How will Spot ETPs effect the economics of Bitcoin and existing Bitcoin markets?

[BenCodie]

Will demand for Bitcoin Spot ETFs/ETPs reflect on Bitcoin's value in the cryptocurrency market?

How can we prove that Bitcoin purchased through a Spot ETF, thus resulting in the creation of a "trust unit", reflects the purchase of real Bitcoin?

I have done some reading that tells us that none of the applicants have done any work to come up with a transparent way to prove the underlying Bitcoin is being bought. If that is true, logic says "how can we trust ETFs and the institutions behind them to reflect demand for ETFs in the real Bitcoin market?"

Or in short...How will ETFs effect the economics of Bitcoin and existing Bitcoin market liquidity? (edit - changed markets to market liquidity as it seems people misunderstood "markets" for "price")

Or are we expected to blindly trust applicants to buy the Bitcoin that is bought on the ETF?

[_act_]

I do not know how possible it would be for those companies not do manipulation that you are talking about. I mean in a way they will provide more ETF shares to their customers than the real bitcoin that they bought. But I think the amount of bitcoin they hold to provide bitcoin ETF shares will be transparent for people to see, but I do not know how people will verify the total amount of shares they created from it to be 1:1.

About the second question. Trading the ETF directly will not have effect on bitcoin price, what will have effect on bitcoin price is if more people are buying the ETF shares and then the company that are providing it are buying more bitcoin when there are needs for it as more people are demanding for the ETF. As the company are buying and holding more bitcoin, it will make bitcoin scarce and the demand also will make the price of bitcoin to increase.

[franky1]

About the second question. Trading the ETF directly will not have effect on bitcoin price,

the foolish game of asking "what will happen to price if"..
.. is that if everyone asks it and comes to same assumption. they then pre-plan their trades to get ahead of the "what will" thus then affecting the "what will" to then become the opposite

using historic events pattern of similar hype to estimate future pattern, is only as good as the limited users that recognise/plan for the pattern
if everyone knows it.. it wont occur because everyone is trading against it

EG
if everyone expects the price to get to say $70k this week
what actually happens with this expectation is. less people actually buy now and instead start getting into a selling position from $50k plus, meaning that less buyers and more sellers means it then never gets to $70k

this is why if bitcoins max premium for ATH estimate for 2024 is $140k. many influencers shout $300k-$500k to keep buyers interested in buying upto $140k so that influencers can sell upto $140k
otherwise if everyone shouted $140k max. people slowdown buying at $100k+ and it never reaches $140k

[Despairo]

It's either Blackrock buy a large sum of Bitcoin from exchange and use it as their reserve asset or Blackrock become a third party between people and exchange. Blackrock is a consumer, while exchange is the supplier, so there's will be an effect to Bitcoin price.

How to being transparent if Blackrock do really hold the whole coins? they must reveal all of their addresses to public and sign a message to prove their ownership, but I believe we won't see they willing to sign a message.

[franky1]

It's either Blackrock buy a large sum of Bitcoin from exchange and use it as their reserve asset or Blackrock become a third party between people and exchange. Blackrock is a consumer, while exchange is the supplier, so there's will be an effect to Bitcoin price.

it wont be blackrock as buyer, middleman nor consumer

instead it would be JPMorgan/Jane street.. the J's will be acting as AP's for blackrock, doing the basket deals/
buying coin.. locking coin to coinbase.. collateralise it to then get blackrock shares to then be middlemen broker/agents for blackrock to sell blackrock shares to consumers

How to being transparent if Blackrock do really hold the whole coins? they must reveal all of their addresses to public and sign a message to prove their ownership, but I believe we won't see they willing to sign a message.

coinbase is blackrocks custodian/reporting agent. it will be coinbase that PRIVATELY reports addresses to SEC as part of regular audits

[Rruchi man]

How will ETFs effect the economics of Bitcoin and existing Bitcoin markets?

There are many investors who knew about bitcoins, but did not want to invest through exchanges, this gives them an opportunity by investing in exchange-traded funds. Also, on the market, with the approval of these Spot bitcoin ETFs, it will expose bitcoins more to people who like investing in digital assets. They may not invest immediately but they will closely be observing the market before joining later.  

[NotATether]

Or in short...How will ETFs effect the economics of Bitcoin and existing Bitcoin markets?

