Topic: [BTC-TC] BTC Growth: Capital Growth via Hedge Fund-Style Investing - page 8. (Read 251637 times)

I'd certainly agree that a large portion of market participants chase promiseware/vaporware taking on massive risk in return for speculative profits.  But don't assume everyone interested in redemption falls into that boat.  I'm very interested in redemption values but stay well clear of all the wannabe ASIC-manufacturers/massive mining companies (with no hardware yet).  That's because the yield on bonds such as Ukyo (or all the others - including my own) don't appeal to me as a long-term prospect, only as a short to medium-term resting place whilst waiting for much more profitable opportunities.  Those opportunities are rare - but not SO rare that I'm willing to take a large hit whenever one arises.  If the redemption was immediately available via the market then I may be more interested - but with Ukyo frequently not around for a few days the potential hit taken when wanting cash out fast becomes even more significant.  Were J-D (with near immediate cash-out and visible capital backing) not available then I'd also tend to value bonds such this higher.

I'm pretty confident a significant portion of holders of Ukyo.loan are relatively safety-minded AND have a strong interest in having access to redemption at near the price they paid.  Those two factors are actually complementary not opposed to one another - being able to get your cash back out quickly without major loss is a big factor when assessing safety in the BTC environment (though the promise of it doesn't, historically, mean the facility will actually exist if things go wrong).  And as such participants will always sell to the market when they want cash back (if market is above face value + site fees) and won't buy significantly above face value it acts to ensure the bid side won't accumulate significant volume much above face value.

Part of the problem is that the way these 'bonds' are structured (and I include my own in this, obviously) makes valuation much harder than with traditionally structured bonds (where there's an exact value for them defined at a predetermined date).  Variable dividends and a buyback price based on a low-liquidity market make this one even harder to value than others.

Selling so low below NAV/U... that's a new one around here...

BATTLE OF THE MENTAL GIANTS

I'm guessing we're probably using the word 'correlation' in different ways... To my mind, correlation does not need to be 100% in order to be correlation (even "direct" correlation).

But semantics aside, the underlying principal is the same: I am merely suggesting that if this has anything at all to do with the market's pricing of Ukyo.Loan (and in fact I suspect it has little to do with it -- see below), then the market is discounting the potential future returns at a higher rate than seems to me to be justified by publicly available evidence. The publicly available evidence suggests that Ukyo.Loan has, more often than not, paid out at above the guaranteed rate; the publicly available evidence suggests that BitFunder itself continues to generate significant trading volume and significant commissions; the publicly available evidence suggests that the sentence "Additional dividends provided when the site does well" has accurately reflected Ukyo's intentions and behaviour.

As to why I suspect this all has little to do with the market's pricing of Ukyo.Loan, my interpretation of others' comments on the loan suggests to me that market participants are far more concerned about the 'get out free' clause of the contract -- i.e., redemption at face value -- than about the buyback provision which ensures they will not be bought out at less than 110% of face value. My sense is that many market participants are much more keen to chase yield via the latest promiseware companies than to accept a lower potential return in exchange for a lower probability of losing large amounts of cash; those yield-sensitive participants are likely under-represented in the shareholder base of Ukyo.Loan, which is likely more populated with safety-minded participants entirely disinclined to chase yield.

BitFunder being doomed to failure is not the same as expecting dividends to generally remain low, since there is not a direct correlation between Ukyo.Loan and the success of BitFunder. If BitFunder does poorly, then Ukyo.Loan will pay the minimum dividend. If BitFunder does well Ukyo.Loan may pay a higher dividend, but there is no guarantee.

I have now edited the report to include the following explicit addendum:


Hopefully that will remove any room for misinterpretation. 

Of course other things are not equal, and nowhere in the rest of the analysis do I make any suggestion whatsoever that they are equal, that they should be equal, that I wish they were equal, or that I would like other people to believe that they are equal. Nowhere in the rest of the analysis do I even return to the 200% idea.

I was simply illustrating what it means for bond prices to specify the market's risk adjusted perception of returns. I could have used a factor of 1000% instead of a factor of 200% to make exactly the same point, and it would make no difference whatsoever to the rest of the analysis.

Why would I want to make the point at all? Because the Bitcoin community has a whole bunch of things floating around called 'bonds', and most of them have very little to do with how real bonds operate. (By analogy, the Bitcoin community also has a whole bunch of things floating around called 'futures', and most of them have very little to do with how real futures operate.)

