Winklevoss ETF update, what does this mean?

[QuestionAuthority]

My opinion is that, if they get it through the system and get it listed it will be an enormous flop.

Care to explain why?

Tooooooo risky. Did you read the prospectus? If I was risking client money, I think I would risk their money on Somali oil reserves before this ETF.

Meh, no riskier than plenty of other options out there, that are already doing $millions in trades every day.  Institutions will buy what their clients want.  If they want a high risk/reward investment option, COIN is likely to be on that list.

Fact is stranger than fiction, but I think this one is too risky (and small) for institutional investors. I'm going to have to see it to believe it. I'm not sure that it will even be approved.

[Bobsurplus]

My opinion is that, if they get it through the system and get it listed it will be an enormous flop.

Care to explain why?

Tooooooo risky. Did you read the prospectus? If I was risking client money, I think I would risk their money on Somali oil reserves before this ETF.

Meh, no riskier than plenty of other options out there, that are already doing $millions in trades every day.  Institutions will buy what their clients want.  If they want a high risk/reward investment option, COIN is likely to be on that list.

Fact is stranger than fiction, but I think this one is too risky (and small) for institutional investors. I'm going to have to see it to believe it. I'm not sure that it will even be approved.

Not sure enough to bet?

[Mortimer452]

My opinion is that, if they get it through the system and get it listed it will be an enormous flop.

Care to explain why?

Tooooooo risky. Did you read the prospectus? If I was risking client money, I think I would risk their money on Somali oil reserves before this ETF.

Meh, no riskier than plenty of other options out there, that are already doing $millions in trades every day.  Institutions will buy what their clients want.  If they want a high risk/reward investment option, COIN is likely to be on that list.

Fact is stranger than fiction, but I think this one is too risky (and small) for institutional investors. I'm going to have to see it to believe it. I'm not sure that it will even be approved.

True - volume will definitely tell whether or not the big boys are even going to screw with it.  If we start seeing $millions moved in and out each day, it will at least catch their attention, risky or not.

[KenJackson]

Read this and tell me if you believe Bitcoin will be a sound ETF investment for knowledgable players.

Ways to identify a bad ETF investment  ...

This seems like very sound advice for years gone by.  But there's one more very important consideration.

We're overdue for a big stock market correction even by normal standards.  But many are saying that the massive, irresponsible money printing by all the major central banks is going to catch up with us at about the same time.  Plus, the US dollar is very likely to fall from it's position as world reserve currency.  Bad things are lining up to give us the big one.

Why is that relevant to the COIN ETF?

Because investors right now are scrambling to find something to invest in to protect their money.  Bonds don't look good.  Real estate seems to be inflating into another bubble.  Stocks are still performing well, but we expect them to loose half their value in the correction shortly.  PMs seem like an excellent bet, but the non-money status of PMs is different right now than at any time in recorded history, so caution is in order.  CD savings lose money against inflation and risk bank failure.  

What's left?  Diamonds and art, I guess, but you have to have a lot of knowledge to avoid getting ripped off.  Dollars under the bed actually has some appeal.


I'm guessing that a lot of investors are looking around for something, something they can invest in that will hold its value through the correction and ensuing depression.  The fact is, we don't know how bitcoin will perform because it hasn't been tested.  But I think a lot of people will be willing to find out.

[freedomno1]

http://www.marketwatch.com/story/winklevoss-bitcoin-trust-files-to-sell-201-million-shares-2014-12-31-7915121

Thanks haven't been checking up on the Winklevoss ETF for a while
At this price it might make for some nice investment as it gets mainstream attention.
(Even around a stock market crash some firestorms may occur)

[QuestionAuthority]

My opinion is that, if they get it through the system and get it listed it will be an enormous flop.

Care to explain why?

Tooooooo risky. Did you read the prospectus? If I was risking client money, I think I would risk their money on Somali oil reserves before this ETF.

Meh, no riskier than plenty of other options out there, that are already doing $millions in trades every day.  Institutions will buy what their clients want.  If they want a high risk/reward investment option, COIN is likely to be on that list.

Fact is stranger than fiction, but I think this one is too risky (and small) for institutional investors. I'm going to have to see it to believe it. I'm not sure that it will even be approved.

Not sure enough to bet?

I'll bet you everything I have left from timeshare coin.

[Bobsurplus]

My opinion is that, if they get it through the system and get it listed it will be an enormous flop.

Care to explain why?

Tooooooo risky. Did you read the prospectus? If I was risking client money, I think I would risk their money on Somali oil reserves before this ETF.

Meh, no riskier than plenty of other options out there, that are already doing $millions in trades every day.  Institutions will buy what their clients want.  If they want a high risk/reward investment option, COIN is likely to be on that list.

