Why the Winklevoss ETF will send Bitcoin to the moon.

[Anonylz]

there is no advantage to holding shares vs holding btc, is there?

Exactly. So why bother is my question in a nutshell.

Because you have 50million dollars and its hard to get that down at MtGox.

And older folks rather not take the risk of losing their private key and maintaining security of their funds. If shares is the same as owning actual, its a nice incentive for them to hand over the risks to the ETF.

A ETF (exchange Traded Fund) is not the same as holding Bitcoin. Like a gold ETF it is meant to dilude money away from the real thing.

Let's say a ETF holds 100K BTC. The ETF makes some rule, the balance between BTC an $ should allways be between 25&33% so in the case a bitcoin is 1$ the total btc have a value of 100K. As soon as the first money flows in, this is all being parked on the side and not one bitcoin is actually bought extra. As soon as more then 50K moved into the fund the first extra bitcoin will be bought, because 50K = 33% of 150K (100K btc + $ 50K)

if the price of a bitcoin at that point rises to lets say 2$ this means the fund is worth 100K btc * 2$ = 200K$ + 50K investment money. At this point the fund exists of 80% btc and 20% $ (50K out of 250K) and this means the ETF should sell BTC until they meet their goal of at least 25% dollars.

A ETF makes the price of everything it trades in less volitile, but the owners don´t actually own any BTC, they own a piece of a fund that holds BTC. All the money put in an ETF is wasted money IMO, because you just give away your money to a trading bot with certain rules. If you want to own something you buy it, if you don´t want to own it you don´t buy it, but i would never put in an ETF, for one because it wil charges you fees 2nd because you have no personal controll over it, maybe one day the rules will change and they put it on a website somewhere with very small letters in order so you will never find out. ETF´s are often used by institutional investors (e.g. pensionfunds or 401K's in the US) because the pricefluctuation is smaller then the underlying asset/commodity and therefore less risky than the real thing + an ETF often pays dividend because of the trades they make, so you get a return on your investment.

I hope people will think twice before buying into the winkelvi bs, i am in no posission to tell you what to do with your money, but i put it in bitcoin because i want to own what I have, putting money in a Bitcoin ETF is like putting it in the bank, it's not your anymore and if for some reason the SHTF (like china stating they have enough $ and don't want any more, 2 days ago, news that is no where broadcasted but will impact the entire world) hold a piece of paper (could be a digital document) in dollar value.

I would love all pensionfunds to put in money though, because this would make it allmost impossible for BTC to ever lose all value, simply because they invest with funds that are numerous times the total marketcap of BTC today.

[Patel]

there is no advantage to holding shares vs holding btc, is there?

Exactly. So why bother is my question in a nutshell.

Because you have 50million dollars and its hard to get that down at MtGox.

And older folks rather not take the risk of losing their private key and maintaining security of their funds. If shares is the same as owning actual, its a nice incentive for them to hand over the risks to the ETF.

A ETF (exchange Traded Fund) is not the same as holding Bitcoin. Like a gold ETF it is meant to dilude money away from the real thing.

Let's say a ETF holds 100K BTC. The ETF makes some rule, the balance between BTC an $ should allways be between 25&33% so in the case a bitcoin is 1$ the total btc have a value of 100K. As soon as the first money flows in, this is all being parked on the side and not one bitcoin is actually bought extra. As soon as more then 50K moved into the fund the first extra bitcoin will be bought, because 50K = 33% of 150K (100K btc + $ 50K)

if the price of a bitcoin at that point rises to lets say 2$ this means the fund is worth 100K btc * 2$ = 200K$ + 50K investment money. At this point the fund exists of 80% btc and 20% $ (50K out of 250K) and this means the ETF should sell BTC until they meet their goal of at least 25% dollars.

A ETF makes the price of everything it trades in less volitile, but the owners don´t actually own any BTC, they own a piece of a fund that holds BTC. All the money put in an ETF is wasted money IMO, because you just give away your money to a trading bot with certain rules. If you want to own something you buy it, if you don´t want to own it you don´t buy it, but i would never put in an ETF, for one because it wil charges you fees 2nd because you have no personal controll over it, maybe one day the rules will change and they put it on a website somewhere with very small letters in order so you will never find out. ETF´s are often used by institutional investors (e.g. pensionfunds or 401K's in the US) because the pricefluctuation is smaller then the underlying asset/commodity and therefore less risky than the real thing + an ETF often pays dividend because of the trades they make, so you get a return on your investment.

I hope people will think twice before buying into the winkelvi bs, i am in no posission to tell you what to do with your money, but i put it in bitcoin because i want to own what I have, putting money in a Bitcoin ETF is like putting it in the bank, it's not your anymore and if for some reason the SHTF (like china stating they have enough $ and don't want any more, 2 days ago, news that is no where broadcasted but will impact the entire world) hold a piece of paper (could be a digital document) in dollar value.