For folks who already understand exactly how bonds normally trade, they can skip over my sentence about price versus yield entirely and move on to the actual point of the analysis -- which is the suggestion that trading at anything less than 110% appears to be guaranteed safe due to the structure of the offering. Or, just for kicks, they could choose to nitpick that sentence, steadfastly refuse to engage with the actual substance of the analysis, and engage in a little ad hominem insinuation.


There was no logic, and there was no analysis or comment that was in any way "based on 'all other things being equal'". There was an illustration of how real bonds trade, nothing more and nothing less.

Can you understand how it might strike some folks as being just a teensy bit disingenuous for you to argue as if to suggest that I am simply ignorant of the fact that other things are not equal -- all while tenaciously ignoring the central point of the entire analysis, which is the 110% argument?


OK, more than a teensy bit disingenuous.

If you read as far as the four candidate explanations I offered as to why market participants might apply such extreme discounting of future yields, you will find that I am assuming that other things are not equal and questioning the degree to which extreme discounting might be justified by those candidate explanations. As I mentioned in my reply to Peter Lambert, obviously market participants will assign a discount rate to future returns from the loan. I am not suggesting that market participants should not apply any discount rate at all, I am suggesting that the discount rate which is implicit in the loan's pricing is higher than ought to be inferred from publicly available information.

*popcorn time*

Yes, your suggestion that "people buy assuming that the dividend will usually be at the lowest possible value" falls under the very first candidate explanation I suggested:


In other words, when people assume the dividend will be at the lowest possible value, they are assigning a very high discount rate to future returns that are specifically due to BitFunder's success. Of course they should assign a discount rate of some kind, because future returns due to BitFunder's success are entirely unknown. My point is that the discount rate which has been implicitly assigned -- if this putative explanation in terms of people's assumptions about the dividend is correct -- is, in my view, higher than it ought to be, given publicly available information.

Obviously: other things are not equal. That's why it was phrased as a conditional: if...then.  

For everything that follows, I cannot escape the feeling that you're looking for an argument and have chosen to argue with a whole slew of suppositions that are not my own and which have little if anything to do with what I have actually written.

Is it possible that you simply read 110% as 200% all the way through? I say that because all throughout what follows, you seem to be magnetically attracted to .02 (i.e., 200%), while I am discussing 110% (i.e., .011)...


I have no idea whether Ukyo has sufficient liquid assets to buy back at twice face value, but I think you're missing the entire point that when other things are equal, this is how real bonds trade out there in the real world: bond price goes up to bring yield down to an appropriately risk adjusted level.

By citing risk as a factor which is not equal, you're not somehow backing up your disagreement with my conclusion, you're merely ignoring the remainder of the analysis.


(I'm assuming that Ukyo is rational and that no rational market participant would issue inflated dividends right before buying back a loan at 110% of face value; I didn't think that needed pointing out.)

However, the logic of your argument is spurious, because it assumes the consequent in the conditional: if he needs...back to current levels. What is at issue here is exactly what would make for a rational current level; if you already assume that the current level is rational, then there's no need to make an argument to that effect.


Suppose the price collapsed back to near IPO. Then forcibly buying back shares would occur at 110%.

Remember what I actually said, as distinct from what you seem to be incredibly keen to argue about (and I get that as a bond issuer yourself, you have a strong vested interest in this matter):


Remember what I actually said:


Wow, now we're really moving far beyond the other things being equal proviso. If you're keen to argue about something I was not saying, why not just compare it to investing in all other possible investments, rather than merely J-D?


Here again, I can't avoid the feeling that you're taking advantage of the opportunity to create an argument with someone else's views than my own.

I agree with Deprived.

The reason the price did not go up much when Ukyo was paying the higher dividend is that nobody knows when the dividend will change. There is no way to predict the future dividend amount, so people buy assuming that the dividend will usually be at the lowest possible value.

Have to say I disagree with this part of your analysis, largely because all other things are NOT equal.

The first point to consider is that, if the price were to rise to somewhere near .02, then it's highly unlikely Ukyo has liquid assets to perform a buy-back based on that price.  If he HAD liquid assets able to pay out over twice the face value of the loans then it's unlikely he'd have needed the loan in the first place.

The second point to consider is that if he needs to do a buy-back then the first stage before that would be the shrinking of dividends to their guaranteed minimum which would, in any event, cause the price to fall back to current levels anyway.  It's not hard for an asset issuer to cause a price drop by releasing bad news.

