Winklevoss ETF will list on NASDAQ as "COIN"

[SunBin]

I am reading the Registration Statement now. I do not understand the maths behind it. Can anyone help me out?

My understanding (could be wrong) of the COIN ETF: WBT is issuing 1 million shares and each share represents 0.2btc. The price of bitcoin today is around $600 (for easy calculation). So, each share should have a trading value of around $120. But on page 1 of the Registration Statement, it says "proposed maximum offering price per Share" is $20.09??

The share price listed on nasdaq is also $20.09:
http://www.nasdaq.com/markets/ipos/company/winklevoss-bitcoin-trust-909930-72927

Is that $20.09 offering price going to change?
If not, who is going to make money from the $100 price difference?

Thanks!

The price is not set in stone. As soon as it is listed, it will self adjust to match the market price.

[jl2012]

I am reading the Registration Statement now. I do not understand the maths behind it. Can anyone help me out?

My understanding (could be wrong) of the COIN ETF: WBT is issuing 1 million shares and each share represents 0.2btc. The price of bitcoin today is around $600 (for easy calculation). So, each share should have a trading value of around $120. But on page 1 of the Registration Statement, it says "proposed maximum offering price per Share" is $20.09??

The share price listed on nasdaq is also $20.09:
http://www.nasdaq.com/markets/ipos/company/winklevoss-bitcoin-trust-909930-72927

Is that $20.09 offering price going to change?
If not, who is going to make money from the $100 price difference?

Thanks!

That price was calculated 1 year ago, when bitcoin was about $100 each. I think they will update the price when it is really approved

[zetaray]

The winklevoss bros are not going to loose money on this. Surely they will adjust the price later. If not, anyone who bought their IPO would enjoy a 5 fold gain on the first trading day.

[medUSA]

Thanks guys. This is what I thought... $20 for 0.2btc is far too cheap. There is surprisingly little information about the ETF on the net. The only thing I could find on the ETF timeline is:

"Under the securities laws we are not permitted to discuss timing to launch or effectiveness. However, identifying the ticker symbol and the exchange are two major events that further demonstrate that we are moving forward as expected.”
http://blogs.wsj.com/moneybeat/2014/07/01/bitbeat-only-one-winner-in-marshals-service-bitcoin-auction/

Approval for a new type of ETF can involve several rounds of comments from regulators, and multiple resubmissions of the application. The approval process for the Bitcoin ETF is “progressing nicely and might occur at the end of 2014”
http://www.bloomberg.com/news/2014-01-30/winklevosses-lawyer-in-talks-with-sec-over-bitcoin-etf.html

[Asrael999]

Only 1 million shares.   Small float = easy manipulation

Pump and dump time

Having access to wall street money, who really know how high bitcoin will go.

Yeah they'll pump it then dump it.   Leaving all retail bagholders in tears.   Seen it all the time in pennystocks

ETF's do not work like that -if more than one million shares are purchased the ETF issues new ones, and buys the bitcoin to hold against them. So if 3 million shares get bought they will issue another 2 million, the fund then buys extra bitcoin with the proceeds of the new share issuance so as be balanced. That way the value of the ETF share stays in line with the value of bitcoin and is not influenced by the supply and demand of the ETF share itself.

When shares are sold back to the ETF they retire them and sell bitcoin so as to stay balanced

So if the ETF gets huge swings in inflows and outflows then it will have a huge impact on bitcoin - unless insitutional market makers get involved in the real bitcoin market so as to smooth flows and volatility.

There are one million shares initially because the ETF  will only own 200,000 bitcoin, and each share is worth 0.2BTC. If more than one million shares get bought the ETF will have to buy bitcoin at market. If less then they may well have to sell bitcoin.


EDIT:

Lets not forget though that to be fully funded at inception or close to inception, ie all one million shares bought, this ETF needs to sell the equivalent  200,000 coins to interested parties , thats USD 130,000,000 at current prices, - and we just had a little panic about 30,000 coins going at auction.

[BitchicksHusband]

Only 1 million shares.   Small float = easy manipulation

Pump and dump time

Having access to wall street money, who really know how high bitcoin will go.

Yeah they'll pump it then dump it.   Leaving all retail bagholders in tears.   Seen it all the time in pennystocks

ETF's do not work like that -if more than one million shares are purchased the ETF issues new ones, and buys the bitcoin to hold against them. So if 3 million shares get bought they will issue another 2 million, the fund then buys extra bitcoin with the proceeds of the new share issuance so as be balanced. That way the value of the ETF share stays in line with the value of bitcoin and is not influenced by the supply and demand of the ETF share itself.

