wouldn't we have heard confirmation sooner?

So, it will be interesting to see if there is a change now that the information is disseminating into the public.

I suspect that whoever is willing to put his (real ) money into something as speculative - potentially profitable, but extremely speculative - as Bitcoin is also willing to jump through the hoops to liquidate his position again.

I think the buying/selling is much stronger linked to the market cycles: major buys at the beginning of rallies (further fueling them), major sells before total breakdown, little movement in between. #justanopinion

[JorgeStolfi]

Lol, he's unknowingly protecting people from their own stupidity.

Objectively, the clients who bought the first ~400'000 shares before 2013-11-07 were smart, those who bought the other 950'000 shares after that were stupid.

If those clients had been able to liquidate on 2014-10-28, the smart clients would have been smarter, some of those stupid clients would have been smart, and the rest would have been less stupid.  As it is now, all clients must resign themselves to become stupider every day, and only pray that some day things will change so that they may become smarter again.

[jamesg]

I think the buying/selling is much stronger linked to the market cycles: major buys at the beginning of rallies (further fueling them), major sells before total breakdown, little movement in between. #justanopinion

+1

Big money has been told to get in and sit tight.

[N12]

I think the buying/selling is much stronger linked to the market cycles: major buys at the beginning of rallies (further fueling them), major sells before total breakdown, little movement in between. #justanopinion

+1

Big money has been told to get in and sit tight.

Indeed it has, back in December 2014, by SecondMarket's very own Barry Silbert: http://www.entrepreneur.com/article/230346

"We're three to six months away from Wall Street dollars moving into Bitcoin in a big way," he says.

What's Silbert saying now?

https://twitter.com/barrysilbert/status/551533923663355904
https://twitter.com/barrysilbert/status/551539703674318849

 

[JorgeStolfi]

All of the buys below took place after this became an issue:

Date	NAV ($)	Net	Est	Est Net	Est New	Actual
spaceholder		Assets	Holding	Buying	Invest	Holding
		(M$)	(XBT)	(XBT)	(M$)	(XBT)	Notes
26-Nov-14	36.37	49.96	134185	4555	1.70
25-Nov-14	37.52	49.79	129630	2123	0.82
18-Nov-14	37.21	48.56	127526	6335	2.42
11-Nov-14	35.77	44.36	121228	6837	2.51

Those buys were discussed earlier.  To me they look like a single entity investing ~6600 BTC per week.  Maybe it knows something that we don't know.

[oda.krell]

All of the buys below took place after this became an issue:

Date	NAV ($)	Net	Est	Est Net	Est New	Actual
spaceholder		Assets	Holding	Buying	Invest	Holding
		(M$)	(XBT)	(XBT)	(M$)	(XBT)	Notes
26-Nov-14	36.37	49.96	134185	4555	1.70
25-Nov-14	37.52	49.79	129630	2123	0.82
18-Nov-14	37.21	48.56	127526	6335	2.42
11-Nov-14	35.77	44.36	121228	6837	2.51

Those buys were discussed earlier.  To me they look like a single entity investing ~6600 BTC per week.  Maybe it knows something that we don't know.

Yes, Jorge, I've read your unsubstantiated claim that you think it was single entity. More than once

Even if it was (hint: pure speculation), the point was whether anyone would be willing to buy in after the selling restriction. Apparently, someone was, to the tune of almost 8M USD.

EDIT: Or maybe I didn't get your point. Mine was: more than any selling restrictions, market cycles (and perhaps, insider information) seems to drive buying/selling of the fund in the recent past.

[JorgeStolfi]

Yes, Jorge, I've read your unsubstantiated claim that you think it was single entity. More than once

Yeah, well, I cannot hide my skepticism about bitcoin and bitcoin entrepreneurs in general.  Which is only growing the more I read (and not at all because of the price, which may even recover, I don't know).

[jl2012]

All of the buys below took place after this became an issue:

Date	NAV ($)	Net	Est	Est Net	Est New	Actual
spaceholder		Assets	Holding	Buying	Invest	Holding
		(M$)	(XBT)	(XBT)	(M$)	(XBT)	Notes
26-Nov-14	36.37	49.96	134185	4555	1.70
25-Nov-14	37.52	49.79	129630	2123	0.82
18-Nov-14	37.21	48.56	127526	6335	2.42
11-Nov-14	35.77	44.36	121228	6837	2.51

Those buys were discussed earlier.  To me they look like a single entity investing ~6600 BTC per week.  Maybe it knows something that we don't know.

Yes, Jorge, I've read your unsubstantiated claim that you think it was single entity. More than once

Even if it was (hint: pure speculation), the point was whether anyone would be willing to buy in after the selling restriction. Apparently, someone was, to the tune of almost 8M USD.

EDIT: Or maybe I didn't get your point. Mine was: more than the selling restrictions market cycles (and perhaps, insider information) seems to drive buying/selling.

I think that's not pure speculation. It was almost the same USD amount for 4 consecutive Tuesdays (except the last one with Tuesday and Wednesday). It's logical to speculate that it was a single entity.

As I said, they invest through BIT probably because they are institutional investors that are not allowed to store real bitcoin, or they have decided to hold more than a year and don't care about the selling restriction.

[rebuilder]

Dumb question: If you can't liquidate your holdings, only sell them on secondary markets, how is buying on secondmarket now any smarter than buying on gox after their "withdrawal issues" started?

[JorgeStolfi]

Dumb question: If you can't liquidate your holdings, only sell them on secondary markets, how is buying on secondmarket now any smarter than buying on gox after their "withdrawal issues" started?

That is a rather indelicate question to ask.  Just because the goxBTC were fetching 20% of face value in the bitcoinbuilder market, it does not mean that the smbitBTC will necessarily go the same way.

[N12]

Dumb question: If you can't liquidate your holdings, only sell them on secondary markets, how is buying on secondmarket now any smarter than buying on gox after their "withdrawal issues" started?

That is a rather indelicate question to ask.  Just because the goxBTC were fetching 20% of face value in the bitcoinbuilder market, it does not mean that the smbitBTC will necessarily go the same way.

If you're implying what I initially thought you are implying: Damn, you're evil, man.