The third point is that he is entirely capable of flooding the market in new bonds which, especially if couple with news that the dividend would likely only be the minimum going forward could guarantee the price collapsing back to near IPO.

The fourth point is that if the price inflates then you immediately lose guaranteed liquidity at or near that price.

And the fifth point (and the kicker) is the consideration of why would you pay .02 for something with liquidity only guaranteed (with a delay) at .01 when you could obtain higher expected returns (albeit with much higher variance) investing in J-D where the capital backing is obvious and liquidity at full price 'paid' is guaranteed.

At .01 or slightly over Ukyo.loan is a good investment so long as you believe Ukyo has sufficient assets/is trustworthy (and most of us already use bitfunder so are fine with that).  At .02 it would be absolutely horrible in both return and (especially) liquidity compared to alternatives.

1.403% - That's great considering the market and other funds here.

I'm pleased by the Ukyo.Loan position - I'm holding some myself because of the 110% clause.

Good job with ASICminer, I am pleased with the results.

Executive Summary

During the month from the fund's initial offering on 15 August to 14 September, net asset value after fees increased from 0.0998 BTC per share (i.e., .1 BTC per share at the offering, net of the exchange's 0.2% transaction fee) to 0.1012 BTC per share. This represents an increase during the month of 1.403%, or 18.20% on an annual basis.

Gains in equity derivatives and forex derivatives offset losses in equities, while a backdrop of debt delivered less volatile returns. As a new fund, the cost of moving from cash to new positions with sometimes exorbitant bid/ask spreads was significant, creating immediate losses -- relative to market bids -- which in some cases approached high single digits in percentage terms.

The fund's initial allocation of capital ensured that no single entity held more than approximately 30% of the total, achieving sufficient diversification that even the complete failure of an entire exchange or an entire asset would have left the vast majority of our capital safe and untouched by such an event.

Context and Environment

During the period, the predominant trend in Bitcoin-denominated 'equities' -- a term which, for convenience, I'll treat as including revenue sharing operations -- was negative, with the most striking exceptions being would-be mining companies that engage in little or no actual mining. Market participants willing to speculate on individual 'faithware' companies -- i.e., those which aspire to become mining companies one day -- and willing to concentrate capital in a small number of such speculative positions, would clearly have outperformed the fund's losses in equities.

The predmoninant move in BTC vs. USD, by contrast, was positive, while volatility remained subdued for nearly the first three weeks. The fund's position was not optimal with respect to volatility, but being delta positive relative to BTC vs. USD enabled it to benefit from the directional move nonetheless. Market participants taking entirely unhedged long positions in BTC vs. USD, especially during the first part of the month, would have outperformed the fund in this area.

Listed debt showed no such sustained directional moves, and the fund benefited from its higher weighting in debt than in equity.

Liquidity and open interest remained anaemic in both equity options and forex futures; with respect to the latter, during much of the month, our own positions represented 5% or more of all open interest in the contracts in which the fund was active. (And as I have argued elsewhere, the Bitcoin economy still lacks a credible and cost effective forex options market, as distinct from a forex futures market; forex options would have made the fund's operations significantly more efficient and straightforward.) The fund's ability to execute otherwise viable strategies using derivatives was significantly constrained by the low liquidity, especially in equity options, as well as by repeated platform failures on our home exchange, which compromised the timeliness of option re-pricing. In addition, the exchange's requirement that put writing be covered 100% by actual cash means that writing such options at all -- even if they are never purchased, let alone exercised -- creates significant opportunity cost by preventing the capital from being deployed elsewhere.

(The 100% cash requirement contrasts sharply with much lower standardized margin requirements familiar in the fiat world. Among other differences, no bona fide market exists for Bitcoin-denominated equity options, and market makers are entirely absent. Therefore, an investor who is short in-the-money puts cannot, except in artificial examples, simply close the position. Instead, they remain on the hook for the full exercise, even if much of the required capital can be immediately recovered by liquidating the shares.)

