Winklevoss Bitcoin ETF effect in price - page 3.

Erdogan

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I can already see in the future people complaining about "paper" bitcoins artificially depressing the price of "physical" bitcoins Grin

Yes, but these are not paper bitcoins. The shares are fully backed.

If on the other hand someone should offer contracts to buy bitcoins in the future, not holding any bitcoins at the sale of that contract, it constitutes naked short selling, which will effectively increase the supply of coins. It is not what is going on.

galbros

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The price should go up, maybe even a lot.

This is because a lot of people who are new to bitcoin will be able to buy it very easily without trust issues or having to send dox to God knows where. Of course, they wont be able to USE the bitcoin they buy in the Winklevoss fund, but they will still be able to trade it.

This is a win, and maybe even a big one.

~~However, I thought it was going to be a closed end fund. If it's that, then they will NOT be buying more coins for it. If it is an ETF then they may have to buy more coins for it.~~

Nope clearly looks like an ETF: http://www.sec.gov/Archives/edgar/data/1579346/000119312514058712/d562329ds1a.htm

YipYip

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Quote from: okthen on July 05, 2014, 05:02:56 PM

Quote from: notung on July 05, 2014, 02:42:39 PM

I have a few questions regarding the Winklevoss Bitcoin ETF and its effect on price. I keep reading that it will make skyrocket the price of bitcoin. However, I don't see how. Let me explain:

As far as I know the Winklevoss ETF consists on putting on the market shares representing the value of the bitcoins held by the twins. Let's say they have 100.000 BTC and they will create 1.000.000 shares (hypothetical numbers). I would expect that the price of each share would be calculated according to the price of BTC at the moment of the IPO. Afterwards, the price of the shares would change depending on supply/demand. How can this supply/demand of the shares affect the price of bitcoin in markets like Bitstamp/Huobi/etc? If the Bitcoins held by the brothers are not sold or they don't buy more, how can it affect the price?
The way that I understand it is that the price of the shares will be highly influenced by the value of bitcoin, but not the other way around!

Am I missing something? Otherwise, just let me know how the shares can affect the price of BTC.

Thanks in advance for clarifying my doubts!

As people said, they'd eventually buy more.

But I actually think the effect it will have will be more undirect: a big name like the Winklevoss will make other big Wallstreet investors aware and more likely to trust bitcoin.

AN ETF is a regulated instrument ....@ a certain tipping point ratio they MUST buy more ...otherwise they are in breach and it can be wound up etc

windjc

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What people are underestimating is the shear lack of bitcoins available on the market. Any decent amount of institutional money that comes into the game when the ETF starts will push the price higher. 3600 coins a day for the next year and a half and then 1800 coins a day for the ENTIRE WORLDS SUPPLY. Holy crap.

What about all the holders? Well, as Risto and others have shown, an average of about 10% of "hodlers" coins get redistributed during every bubble. 10% is a decent amount, but not anywhere close enough to bridge the gap betwen potential institutional/401k-like investments and 3600 coins a day.

And that's not even counting other financial ETFs that will follow in other finance centers in places like London, Germany, Asia, etc.

okthen

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Quote from: Justine on July 06, 2014, 09:43:13 AM

Quote from: LiteCoinGuy on July 06, 2014, 07:28:14 AM

Quote from: Mythul on July 06, 2014, 02:41:02 AM

I'm pretty sure it's going to have a positive effect on the bitcoin ecosystem.

think so too but dont expect that the price will be like a skyrocket because of one etf. maybe we see the 1500 - 2000 USD after some moths. that would be nice.

but silberts etf is also on the way and more will follow...what should cause a price rise Wink

Think many people are expecting 4k-5k after etf is out.

Yes but it probably won't get there on the EFT solely.
One piece of good news along with it should do the job.

Justine

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Quote from: LiteCoinGuy on July 06, 2014, 07:28:14 AM

Quote from: Mythul on July 06, 2014, 02:41:02 AM

I'm pretty sure it's going to have a positive effect on the bitcoin ecosystem.

think so too but dont expect that the price will be like a skyrocket because of one etf. maybe we see the 1500 - 2000 USD after some moths. that would be nice.

but silberts etf is also on the way and more will follow...what should cause a price rise Wink

Think many people are expecting 4k-5k after etf is out.

LiteCoinGuy

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In Satoshi I Trust

Quote from: Mythul on July 06, 2014, 02:41:02 AM

I'm pretty sure it's going to have a positive effect on the bitcoin ecosystem.

think so too but dont expect that the price will be like a skyrocket because of one etf. maybe we see the 1500 - 2000 USD after some moths. that would be nice.

but silberts etf is also on the way and more will follow...what should cause a price rise Wink

Mythul

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I'm pretty sure it's going to have a positive effect on the bitcoin ecosystem.