When shares are sold back to the ETF they retire them and sell bitcoin so as to stay balanced

So if the ETF gets huge swings in inflows and outflows then it will have a huge impact on bitcoin - unless insitutional market makers get involved in the real bitcoin market so as to smooth flows and volatility.

There are one million shares initially because the ETF  will only own 200,000 bitcoin, and each share is worth 0.2BTC. If more than one million shares get bought the ETF will have to buy bitcoin at market. If less then they may well have to sell bitcoin.


EDIT:

Lets not forget though that to be fully funded at inception or close to inception, ie all one million shares bought, this ETF needs to sell the equivalent  200,000 coins to interested parties , thats USD 130,000,000 at current prices, - and we just had a little panic about 30,000 coins going at auction.

But if more than 200,000 shares are sold (say, 300,000 on the first day), there are only 3600 coins per day to be had.  How will they buy them all?  And for how much?  You can see that if they get to 1,000,000 shares, it will be almost impossible to fill the need, meaning the price of bitcoin will need to skyrocket to massive numbers in order to convince HODLers to sell.

[Alley]

That's a high share price for a IPO.  I wonder if they will change it to .1 or .05 btc per share.  Most IPOs start at $15-30 a share.

Either way I know I will be buying at the btc I can afford the day before it launches.

[BitchicksHusband]

.1 would be a lot easier, and then they could have 2 million shares available instead.

[InwardContour]

Only 1 million shares.   Small float = easy manipulation

Pump and dump time

Having access to wall street money, who really know how high bitcoin will go.

Yeah they'll pump it then dump it.   Leaving all retail bagholders in tears.   Seen it all the time in pennystocks

ETF's do not work like that -if more than one million shares are purchased the ETF issues new ones, and buys the bitcoin to hold against them. So if 3 million shares get bought they will issue another 2 million, the fund then buys extra bitcoin with the proceeds of the new share issuance so as be balanced. That way the value of the ETF share stays in line with the value of bitcoin and is not influenced by the supply and demand of the ETF share itself.

When shares are sold back to the ETF they retire them and sell bitcoin so as to stay balanced

So if the ETF gets huge swings in inflows and outflows then it will have a huge impact on bitcoin - unless insitutional market makers get involved in the real bitcoin market so as to smooth flows and volatility.

There are one million shares initially because the ETF  will only own 200,000 bitcoin, and each share is worth 0.2BTC. If more than one million shares get bought the ETF will have to buy bitcoin at market. If less then they may well have to sell bitcoin.


EDIT:

Lets not forget though that to be fully funded at inception or close to inception, ie all one million shares bought, this ETF needs to sell the equivalent  200,000 coins to interested parties , thats USD 130,000,000 at current prices, - and we just had a little panic about 30,000 coins going at auction.

But if more than 200,000 shares are sold (say, 300,000 on the first day), there are only 3600 coins per day to be had.  How will they buy them all?  And for how much?  You can see that if they get to 1,000,000 shares, it will be almost impossible to fill the need, meaning the price of bitcoin will need to skyrocket to massive numbers in order to convince HODLers to sell.

Shares in ETFs can be "created" by investors giving the trustee the same assets in the index/securities that the ETF is suppose to track. So for example someone could create 5 shares of the bitcoin ETF by giving the trustee 1 BTC

[medUSA]

But if more than 200,000 shares are sold (say, 300,000 on the first day), there are only 3600 coins per day to be had.  How will they buy them all?  And for how much?  You can see that if they get to 1,000,000 shares, it will be almost impossible to fill the need, meaning the price of bitcoin will need to skyrocket to massive numbers in order to convince HODLers to sell.

You have a point. If there is overwhelming demand for the ETF, the AP will need to buy bitcoin to create new blocks of shares to drive ETF share price back to "fair value".

You were thinking they would buy from the exchanges in realtime, but I believe they would buy a buffer stock of bitcoin before hand. The 200,000 bitcoin placed in the ETF should not be all of the Winklevosses' holdings. They can guage the demand for the ETF at IPO and decide how bitcoin they need to set aside for creating new shares.

[maker88]

Only 1 million shares.   Small float = easy manipulation

Pump and dump time

Having access to wall street money, who really know how high bitcoin will go.

Yeah they'll pump it then dump it.   Leaving all retail bagholders in tears.   Seen it all the time in pennystocks

ETF's do not work like that -if more than one million shares are purchased the ETF issues new ones, and buys the bitcoin to hold against them. So if 3 million shares get bought they will issue another 2 million, the fund then buys extra bitcoin with the proceeds of the new share issuance so as be balanced. That way the value of the ETF share stays in line with the value of bitcoin and is not influenced by the supply and demand of the ETF share itself.

When shares are sold back to the ETF they retire them and sell bitcoin so as to stay balanced

So if the ETF gets huge swings in inflows and outflows then it will have a huge impact on bitcoin - unless insitutional market makers get involved in the real bitcoin market so as to smooth flows and volatility.