During the period, the fund's initial allocation of capital ensured that no single entity or platform -- including individual exchanges -- held more than approximately 30% of the fund's total. This is signficant not only from the perspective of reducing counterparty risk and company-specific risk, but also from the perspective of mitigating impact from the types of platform failures mentioned above. During the entire period from when we began logging platform failures on 17 August to 14 September, there were only 6 individual days on which we didn't log at least one outright failure or other anomolous behaviour by at least one of the platforms we used. The most common such failures were CloudFlare error 524 and BTC-TC's "Access Temporarily Denied" message. (With regard to the latter, it seems a stretch to suggest that such frequent failures are solely a result of correctly functioning defenses such as packet filtering or rate-limiting measures.)

A platform problem of my own, in the shape of my primary work computer's abrupt hardware failure on the afternoon of 9 September, compromised my personal efficiency during the entirety of the week. Thanks to redundant backup strategies, data loss was never an issue, but the job of diagnosing, replacing, and re-configuring, all while working from two older and less capable backup machines, came at a distinctly inconvenient time.

Finally, fund participants should note that entering any new position at all in a listed asset entails either waiting a potentially very long time for suitable market sell orders or absorbing the sometimes exorbitant cost implicit in the bid/ask spread. As a new fund, therefore, it should not be surprising that we have conceded non-trivial amounts of capital to the spread simply as a result of entering positions at all.

For the purposes of calculating net asset value, individual positions have been marked to market using either the 7-day trading average where platforms provide this information directly, or the instantaneous market value where they do not.

Individual Securities

The fund has been active across around a dozen platforms and many different businesses, but as illustrative examples I will offer some thoughts on two specifically, with a view to highlighting a little of the fund's general approach.

ASICMiner

Without entering into meta-arguments about the sustainability of Bitcoin mining or the wisdom of investing in it -- topics which I have addressed elsewhere and which many others have addressed at greater length and in greater detail -- the fund does have some exposure to ASICMiner, a security which attracts broad interest and which in passthrough form offers sufficient liquidity to support meaningful and profitable derivatives strategies. Primarily for the purpose of applying simple derivatives strategies on BTC-TC, the fund began establishing a position in ASICMiner shortly before the share price corrected severely in the second half of August.

The timing resulted in an immediate and negative hit to the value of the fund's position.

However, while the overall position is relatively small, the results of the fund's follow-up action are illustrative. Thanks to healthy option premiums, 6 of the fund's shares were sold at net prices above the market at the time, while 16 shares were purchased at net prices below the market -- providing a cost basis as low as 1.2 BTC each, compared to a market price at the time of around twice that. (Notably, such low net entry points are outliers, due more to inefficiencies in the market than to anything exotic in terms of the structure of our strategies.)

As I have suggested previously, "investing in mining" need not be a black and white, do-or-don't issue; nor is it either a guaranteed way to print free money or a guaranteed way to destroy shareholder value.

Ukyo.Loan

During the month, the fund acquired roughly 11.6% of all outstanding units of Ukyo.Loan, making it the second largest holder of the loan as of this writing.

Ukyo.Loan, issued by the owner and operator of the BitFunder exchange, is a peculiar creature. Unlike a normal bond, it was not offered at a discount to face value, to be redeemed at that face value upon maturity at a specific date, and with the interest rate therefore set implicitly by the price at which it trades. (In this sense, the loan is similar to other 'bonds' in the Bitcoin world.) Instead, its 'face value' serves two purposes and two purposes only:

• Interest, paid in the form of dividends, is guaranteed to be at least .05% of face value per day.
• Units can be redeemed for face value on demand.

The loan is also described explicitly as being "Similar to Graet.Loan", but it differs in two very significant ways. First, the interest paid indirectly reflects the success of the BitFunder exchange itself, with the Ukyo.Loan specifically described as a sort of roundabout investment in the exchange and the description further indicating that "Additional dividends provided when the site does well". Therefore, while the interest rate never drops below .05% of face value per day, it can climb significantly above that rate. Second, while the units can be redeemed for face value on demand -- a fact which effectively places a floor on the price at which units should trade -- any buybacks must, according to the contract, occur at "110% of the last 30 days average market price".

The combination of these two facts suggests that Ukyo.Loan should trade so as to reflect the market's aggregate estimation of its risk-adjusted return. Unlike Graet.Loan and other similar loans, there is no overhanging threat that units will be bought back at face value, so there is no mechanism in place to force units of the loan to trade near that value. On the contrary, those willing to hold the Ukyo.Loan (and not looking for a quick exit via sale to another party) appear to be essentially guaranteed to break even or make a profit when buying at any price below 110% of face value, since they cannot be forcibly bought out at anything less than 110% of a 30-day trailing average that should never cross below face value. (Trading below face value would offer 'free money' arbitrage via immediate redemption at face value, so while it might occasionally happen, the probability of a 30-day trailing average below face value should be negligible.)