HarryT1923

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isn't this what institutional money is waiting for? Tongue

spiderbrain

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As units of an ETF are bought or sold on the market, the unit price of the ETF can diverge from the price of the underlying commodity. This is addressed by the issuer creating more of it's own units and using the money to purchase more assests (in this case, bitcoins) or the reverse process when the price is low. As this is an on going process, you can assess an ETF unit for fare value by comparing it with the Net Asset Value (NAV), which is the current market value of all the assets held by the trust divided by the number of units. There are lots of different legal ways to set ETFs and ETNs up, I don't know how COIN will be set up, but that's the way some mainstream comodity ETFs are run.

I think the overall effect will be to increase the demand for bitcoins, because money that was already capable of buying them on exchanges already has, this is new money (trillions) that can only invest in legal exchange entities, such as stocks, bonds, ETFs etc.

okthen

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Quote from: notung on July 05, 2014, 02:42:39 PM

I have a few questions regarding the Winklevoss Bitcoin ETF and its effect on price. I keep reading that it will make skyrocket the price of bitcoin. However, I don't see how. Let me explain:

As far as I know the Winklevoss ETF consists on putting on the market shares representing the value of the bitcoins held by the twins. Let's say they have 100.000 BTC and they will create 1.000.000 shares (hypothetical numbers). I would expect that the price of each share would be calculated according to the price of BTC at the moment of the IPO. Afterwards, the price of the shares would change depending on supply/demand. How can this supply/demand of the shares affect the price of bitcoin in markets like Bitstamp/Huobi/etc? If the Bitcoins held by the brothers are not sold or they don't buy more, how can it affect the price?
The way that I understand it is that the price of the shares will be highly influenced by the value of bitcoin, but not the other way around!

Am I missing something? Otherwise, just let me know how the shares can affect the price of BTC.

Thanks in advance for clarifying my doubts!

As people said, they'd eventually buy more.

But I actually think the effect it will have will be more undirect: a big name like the Winklevoss will make other big Wallstreet investors aware and more likely to trust bitcoin.

Ibian

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So all they have to do is set the price a bit higher than regular market price? Nice. Like printing money.

siggy

sr. member

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ok... there are several mechanisms...

1) arbitrage between the ETF and actual BTC... say the ETF values a "btc" at $1000, but spot BTC is only 800... it is worthwhile to sell short the ETF, and use those funds to buy actual BTC to offset your short.. net effect is BTC price goes up cuz you bought.

2) part of the ETF is the ability for whales to deliver BTC into the fund (I believe it has to be in blocks of something like 10,000 BTC) ..anyways.. once again if the ETF is at 1000, but BTC is only at 800... it is an instant 20% return for a whale to by BTC on the market and deliver it to the ETF for additional ETF shares to be created for him. Once again, buying BTC on the market will raise the price of BTC...

Both the above examples also work in reverse if the fund is cheaper than the actual BTC....

so yes, it is very possible for the fund price to directly influence the price of BTC.

Sigg

Benjig

sr. member

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We are saying it will impact the price positively because we are assuming the fund will have succes and all the shares will be sold.

BitchicksHusband

sr. member

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Because we are assuming that they will have to buy more bitcoins eventually. And once they run out, there is a supply of only 3600 a day worldwide.

Let's put it this way. I have more money tied up in IRAs and 401k than I have invested in bitcoin already. By several times. And probably most middle class Americans are in the same situation.

Then you have mutual funds, which can invest in an ETF, but not directly.

So, it's the sheer amount of money that CAN come in.

notung

member

Activity: 67

Merit: 10

I have a few questions regarding the Winklevoss Bitcoin ETF and its effect on price. I keep reading that it will make skyrocket the price of bitcoin. However, I don't see how. Let me explain:

As far as I know the Winklevoss ETF consists on putting on the market shares representing the value of the bitcoins held by the twins. Let's say they have 100.000 BTC and they will create 1.000.000 shares (hypothetical numbers). I would expect that the price of each share would be calculated according to the price of BTC at the moment of the IPO. Afterwards, the price of the shares would change depending on supply/demand. How can this supply/demand of the shares affect the price of bitcoin in markets like Bitstamp/Huobi/etc? If the Bitcoins held by the brothers are not sold or they don't buy more, how can it affect the price?
The way that I understand it is that the price of the shares will be highly influenced by the value of bitcoin, but not the other way around!

Am I missing something? Otherwise, just let me know how the shares can affect the price of BTC.

Thanks in advance for clarifying my doubts!

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