Why do you think that Barry created SMBIT, or the Winkles want to create COIN? Hint: if one has 100'000 coins, how could one sell them without crashing the price?
You think the winklevoss twins are starting an ETF to be able to dump their 110,000 BTC?
[ ... ] that 110,000 BTC is used as needed liquidity to start the fund. [ ... ] they will get to keep ALL of their Bitcoins too.
Well, at least one of us does not understand how funds work.
As investors come buy COIN fund shares, the COIN fund will have to buy the corresponding BTC somewhere. The Winkles at some point will sell their 110'000 BTC to the fund. (That is what "provide liquidity for" means). They will own the fund, and the fund will own those BTC and maybe some more; but the fund will also owe to its investors the dollar equivalent of those bitcoins (minus a few % in fees). So the net assets of the fund will be just those fees.
Simplifying the equations: the Winkes will sell their BTC to the fund investors, for the current market price plus a few % in fees. After that, they will only get a few % of whatever investors invest in the fund.
Imagine the number of massive buys once this fund launches. Every mutual fund in the world will be able to legally buy BTC at that point. [...] Next year $10,000 per Bitcoin will be considered cheap
Why would they want to do that? Bitcoin will still be a risky investment, with no backing assets and paying no dividends, whose value is entirely dependent on the expectation of future expectations of investors.
Right now, no one with money wants to buy those bitcoins that are for sale at 360$. If the Winkles and Silberts and Drapers really believed that bitcoin had a 10% chance of being 10'000$ next year, they would buy every coin they could, until the price reached 1000$. They are not optimistic; they just want others to be optimistic -- and buy their bitcoins.
If the COIN fund buys a million bitcoins from current holders at 10'000 $/BTC, that would mean 10 billion dollars will go from the pockets of fund investors to the pocekts of current holders. But when are the investors getting back their 10 billion dollars, and from where?
That is the difference between investing 10 billion in bitcoin (whether bare, or wrapped in the glittering tinfoil of a fund) and investing 10 billion in stocks. In the latter case the investors become owners of 10 billion worth in factories and such, which will create many more billions of new wealth. In the case of bitcoins, the 10 billion will just pay for caviar and palaces and lamborghinis for the old holders; no wealth will be created, only wasted in luxury consumption. Isn't something wrong with that picture?
