ETC Group to launch bitcoin ETP on Deutsche Boerse

[Karartma1]

But, as I said, crap's always crap.

Agree.
Let's look at the half-full glass: it's less crap than using other sub-optimal instruments.
For example, an ETF is crap, but surely is less a crappy instrument than buying MSRT or GBTC to gain exposure to BTC!

In fact I can't wait to see what will be the performance here both in terms of adoption and appeal for classic investors (read financial dinosaurs).
Still, I can't see the half-full glass for all the reasons I expressed in your Grayscale thread which I don't want to repeat.
A maybe quarter full glass thought could be the one that these guys needs to cover their arse with the underlying asset which is the real thing.

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[fillippone]

A little update on this thread.
The spreadsheet is broken after so much time, so I will try to restart it again.
In the meantime we can see how the BTCE portfolio evolved over the last months:



it interesting that the number of Bitcoins held in the fund is closely following the steepness of the contango.
As the contango steepens the number of Bitcoin held grows, while when the contango is flatter the number of bitcoins decreases.

This hints at the usage of this ETP as a leg in the cash and carry trade.
If the contango grows positive, then speculators will try to sell the futures and buy the spot.
Buying the spot means that they will buy this ETP, hence  the amount of BTC held in BTCe Walle will grow.
But doing so, they will also make the curve flatter.
When the curve flat enough, they will close the position and wait for it to become steep again, as keeping the position open has a cost. Closing the position they will end up selling the spot leg of the trade.

[fillippone]

Bumping this thread as something new happened.

Speaking of Depegs, the BTCE fund just depegged from it’s intrinsic value.
I define intrinsic value as the value of the Bitcoin embedded in each share of the fund, determined as

Code:

 Conversion Value= Bitcoin price*Cryptocurrency Entitlement- Conversion Fees

At the moment the BTCE is traded on the market at 19.35 EUR mid, bt with a bitcoin price of 22,250USD,  entitlements of 0.000945735 and an FX rate of 1.0678we get a value of

Code:

 Conversion Value=22,250*0.000945735/1.0678=19.70

This means that theoretically you could buy the BTCE, sell an equal amount of bitcoin, and then ask the BTCE issuers or Market makers to convert your shares in an equal amount of physical bitcoins, pocketing 35 cents - fees per share.

A lot of details and frictions to be ironed out here, but the concept is simple.

More information on the conversion process is here:
Redemption Information Document