Fact is stranger than fiction, but I think this one is too risky (and small) for institutional investors. I'm going to have to see it to believe it. I'm not sure that it will even be approved.

Not sure enough to bet?

I'll bet you everything I have left from timeshare coin.

   

 

[QuestionAuthority]

My opinion is that, if they get it through the system and get it listed it will be an enormous flop.

Care to explain why?

Tooooooo risky. Did you read the prospectus? If I was risking client money, I think I would risk their money on Somali oil reserves before this ETF.

Meh, no riskier than plenty of other options out there, that are already doing $millions in trades every day.  Institutions will buy what their clients want.  If they want a high risk/reward investment option, COIN is likely to be on that list.

Fact is stranger than fiction, but I think this one is too risky (and small) for institutional investors. I'm going to have to see it to believe it. I'm not sure that it will even be approved.

Not sure enough to bet?

I'll bet you everything I have left from timeshare coin.

   

 

LOL  I thought you'd like that one. 

[Vessko]

However, my impression of the average ETF is that it contains a basket of multiple securities, no?

Not necessarily. There are hundreds of different ETFs and they have very different characteristics. COIN will basically be a tracking ETF, tracking the spot price of a single currency/commodity. A good example for this is the GLD ETF, which tracks the spot price of gold.

If so, why would a single-security ETF (e.g. COIN) be affected by #5 at all?

#5 is true for any security, not just for ETFs. Thinly traded markets are illiquid, easy to manipulate, and cause a lot of slippage (i.e., losses because of the difference between bid and ask).

The effort required to track a single security (e.g. Bitcoin) should be trivial, and therefore very efficient, should it not?

The effort is trivial - I could probably code it on a PC in a couple of weeks (and most of that time will be spent on getting acquainted with the APIs of the exchanges and on testing). It's not the tracking algorithm that is the problem. It's that if the market is thinly traded (few buyers and sellers), it's easy for an entity to push it in a particular direction with a relatively small amount of money.

Also, you can lose even if the price doesn't move at all. For instance, suppose that there are only 1 buyer and 1 seller besides you and you buy 1 share at $45 from the seller and immediately try to sell it to the buyer, but he is offering only $35. Even if the price didn't move at all (because there were no other participants), you will lose money by exiting your trade.

I've seen both of these things happen in several thinly traded markets, like gold exploration companies, pink sheet shares and so on. It won't necessarily be a problem of COIN, but the advice quoted is a general investment advice, it is not aimed at a particular investment vehicle. We'll have to see how this ETF trades, in order to know if this is going to be a problem.

[Vessko]

Tooooooo risky. Did you read the prospectus? If I was risking client money, I think I would risk their money on Somali oil reserves before this ETF.

I don't think that the ETF-specific risks will be large enough to matter. I mean, they have a large enough amount of bitcoins and it's relatively trivial to make a tracking ETF. Speculating in a volatile commodity/currency like Bitcoin is very risky per se - but if you are willing to stomach that risk, I don't think that speculating in a Bitcoin-tracking ETF would be significantly riskier.

[QuestionAuthority]

Tooooooo risky. Did you read the prospectus? If I was risking client money, I think I would risk their money on Somali oil reserves before this ETF.

I don't think that the ETF-specific risks will be large enough to matter. I mean, they have a large enough amount of bitcoins and it's relatively trivial to make a tracking ETF. Speculating in a volatile commodity/currency like Bitcoin is very risky per se - but if you are willing to stomach that risk, I don't think that speculating in a Bitcoin-tracking ETF would be significantly riskier.

All of this is a moot point anyway. I don't see this ever getting past the SEC.

[KenJackson]

All of this is a moot point anyway. I don't see this ever getting past the SEC.

If the SEC allows Direxion's 3x leveraged ETFs (and they do), why on earth wouldn't they allow an ETF that follows bitcoin?

One of their prospectuses says they invest in futures contracts; opens on securities, indices and futures contracts; equity caps, floors and collars; swap agreements; forward contracts; short positions; reverse repurchases agreements; ETFs and other financial instruments.

Recognize those names?  Some of them are the derivatives that caused the financial meltdown in 2008.  Now you can meltdown too.

Or you can invest in bitcoin.

[jbreher]

However, my impression of the average ETF is that it contains a basket of multiple securities, no?

Not necessarily. There are hundreds of different ETFs and they have very different characteristics. COIN will basically be a tracking ETF, tracking the spot price of a single currency/commodity. A good example for this is the GLD ETF, which tracks the spot price of gold.

I'm with you - indeed, that is kind of my point. Note I said 'average ETF'. Granted, it would have been more grammatically correct to state 'typical ETF'.

If so, why would a single-security ETF (e.g. COIN) be affected by #5 at all?

#5 is true for any security, not just for ETFs. Thinly traded markets are illiquid, easy to manipulate, and cause a lot of slippage (i.e., losses because of the difference between bid and ask).