I would love all pensionfunds to put in money though, because this would make it allmost impossible for BTC to ever lose all value, simply because they invest with funds that are numerous times the total marketcap of BTC today.

thanks for the clarification

[BittBurger]

I hope people will think twice before buying into the winkelvi bs

I see absolutely nothing wrong with a certain demographic buying up all those shares.  They're still going to get a piece of the action whereas they otherwise would not, because they don't know how to do what we do .... to acquire Bitcoin.  This will be suitable for them.  Its not BS.  Its just another way to get in on Bitcoin for those who have no other means.  Not everyone gets the best possible option all the time.  That is normal.  Sure, they'll be getting a less than awesome price, but in exchange they get some perks that we don't.  Sometimes people by 2nd hand 3rd hand 4th hand with a lot of things.   Others find ways to get things right from the manufacturer.  There's a market for both parties.

[BitchicksHusband]

I'm sick right now so I don't feel like searching for it, but I'm pretty sure of the following:

1. A share will always be .1 BTC exactly.  So $80 right now.
2. They are not diluting money away from the real thing.  For every share, they guarantee to buy the real thing.
3. In the US, there are rules on investing your pre-tax retirement money (401k for corporate, 403b for non-profits, and IRA for personal).  You can't take the money out without a substantial penalty unless you are 59½.  It has to be invested in an SEC-registered fund.  Bitcoin is not an SEC-registered fund.  The ETF will be an SEC-registered fund.
4. This allows access to billions of dollars of retirement funds that can't currently come into bitcoin.  Well, I borrowed half of my 401k to do it and I pay the interest back to myself.  But it's really not that doable.
5. Unfortunately, it doesn't really matter, since the SEC usually takes years to approve anything.  So by the time the SEC approves it, we'll probably already be at the top of the sigmoid adoption curve and there will be no money to be made in it anyway.

[BitDreams]

It could be the first ETF that could be audited by clients 24 hours a day 7 days a week.

[freebird]

The ETF, if approved, will produce huge upward pressure on the price. It's the next stage of widespread adoption of bitcoin, after the early adopters and hedge funds. Ordinary people will feel much more comfortable buying a government-approved financial instrument through their online brokerage account, compared to the way we have to buy bitcoins today. I just hope the SEC won't delay approval too long!

[freebird]

5. Unfortunately, it doesn't really matter, since the SEC usually takes years to approve anything.  So by the time the SEC approves it, we'll probably already be at the top of the sigmoid adoption curve and there will be no money to be made in it anyway.

How long does it usually take the SEC to approve a new ETF? If it's only 1-2 years, I doubt we'll be at the top of the curve by then. If it's 3-4 years, then that might just delay widespread adoption of bitcoin as an investment vehicle, which would delay the price curve as well. I think the ETF is crucial to get these really high prices we're all hoping for ($10k per coin and up).

[byronbb]

Well the ETF will allow shorting unlike that available with any other platform.

[freebird]

Well the ETF will allow shorting unlike that available with any other platform.

I thought there was shorting on Bitfinex. Am I mistaken?

[windjc]

Well the ETF will allow shorting unlike that available with any other platform.

I thought there was shorting on Bitfinex. Am I mistaken?

No, there is.

[Sindelar1938]

The etf will help drive adoption but let's not forgt we can already buy fractions

It addresses the access problem for joe public and that's important

[windjc]

5. Unfortunately, it doesn't really matter, since the SEC usually takes years to approve anything.  So by the time the SEC approves it, we'll probably already be at the top of the sigmoid adoption curve and there will be no money to be made in it anyway.

How long does it usually take the SEC to approve a new ETF? If it's only 1-2 years, I doubt we'll be at the top of the curve by then. If it's 3-4 years, then that might just delay widespread adoption of bitcoin as an investment vehicle, which would delay the price curve as well. I think the ETF is crucial to get these really high prices we're all hoping for ($10k per coin and up).

I'm surprised bitchickhusband said this. The SEC doesn't take years to approve ETFs. In fact the application in this situation is moving along at a normal pace. The twins predicted conservatively 6-12 months around two months ago.

[zachcope]

There may be tax / pension incentives to invest via ETFs.

If one's pension provider allows investment in this is it could be tax deductible as a pension contribution or via tax free investment vehicles.

Could be worth anything from 10-40% in many 'developed' countries.

This might offset the higher risk (by not owning the keys, and risk of govt intervention) for some investors.