Fools who want to long and short the price of BTC or only come in to make a quick buck no longer have to buy actual bitcoin to do it, if they post orders, then those will go to the ETF provider and the bitcoin price will change only if ETF managers buy or sell their own bitcoins.

Among other things, the amount of hacks will go down dramatically for these users too, as there is no more seed phrase or private key to enter or give away.

[Cvetik56]

How will ETFs effect the economics of Bitcoin and existing Bitcoin markets?

There are many investors who knew about bitcoins, but did not want to invest through exchanges, this gives them an opportunity by investing in exchange-traded funds. Also, on the market, with the approval of these Spot bitcoin ETFs, it will expose bitcoins more to people who like investing in digital assets. They may not invest immediately but they will closely be observing the market before joining later.  

And they won't hold the actual BTC, it will lie in the BlackRock pockets, as I understand it. I wonder how it will affect the market, I suppose we just need to wait.

[hugeblack]

How can we prove that Bitcoin purchased through a Spot ETF, thus resulting in the creation of a "trust unit", reflects the purchase of real Bitcoin?

The category of investors who may apply to ETFs is the category of investors who are more interested in speculation than value, meaning that they do not want to buy Bitcoin or invest in it, but rather they are looking for value in trading without risking buying Bitcoin, learning how to generate the private key safely, and selling it in the future, so there will be a number Less people buying Bitcoin and more money for the big whales.
The disadvantage of ETFs is that it is easy for whales to empty the price pumps so that we will not see a crazy increase like we did in 2017.

[Blitzboy]

We're like pioneers attempting to figure out the rules. I support transparency. Building ETFs without Bitcoin backing is like building castles in the air. However, even if these ETFs cant prove their Bitcoin holdings, their existence shows Bitcoin's gaining credibility in mainstream finance.

Asking if Bitcoin's value is affected is like asking if waves affect the ocean. They make a splash, but the ocean's strength is its size. Bitcoin's value comes from its decentralization and community trust, not ETFs. ETFs are little boats surfing the Bitcoin wave.

ETFs are a milestone, but they dont prove Bitcoin's strength. They're one of several ways to spread Bitcoin. Like adding additional taste to a rich dish, its interesting but not necessary. Bitcoin's charm is its independence.

[BenCodie]

How can we prove that Bitcoin purchased through a Spot ETF, thus resulting in the creation of a "trust unit", reflects the purchase of real Bitcoin?

The disadvantage of ETFs is that it is easy for whales to empty the price pumps so that we will not see a crazy increase like we did in 2017.

Can you elaborate on how it will now be easier, for my own clarity and for the wider audience? I know what you mean based on my reading though what is unclear is a practical example, or a "from start to finish" look, from the start of the increase and the difference when the selling begins/bear begins.

the foolish game of asking "what will happen to price if"..
.. is that if everyone asks it and comes to same assumption. they then pre-plan their trades to get ahead of the "what will" thus then affecting the "what will" to then become the opposite

using historic events pattern of similar hype to estimate future pattern, is only as good as the limited users that recognise/plan for the pattern
if everyone knows it.. it wont occur because everyone is trading against it

EG
if everyone expects the price to get to say $70k this week
what actually happens with this expectation is. less people actually buy now and instead start getting into a selling position from $50k plus, meaning that less buyers and more sellers means it then never gets to $70k

this is why if bitcoins max premium for ATH estimate for 2024 is $140k. many influencers shout $300k-$500k to keep buyers interested in buying upto $140k so that influencers can sell upto $140k
otherwise if everyone shouted $140k max. people slowdown buying at $100k+ and it never reaches $140k

I'm sorry that you wasted so much time on your post. My topic has nothing to do with price. It has more to do with liquidity and the change in one of Bitcoin's most valuable fundamentals - limited supply - and how this will be effected by ETPs (as well as, how liquidity in the cryptocurrency market will be effected by ETPs)

Asking if Bitcoin's value is affected is like asking if waves affect the ocean. They make a splash, but the ocean's strength is its size. Bitcoin's value comes from its decentralization and community trust, not ETFs. ETFs are little boats surfing the Bitcoin wave.

Yes this seems to be misunderstood and I changed "markets" to "market liquidity" as this was specifically what I was referring to rather than price.