There are one million shares initially because the ETF  will only own 200,000 bitcoin, and each share is worth 0.2BTC. If more than one million shares get bought the ETF will have to buy bitcoin at market. If less then they may well have to sell bitcoin.


EDIT:

Lets not forget though that to be fully funded at inception or close to inception, ie all one million shares bought, this ETF needs to sell the equivalent  200,000 coins to interested parties , thats USD 130,000,000 at current prices, - and we just had a little panic about 30,000 coins going at auction.

thank you for explaining the term fund for them lol i think some people think stocks= all financial instruments.

[arbitrage001]

Only 1 million shares.   Small float = easy manipulation

Pump and dump time

Having access to wall street money, who really know how high bitcoin will go.

Yeah they'll pump it then dump it.   Leaving all retail bagholders in tears.   Seen it all the time in pennystocks

ETF's do not work like that -if more than one million shares are purchased the ETF issues new ones, and buys the bitcoin to hold against them. So if 3 million shares get bought they will issue another 2 million, the fund then buys extra bitcoin with the proceeds of the new share issuance so as be balanced. That way the value of the ETF share stays in line with the value of bitcoin and is not influenced by the supply and demand of the ETF share itself.

When shares are sold back to the ETF they retire them and sell bitcoin so as to stay balanced

So if the ETF gets huge swings in inflows and outflows then it will have a huge impact on bitcoin - unless insitutional market makers get involved in the real bitcoin market so as to smooth flows and volatility.

There are one million shares initially because the ETF  will only own 200,000 bitcoin, and each share is worth 0.2BTC. If more than one million shares get bought the ETF will have to buy bitcoin at market. If less then they may well have to sell bitcoin.


EDIT:

Lets not forget though that to be fully funded at inception or close to inception, ie all one million shares bought, this ETF needs to sell the equivalent  200,000 coins to interested parties , thats USD 130,000,000 at current prices, - and we just had a little panic about 30,000 coins going at auction.

thank you for explaining the term fund for them lol i think some people think stocks= all financial instruments.

May not be a good long term thing for bitcoin as wall street type hoard the coin rather than use it.

[InwardContour]

But if more than 200,000 shares are sold (say, 300,000 on the first day), there are only 3600 coins per day to be had.  How will they buy them all?  And for how much?  You can see that if they get to 1,000,000 shares, it will be almost impossible to fill the need, meaning the price of bitcoin will need to skyrocket to massive numbers in order to convince HODLers to sell.

They would simply buy them all on the open market. The number of coins available via the miners is not reliant as the authorized participants will not buy directly from the miners, but rather from large whales and on exchanges

[hyphymikey]

How far in advance are they legally allowed to announce the launch date?

[wachtwoord]

How far in advance are they legally allowed to announce the launch date?

very good question. Anyone with experience in this?

[BTCtrader71]

How far in advance are they legally allowed to announce the launch date?

very good question. Anyone with experience in this?

I don't know who or how it gets announced, but it's not by the Winklevii:

Cameron Vinklevoss stressed that he could not discuss timing to launch due to strict security laws. “However, identifying the ticker symbol and the exchange are two major events that further demonstrate that we are moving forward as expected,” he added.

[theonewhowaskazu]

So where do the coins come from that finance the original IPO shares? Are they selling their own coins as part of the IPO?

[BitchicksHusband]

So where do the coins come from that finance the original IPO shares? Are they selling their own coins as part of the IPO?

It appears that way, since the numbers match.

[wachtwoord]

How far in advance are they legally allowed to announce the launch date?

very good question. Anyone with experience in this?

I don't know who or how it gets announced, but it's not by the Winklevii:

Cameron Vinklevoss stressed that he could not discuss timing to launch due to strict security laws. “However, identifying the ticker symbol and the exchange are two major events that further demonstrate that we are moving forward as expected,” he added.

What makes you think it not the twins? They are forbidden to talk about this now, I assume they will be able to talk about this after approval (which I suspect is a public event in itself).

[hyphymikey]

So where do the coins come from that finance the original IPO shares? Are they selling their own coins as part of the IPO?

They are using their own coins for the IPO.

I thought this ETF was kind of like a cold storage for people who don't want to do it themselves. Buyers of shares could also buy and sell shares as they please, taking the "fear of using exchanges" out of the picture. At any time they can ask for the bitcoins in trade for their shares, I am guessing with some additional costs. Then the Winklevii would buy more coins and resell the shares, keeping the amount of coins and shares in the fund the same as people redeem shares for coins. Also, at anytime, the Winklevii can buy more coins and sell the shares to those coins as demand increases, while keeping the ratio of coins to shares the same.