[mccoyspace]

The reason for the ETF, which you probably don't know is to make an income off bitcoin on a weekly basis. Ever hear of writing options!!!!!!!!! That's where the money on bitcoin will be made. 10$ price swing on a option you bought for 2$ at the current strike price 500% profit in minutes! Wake up and read some books on trading and the market!

Options on volatile products are priced higher, market makers are not stupid.

That's exactly what people that are writing the option want!!!! Huge volatility premium. I mean if I can sell 100$ out of the money for a couple bucks on wed and it expires on Friday..... Pretty sure I just got paid without losing a thing! Just look at an option chain on appl or goog. Way out of the money is still great weekly gains!

So you are talking about writing the out of the money options that you sell to people as lottery tickets?
So I guess you would then be making money by assuming the small but potentially really expensive risk.

[PenAndPaper]

The purpose of winklevii etf is to offer investors exposure to bitcoin without having them to worry about anything else.

There is a learning curve right now for individuals to get their feet wet.
You must go through a lot of thing like what is bitcoin, where it is stored, how to use wallets, what are the private keys, what is the blockchain, the transaction confirmations etc.

On top of that you have to deal with more or less unregulated and not yet 100% trustworthy companies to buy and sell them.

With the etf you can just buy shares and voila. You are in 

[damnek]

The reason for the ETF, which you probably don't know is to make an income off bitcoin on a weekly basis. Ever hear of writing options!!!!!!!!! That's where the money on bitcoin will be made. 10$ price swing on a option you bought for 2$ at the current strike price 500% profit in minutes! Wake up and read some books on trading and the market!

Options on volatile products are priced higher, market makers are not stupid.

That's exactly what people that are writing the option want!!!! Huge volatility premium. I mean if I can sell 100$ out of the money for a couple bucks on wed and it expires on Friday..... Pretty sure I just got paid without losing a thing! Just look at an option chain on appl or goog. Way out of the money is still great weekly gains!

Your first post was confusing because you were arguing for both sides, selling and buying options, and of course it's impossible for both sides to make money at the same time. I'm an option seller and I can tell you it's not as obvious as you made it sound. I sold calls in GOOG before their last earnings report way out of the money and lost my shirt over it. In that particular case, the implied volatility in the options was simply too cheap. The marketplace as a whole decides on the volatility of options and it is not easy to outsmart the collective intelligence of the marketplace. Now, I believe that statistically option sellers have an advantage over options buyers (using certain strategies), because options are a form of insurance and insurance tends to be overpaid for. But again, I don't think it's obvious and easy at all to consistently make money trading options.

[DeathAndTaxes]

Hmm how do you know if you are able to invest with them?

If you have to ask you probably can't.

https://en.wikipedia.org/wiki/Accredited_investor

[freebird]

5. Unfortunately, it doesn't really matter, since the SEC usually takes years to approve anything.  So by the time the SEC approves it, we'll probably already be at the top of the sigmoid adoption curve and there will be no money to be made in it anyway.

How long does it usually take the SEC to approve a new ETF? If it's only 1-2 years, I doubt we'll be at the top of the curve by then. If it's 3-4 years, then that might just delay widespread adoption of bitcoin as an investment vehicle, which would delay the price curve as well. I think the ETF is crucial to get these really high prices we're all hoping for ($10k per coin and up).

I'm surprised bitchickhusband said this. The SEC doesn't take years to approve ETFs. In fact the application in this situation is moving along at a normal pace. The twins predicted conservatively 6-12 months around two months ago.

Thanks for the info. Hopefully it can be up and running before the end of next year.

[BitchicksHusband]

5. Unfortunately, it doesn't really matter, since the SEC usually takes years to approve anything.  So by the time the SEC approves it, we'll probably already be at the top of the sigmoid adoption curve and there will be no money to be made in it anyway.

How long does it usually take the SEC to approve a new ETF? If it's only 1-2 years, I doubt we'll be at the top of the curve by then. If it's 3-4 years, then that might just delay widespread adoption of bitcoin as an investment vehicle, which would delay the price curve as well. I think the ETF is crucial to get these really high prices we're all hoping for ($10k per coin and up).

I'm surprised bitchickhusband said this. The SEC doesn't take years to approve ETFs. In fact the application in this situation is moving along at a normal pace. The twins predicted conservatively 6-12 months around two months ago.

Thanks for the info. Hopefully it can be up and running before the end of next year.

"It often takes more than a year from the date of an initial exemptive relief filing for a company’s first ETF to hit the market." - http://www.indexuniverse.com/sections/features/16598-sec-may-streamline-etf-approval-process.html

So "years" may be a bit overstated, but it's very commonly more than a year.

[vpitcher07]

Do we have any time estimate of when this ETF is going live? I'll put in a few buy orders as soon as it does.