We're like pioneers attempting to figure out the rules. I support transparency. Building ETFs without Bitcoin backing is like building castles in the air. However, even if these ETFs cant prove their Bitcoin holdings, their existence shows Bitcoin's gaining credibility in mainstream finance.

....

ETFs are a milestone, but they dont prove Bitcoin's strength. They're one of several ways to spread Bitcoin. Like adding additional taste to a rich dish, its interesting but not necessary. Bitcoin's charm is its independence.

I'm on the same page as you with these comments, thank you for your post

How will ETFs effect the economics of Bitcoin and existing Bitcoin markets?

There are many investors who knew about bitcoins, but did not want to invest through exchanges, this gives them an opportunity by investing in exchange-traded funds. Also, on the market, with the approval of these Spot bitcoin ETFs, it will expose bitcoins more to people who like investing in digital assets. They may not invest immediately but they will closely be observing the market before joining later.   

This is true but the obvious part of the ETP approval. I think we're all aware of this already.

How will ETFs effect the economics of Bitcoin and existing Bitcoin markets?

There are many investors who knew about bitcoins, but did not want to invest through exchanges, this gives them an opportunity by investing in exchange-traded funds. Also, on the market, with the approval of these Spot bitcoin ETFs, it will expose bitcoins more to people who like investing in digital assets. They may not invest immediately but they will closely be observing the market before joining later.   

And they won't hold the actual BTC, it will lie in the BlackRock pockets, as I understand it. I wonder how it will affect the market, I suppose we just need to wait.

This is the new golden question mark in this next cycle it seems...

[mvdheuvel1983]

About the second question. Trading the ETF directly will not have effect on bitcoin price, what will have effect on bitcoin price is if more people are buying the ETF shares and then the company that are providing it are buying more bitcoin when there are needs for it as more people are demanding for the ETF. As the company are buying and holding more bitcoin, it will make bitcoin scarce and the demand also will make the price of bitcoin to increase.

I expect that they will force market makers and other institutional participants to buy huge amounts of real BTC in order to back new shares of these ETFs. This buy is going to pump the price of Bitcoin into the hundreds of thousands I believe. I advice everyone if you can, don't buy a spot Bitcoin ETF don't buy the Black Rock one and don't buy any of them. Instead earn the real BTC, hold it in cold Storage or a software wallet yourself that way you can both benefit from the price pump and also not get rugged eventually along with all the other Bitcoin ETF holders.

[strunberg]

ETFs are a milestone, but they dont prove Bitcoin's strength. They're one of several ways to spread Bitcoin. Like adding additional taste to a rich dish, its interesting but not necessary. Bitcoin's charm is its independence.

I don't really understand Bitcoin ETFs but from what I have learned, Bitcoin ETFs allow asset management companies to buy Bitcoins and they will provide a contract that proves Bitcoin ownership. To me it sounds like buying and selling shares. One of the advantages offered is that many of the world's largest asset management companies will join. And will open up opportunities to include many other large investors in the future.

The disadvantage of ETFs is that it is easy for whales to empty the price pumps so that we will not see a crazy increase like we did in 2017.

I think so too. This means that if the Bitcoin ETF is held by several asset management companies, then of course they will try to maintain Bitcoin price stability. And there will be a possibility that the contract value they provide will not be the same as the amount of Bitcoin they have. In my opinion, Companies like Blackrock will control the price of Bitcoin to maintain their stability and profits. The price of Bitcoin will pass hundreds of thousands of dollars and it is possible that the price will not go down and will not go up so there will be no more price pumps in the future.

[BenCodie]

About the second question. Trading the ETF directly will not have effect on bitcoin price, what will have effect on bitcoin price is if more people are buying the ETF shares and then the company that are providing it are buying more bitcoin when there are needs for it as more people are demanding for the ETF. As the company are buying and holding more bitcoin, it will make bitcoin scarce and the demand also will make the price of bitcoin to increase.

I expect that they will force market makers and other institutional participants to buy huge amounts of real BTC in order to back new shares of these ETFs. This buy is going to pump the price of Bitcoin into the hundreds of thousands I believe. I advice everyone if you can, don't buy a spot Bitcoin ETF don't buy the Black Rock one and don't buy any of them. Instead earn the real BTC, hold it in cold Storage or a software wallet yourself that way you can both benefit from the price pump and also not get rugged eventually along with all the other Bitcoin ETF holders.