Thanks. Here is #5 reproduced, as I've lost track:
5. Finally, very new or very small ETFs sometimes trade inefficiently, resulting in wide spreads between their buy and sell prices or failure to track their benchmarks accurately. Wait for an ETF to gather at least $100 million in assets before you invest in it.

Granted, I'm not familiar with ETFs in general. However, I read this essentially as 'your potential ETF may have a low ratio of available management bandwidth to basket market activity -- which may increase the risk that the fund does not accurately track the actual market'.

The effort required to track a single security (e.g. Bitcoin) should be trivial, and therefore very efficient, should it not?

The effort is trivial - I could probably code it on a PC in a couple of weeks (and most of that time will be spent on getting acquainted with the APIs of the exchanges and on testing). It's not the tracking algorithm that is the problem. It's that if the market is thinly traded (few buyers and sellers), it's easy for an entity to push it in a particular direction with a relatively small amount of money.

Got it. I was focused upon the "failure to track their benchmarks", while you feel the calculus is dominated by "wide spreads between their buy and sell prices". I defer to your apparent greater experience.

[QuestionAuthority]

All of this is a moot point anyway. I don't see this ever getting past the SEC.

If the SEC allows Direxion's 3x leveraged ETFs (and they do), why on earth wouldn't they allow an ETF that follows bitcoin?

One of their prospectuses says they invest in futures contracts; opens on securities, indices and futures contracts; equity caps, floors and collars; swap agreements; forward contracts; short positions; reverse repurchases agreements; ETFs and other financial instruments.

Recognize those names?  Some of them are the derivatives that caused the financial meltdown in 2008.  Now you can meltdown too.

Or you can invest in bitcoin.

Because I'm not convinced that Wall Street and their puppet the SEC are particularly fond of Bitcoin.

[Marina_T]

A great idea and would really change the industry but is SEC approval likely? Does not seem to be the case:
https://bitcoinmagazine.com/articles/needham-winklevoss-bitcoin-etf-would-have-profound-impact-on-price-but-approval-unlikely-1484254628/

[QuestionAuthority]

A great idea and would really change the industry but is SEC approval likely? Does not seem to be the case:
https://bitcoinmagazine.com/articles/needham-winklevoss-bitcoin-etf-would-have-profound-impact-on-price-but-approval-unlikely-1484254628/

Hum, seems like I've heard that somewhere before. 

[Marina_T]

A great idea and would really change the industry but is SEC approval likely? Does not seem to be the case:
https://bitcoinmagazine.com/articles/needham-winklevoss-bitcoin-etf-would-have-profound-impact-on-price-but-approval-unlikely-1484254628/

Hum, seems like I've heard that somewhere before. 

Have you heard this?
http://www.coindesk.com/winklevoss-bitcoin-etf-100-million/

[QuestionAuthority]

A great idea and would really change the industry but is SEC approval likely? Does not seem to be the case:
https://bitcoinmagazine.com/articles/needham-winklevoss-bitcoin-etf-would-have-profound-impact-on-price-but-approval-unlikely-1484254628/

Hum, seems like I've heard that somewhere before. 

Have you heard this?
http://www.coindesk.com/winklevoss-bitcoin-etf-100-million/

Yeah, I heard they were having troubles. Now that the deadline has been pushed to the max (240 days) it's likely to fail. The history of etfs show that only 1 in 20 that have been pushed to the maximum deadline are approved.

The size of the offering has increased, from $65m to $100m, as well as a boost in the number of shares being offered, from 1m shares to 10m shares. The filing goes on to indicate that the maximum offering price per share has been lowered, from $65 down to just $10.

[Marina_T]

A great idea and would really change the industry but is SEC approval likely? Does not seem to be the case:
https://bitcoinmagazine.com/articles/needham-winklevoss-bitcoin-etf-would-have-profound-impact-on-price-but-approval-unlikely-1484254628/

Hum, seems like I've heard that somewhere before. 

Have you heard this?
http://www.coindesk.com/winklevoss-bitcoin-etf-100-million/

Yeah, I heard they were having troubles. Now that the deadline has been pushed to the max (240 days) it's likely to fail. The history of etfs show that only 1 in 20 that have been pushed to the maximum deadline are approved.

The size of the offering has increased, from $65m to $100m, as well as a boost in the number of shares being offered, from 1m shares to 10m shares. The filing goes on to indicate that the maximum offering price per share has been lowered, from $65 down to just $10.

Two more are waiting for an approval as well (SolidX and Grayscale), hopefully in some time we will get there

[asdalani]

The Winklevoss twins been waiting for that ETF for a very long time now. By the time the ETF will get released they will be oldmen and probably forget what Bitcoin even is!

Just joking of course.