Given the absence of any cap on the unit price created by the threat of a forced buyback at face value, those who are willing to hold Ukyo.Loan at a price of .01 BTC per share for .05% daily yield relative to face value should, other things being equal, be willing to hold it at twice that price in return for twice the yield -- a price of .02 BTC per share for .1% daily yield relative to face value.

(ADDENDUM TO THE ORIGINAL: For anyone who either accidentally or intentionally would like to interpret the previous sentence as implying or suggesting, in any way, shape or form, that I somehow believe that other things are equal, I am making no such suggestion. I am, on the contrary, illustrating how normal bonds trade in the real world. And in the real world, we can assume that other things are not equal when yields change; that is why bond prices change so as to bring the risk adjusted return of a bond in line with the risk adjusted returns of other comparable assets. That is also why higher yields typically correlate with lower quality offerings: issuers of lower quality, higher risk paper must pay higher yields in order to counterbalance their higher risk.)

Yet historically, the price of units of Ukyo.Loan has barely responded to radical changes in yield. From inception (19 July) to 1 September inclusive, by which time the bulk of the fund's purchases had been completed, the loan paid out the equivalent of 10 days of dividends at its normal rate, then 11 days at 150% of its normal rate, then 20 days at 200% of the normal rate, then 4 days at the normal rate. (The loan continued to pay out at its normal rate from the beginning of September to this writing.) Despite the fact that the yield climbed to 200% of the guaranteed rate for a sustained period of 20 consecutive days, the price per unit barely budged during that time, trading at no more than 20% above face value. (Up until 11 August, it traded largely at or very occasionally below face value.) For reference, paying 20% above face value reduces the effective return of the loan from approximately 18% per annum to approximately 15% per annum, or from approximately 36% per annum -- when it is paying 200% of its guaranteed rate -- to 30%.

As far as I can tell, the most plausible justifications for such extreme discounting of potentially above-guarantee returns as reflected in the unit price of Ukyo.Loan are along the following lines:

• Potential holders believe BitFunder is doomed, and therefore future returns from the loan will not benefit significantly from its success.
• Potential holders believe Ukyo is extremely untrustworthy or is extremely likely either to alter the loan contract unilaterally to the detriment of creditors or to breach the terms of the contract altogether. (Note that such ex post facto unilateral contract modifications are permitted by BitFunder.)
• Potential holders are so strongly wedded to the 'get out clause' provided by face value redemption on demand that they will not pay anything for higher yield that is not accompanied by a higher guaranteed redemption price.
• Potential holders have not fully attended to the difference between the buyback provision for Ukyo.Loan and the analogous provisions of related loans which rarely deviate significantly from face value.

As for the first two, I personally have no idea whether BitFunder is doomed, and I have no idea whether Ukyo is so untrustworthy as to effect a radical and unilateral change to the contract to the detriment of those holding the loan. However, to the extent that either of these types of explanations plays a role in current pricing of Ukyo.Loan, I believe the market's pricing reflects a degree of skepticism about BitFunder and/or about Ukyo's trustworthiness that is unsupported by publicly available evidence. As for the second two, it seems likely to me that any influence from factors like these is apt to decrease over time.

The upshot is that Ukyo.Loan appears to me to be mispriced, and I believe there is a worthwhile probability that this mispricing will be corrected over a time horizon relevant to the success of the fund.

Liquidity Facility and Subscriptions/Redemptions

As many participants will be aware, the fund's initial offering of 20,000 shares on 15 August was entirely subscribed in less than 30 hours. Immediately following the initial offering, the fund traded as high as a 7% premium to NAV, but the fund refrained from interfering with the market's natural pricing activity and provided no further liquidity either on the bid or ask side. (As described in the listing documents, the fund may optionally provide additional liquidity when bids or asks fall significantly below or above NAV, respectively.) Some days later, after the initial flurry of activity had settled, the fund did offer limited additional liquidity above NAV, but just one additional share was issued before other market participants stepped in and enhanced liquidity.

Subsequent to this report, the fund may make additional shares available for a time somewhat above NAV.