I agree with not holding the ETF as it is not true ownership of BTC. It will be inevitable that new investors or investors who arr used to the share market, will get the ETF instead of learning the steps to use self custody solutions.

ETFs are a milestone, but they dont prove Bitcoin's strength. They're one of several ways to spread Bitcoin. Like adding additional taste to a rich dish, its interesting but not necessary. Bitcoin's charm is its independence.

I don't really understand Bitcoin ETFs but from what I have learned, Bitcoin ETFs allow asset management companies to buy Bitcoins and they will provide a contract that proves Bitcoin ownership. To me it sounds like buying and selling shares. One of the advantages offered is that many of the world's largest asset management companies will join. And will open up opportunities to include many other large investors in the future.

The disadvantage of ETFs is that it is easy for whales to empty the price pumps so that we will not see a crazy increase like we did in 2017.

I think so too. This means that if the Bitcoin ETF is held by several asset management companies, then of course they will try to maintain Bitcoin price stability. And there will be a possibility that the contract value they provide will not be the same as the amount of Bitcoin they have. In my opinion, Companies like Blackrock will control the price of Bitcoin to maintain their stability and profits. The price of Bitcoin will pass hundreds of thousands of dollars and it is possible that the price will not go down and will not go up so there will be no more price pumps in the future.

The interesting contrast between both of your opinions, one says the price will pump the other says the price will be stable. Both of these opinions make sense to me. Another layer of uncertainty added to Bitcoin price speculation where only time can tell...

I think the one of the problems is what I've highlighted in the quoted post. This needs to be fixed.

[The Cryptovator]

When you are investing in Bitcoin through a Bitcoin ETF, you have to trust a third party, and you don't own any real Bitcoin at all. I am not sure if the broker holds the exact amount of bitcoin they are selling for ETF. There should be regulations to ensure transparency. Then we may see the real impact on Bitcoin. I am not highly expecting anything from the Bitcoin ETF at all. We already see how the market reacts after the approval of the Bitcoin ETF, which was a long-awaited process. So now the market will be normal, and we may see some sell-off, which is already happening. Then, as usual, we may see a real bull run because of the halving.

[_BlackStar]

When you are investing in Bitcoin through a Bitcoin ETF, you have to trust a third party, and you don't own any real Bitcoin at all. I am not sure if the broker holds the exact amount of bitcoin they are selling for ETF. There should be regulations to ensure transparency. Then we may see the real impact on Bitcoin. I am not highly expecting anything from the Bitcoin ETF at all. We already see how the market reacts after the approval of the Bitcoin ETF, which was a long-awaited process. So now the market will be normal, and we may see some sell-off, which is already happening. Then, as usual, we may see a real bull run because of the halving.

This means a bitcoin ETF will not completely influence the price considering that investors do not actually own bitcoin. Third parties can manipulate their investors by claiming to hold bitcoin from their customers' investments - but when transparency does not exist, there is every possibility of something going wrong. Previously - Bitcoin ETF were considered a strong fundamental for bitcoin market capitalization growth this year, but things look different now that everyone is starting to figure out how they work.

So maybe - halving is another hope that could possibly make the market more profitable. High demand for bitcoin after the halving is certainly expected - it will have an impact on the growth of the bitcoin market cap automatically.

[franky1]

liquidity is also still about the ease of sale to cash.
i think the words you are looking for is "circulating utility", "available utility", "open use"

here are some idea's of how utility can change due to ETF
lets use the lobbying that big-agri done to wheat farming due to commoditising of wheat
(something else that was years ago free, open and un-patent-able, after all wheat is wheat right. no one should control wheat, its natural)

once big agri gained a stake in commodities of wheat they then lobbied EPA to implement farming restrictions on independent farmers to no longer farm. so that only big agri can farm

remember how the EPA and gov said how they restrict farming to control the manipulation of commodity markets

notice how small independent family wheat farmers were sanctioned, restricted, sued and bought out from operating/owning their own wheat farm, unless they met some EPA permit standards.

