Is an ETF good for bitcoin? I feel no it is not. Long term will be harmful to bitcoin in fact. Yes in the short term it may instigate a bull run. (It may even be a staggeringly big one) However longer term ETFs will be used to manipulate and suppress price and counter the threat to govt fiat and dampen enthusiasm.
Its not hard to see the parallel. Just as in gold and silver markets, investors are herded into paper shares ie GLD and SLV ETFs the same will become true with bitcoin. But if the ETF is not honest about increasing its own reserves why people buy the ETF then the reality is that that investment money did not reduce bitcoin supply and therefore does not put pressure on price to rise.
In my idealistic vision of bitcoin, people would own real bitcoin and not any derivatives of bitcoin which are in reality a means to control the market
Its not hard to see the parallel. Just as in gold and silver markets, investors are herded into paper shares ie GLD and SLV ETFs the same will become true with bitcoin. But if the ETF is not honest about increasing its own reserves why people buy the ETF then the reality is that that investment money did not reduce bitcoin supply and therefore does not put pressure on price to rise.
In my idealistic vision of bitcoin, people would own real bitcoin and not any derivatives of bitcoin which are in reality a means to control the market
Auditing Bitcoin is fairly easy. Auditing gold is very, very hard. A Bitcoin ETF can simply put a bit of data on their website to all but prove their reserves to everyone. Besides relying on a third-party audit, which can be gamed if the government is involved, all a gold ETF can do to persuade people is to put things like gold bar serial numbers up, which of course can be gamed in many ways easily. It's also much easier and much cheaper to take delivery in BTC than gold. I see no reason why people would allow fractional reserve, especially once BTC is easier to hold, and also given all the people who want to hold it in other countries, don't want US juridictional risk, etc.
Even assuming the worst case scenario where no one ends up caring and the ETFs operate on 10x reserve, it can at most reduce "the moon" by tenfold. $100,000 per coin instead of a $1 million. Realistically it's quite a bit less, since it's not like everyone in the world is going to buy the ETF instead of actual coins. But an ETF accounting for a huge amount of the base BTC supply itself implies a great jump in adoption, from which we could already expect a 10x in the price easily.
So I think worst case, with the assistance of corrupt auditors and government complicity, they might be able to hold back a year or two of gains. After that, fractional reserve has its limits, especially as Bitcoin gains more market uses so that people actually need to withdraw it.
Hi Zanglebert Thanks for that reply, thats quite reassuring. I thought about the transparency aspect a bit more after writing original version of my comment. In a way I'm not sure why people would buy an etf for bitcoin, I guess some people are just conditioned to do all their investing via one vehicle ie whatever sharebroker they like to use or something. To me I can't help thinking that surely if you are competent enough to buy share in an ETF is not really harder to buy some actual bitcoin.
ps nice to see you on the forums, feels like ages since we chewed the fat.