Note that without interference or 'management' of the spread in any way, the market has already set a difference between bids and asks for the fund which frequently ranges from less than 1% to a bit over 2%, with the spread widening somewhat during the days immediately prior to this report. For the avoidance of doubt, I have no intention of turning the routine maintenance of a wider and less favourable spread into an ongoing profit engine for the fund. The reality is that although wide spread market making by funds' own managers can create the appearance of a performance boost that may appeal to the casual onlooker, in fact it represents an indirect trading tax on fund participants, a tax taken directly out of participants' pockets when buying, when selling, or both. This practice is designed to subsidise early and ongoing shareholders' returns on paper by taxing newer shareholders' and departing shareholders' trading activity. It has nothing at all to do with real fund performance. After all, a trained monkey can generate 12% 'gains' per year simply by skewering participants with a 5% bid/ask trading tax on a monthly churn of only 20% of a fund's total capitalisation; double the spread or the monthly churn, and presto, easy 24% annual 'gains'. It's remarkable that this practice survives at all in a community which is otherwise justifiably hypervigilant about schemes designed to pay early investors using money extracted from later ones.

Finally, a few individuals considering relatively large positions in the fund have been in touch, and I have discussed with them the option of direct share transfers. Since it benefits the fund not to have to pay transaction fees on new share subscriptions, potential participants considering positions in the fund of 5000 shares or larger are welcome to get in touch with me about arranging direct transfers, internal to the exchange. Note that as with any other new share issuance, this facility will only be made available during a period immediately following publication of the fund's latest NAV. (It has, therefore, not been made available to anyone prior to this report.)

Reporting Schedule

I believe it would be useful to synchronise fund reporting with calendar months, rather than with anniversaries of the fund's initial offering date which, as luck would have it, fell squarely in the middle of a calendar month. Therefore, I'm considering extending the next reporting period so as to cover thru the end of October, rather than thru the middle of October. Unless or until any public announcement is made about synchronising the next reporting date, however, it is safe to assume that it will continue to fall on an approximately monthly cycle and will therefore next occur around mid-October.

Trust Ratings

As I mentioned in the fund's listing documents, I have no particular interest in amassing trust ratings for a pseudonymous WOT account. However, if participants in the fund feel it is appropriate to do so, I would invite them to consider leaving trust feedback for my forum account, not as a reflection of positive or negative fund performance, but rather as an indication of how they regard the trustworthiness of my management of the fund. (It is virtually certain that the NAV of the fund will go down as well as up, but hopefully variation in fund performance need not imply variation in trustworthiness!)

Wow, someone bought in at 7,1% mark-up last night.

It looks that nobody will sell me shares below the IPO price anymore, so now I can post links to the articles from Dr. Greg that convinced me to buy some shares:
http://psychologicalinvestor.com/lib/real-markets/bitcoin-derivatives-liquidity-counterparty-risk-134/
http://psychologicalinvestor.com/lib/real-markets/lose-money-bitcoin-unhedged-short-174/
http://psychologicalinvestor.com/lib/real-markets/asymmetric-risk-145/

Also he did a good prediction about Tesla and Apple stocks:
http://psychologicalinvestor.com/lib/real-markets/tesla-earnings-surprise-put-profit-181/
http://psychologicalinvestor.com/lib/real-markets/avoiding-apple-overreaction-166/

Over time BTC-GROWTH would want to return higher than J-D as it lacks the liquidity, simplicity and transparency of that investment. In the short-term of course I imagine returns could be way higher or lower.

Haha, I love guessing. As Deprived mentioned, 5% would actually be very nice considering the size of the fund. I have similar experience - I do occasional trades for my friend who's lent me some money to play with, and I always earn more on his account than on my own (relatively) - simply because there's significantly less money and it's easier to move it around. The fund's size is bigger still, so it will be even more difficult (although the manager probably spends a lot more time on it than I do, so it's possible to meaningfully invest the capital).

The true test though will be the comparison with Just-Dice. While I don't remember what their profit was a month ago; if their luck had been 100% (I think it was a bit higher), their profit would have been ~3,4% (assuming 170k wagered and 50k in the bank; sorry for the estimates) for the month.

EDIT: their real profit was ~1800 BTC (thank you Deprived for keeping the score!), but average bank might have been a bit higher (than 50k) too, so 3,4% monthly profit is a good guess.

I give BTC-Growth a 2,5% estimated appreciation. If it is anything over 4%, the manager is a boss, beating a casino.