things even went to GMO tactics tainting the seed to then recognise certain seedlings to then sue those using certain seeds. the lull independent farmers into using GMO seeds. to later sue them for using GMO seeds outside their purview

translation to crypto
ETF institutions can then lobby SEC to put more restrictions on spot CEX, and any service business transferring crypto(MSB) to not be so open to individuals, and even make it restrictive to openly advertise/offer coin swap services via de-fi without such de-fi having permit X

then blame market manipulation on individuals using spot CEX. to restrict independent access to spot markets unless you meet conditions

then we move to the coin tainting game by getting individuals lulled into using mixers. thus lulling them into tainting their own coins as suspicious to then lock them out of transferring between retailers

(take note J dimon is a AP of blackrock and said he would "take bitcoin down")

[ObscurePen]

I was reading some of the filings. My understanding is that each fund allocates a third party Adminstrator. For e.g the Administrator for ARK 21 Shares and Blackrock iShare is The Bank of New York Mellon. The Administrator then calculates the NAV of the Trust once each Exchange trading day after closing of trading - 4pm using CF Benchmarks Index for up to date Bitcoin price. The NAV provides investors and shareholders with an idea of the number of Bitcoins in the fund and the inflow and outflow.

During the day ARK also has some means to provided and intraday indicative value of the same using the previous days NAV and updating this based of changes in BTC price and changes in the trust's underlying assets which I didn't quite understand. Something about using Solactive to calculate IIV?

[franky1]

I was reading some of the filings. My understanding is that each fund allocates a third party Adminstrator. For e.g the Administrator for ARK 21 Shares and Blackrock iShare is The Bank of New York Mellon. The Administrator then calculates the NAV of the Trust once each Exchange trading day after closing of trading - 4pm using CF Benchmarks Index for up to date Bitcoin price. The NAV provides investors and shareholders with an idea of the number of Bitcoins in the fund and the inflow and outflow.

During the day ARK also has some means to provided and intraday indicative value of the same using the previous days NAV and updating this based of changes in BTC price and changes in the trust's underlying assets which I didn't quite understand. Something about using Solactive to calculate IIV?

simplified
ark21:  1 share = ~0.001 btc peg
blackrock:  1 share = ~0.000569 btc peg

Solactive will calculate and disseminate throughout the core trading session on each trading day an updated intraday indicative value (“IIV”). The IIV will be calculated by using the prior day’s closing NAV as a base and updating that value during the trading day based off of more recent bitcoin pricing information to reflect any changes in the value of the Trust’s underlying assets and, therefore, the Trust’s NAV.

the IIV is not used on ARKS public market intraday NAV chart
its used within brokers order creation where those AP wanting to make an order get a price from IIV that lasts 15 seconds to accept or reject

...
its worth noting that the ETF are not selling direct to end user investors. this principle nav and more intuitive IIV "real time" nav is between ETf and brokers..

the demand of end shares for investors is secondary market stuff between brokers and their customers..
so the IIV and principle NAV will be more stable then the trades of end users with the brokers on secondary markets

[PrivacyG]

I will be honest with you.  I have no idea what is up with this ETF thing nor do I have a desire to understand it.

It is a hard thing for me to believe even that some of the Exchanges we see have 100 percent backing of their supposed balance.  Particularly more sketchy Exchanges, but even some of the top ones.  I wonder how that will work with the ETF.  Is it truly backed 1 to 1 by Bitcoin?  Or is it just in theory and we will only hear about successful audits with no proper evidence to back statements with.

Unless among the other reasons for approving a Bitcoin ETF or doing other such actions is a desire to help Bitcoins Decentralization too, I am highly skeptical of the scope of the product, Service or what ever it is.  I understand that a Bitcoin ETF is only useful to those who want to speculate on the price of Bitcoin without owning Bitcoin the traditional way, which includes the 'headache' of creating a Wallet, backing it up properly et cetera.

Once the Rich are in the game, to me it is not a happy life or a great purpose any more.  Probably a great purpose to their pockets.  But not to the future of Bitcoin.  They have no intention to make Bitcoin a better Currency or any thing like that.  In fact most of them wish Bitcoin would NOT exist because it takes away a chunk of their power now.

I could speculate on how a Bitcoin ETF can result into a manipulation of the Bitcoin price but I do not think it is worth the effort considering I do not clearly understand what an ETF truly is.  The point is.  I believe the Rich are in it for a reason and it is not for the better future of Bitcoin.