Kudos to Coinbase for launching this but a 2% fee and the fact that Coinbase is far from being trustworthy in my book I am going to wait for when/if a company like Vanguard starts such a fund.
Yeah, at 2% this is more akin to a mutual fund.
Coinbase Index Fund
131–140 of 346 posts
Re: Coinbase Index Fund
#132Earlier quoted context omitted.
Yeah, this is an index of 4 securities and is rebalanced annually. Coinbase is charging a 2% fee for what amounts to automating a max of 4 transactions a year. I get that people are excited about cryptocurrencies becoming available in more traditional investment vehicles, but this particular index fund seems almost completely unnecessary.
I'm admittedly not up on rebalancing policies. With a fund of highly volatile assets, would rebalancing more frequently be necessary? I'm not thinking daily, but perhaps every month or so?
I believe so. The worth of your portfolio is the worth of the assets. Bitcoin dropped a ton in even a month. There are still changes of a few percent possible in less than a day, so yearly balancing sounds insanely dumb to me.
Re: Coinbase Index Fund
#133Earlier quoted context omitted.
Yeah, this is an index of 4 securities and is rebalanced annually. Coinbase is charging a 2% fee for what amounts to automating a max of 4 transactions a year. I get that people are excited about cryptocurrencies becoming available in more traditional investment vehicles, but this particular index fund seems almost completely unnecessary.
I'm admittedly not up on rebalancing policies. With a fund of highly volatile assets, would rebalancing more frequently be necessary? I'm not thinking daily, but perhaps every month or so?
Yes, at the most general level highly volatile assets should be rebalanced more frequently. However, that isn't going to be a universal rule. It will depend on what is causing the volatility and whether that is more a product of the market or something specific related to the assets. Rebalancing too frequently is also a very real possibility so more is not always better.
Another consideration specific to cryptocurrencies like Bitcoin is the relatively high transaction fee. You don't want to see your investments be whittled away by frequent transaction fees doing unnecessary rebalances. I haven't spent enough time researching cryptocurrencies to know how all these considerations shake out when it comes to this specific index fund, but as a pure gut instinct the annual rebalancing was less frequent than I would have expected from this type of fund.
Re: Coinbase Index Fund
#134Earlier quoted context omitted.
This is a somewhat debated topic in cryptocurrency. IMO what you said is not the case. If gold and silver aren't treated "like kind", and facebook and google stocks aren't treated "like kind", why would bitcoin and ethereum be treated like kind? I'm not a tax professional, but I did consult with one, and they confirmed my hunch.
> If gold and silver aren't treated "like kind", and facebook and google stocks aren't treated "like kind", why would bitcoin and ethereum be treated like kind? For the same reason that, say, transferring your wealth from an Irish bank account to a German bank account doesn’t trigger a capital-gains event in the US? I.e., those other things you listed exist “within” the US financial system. Cryptocurrencies exist out…
>>For the same reason that, say, transferring your wealth from an Irish bank account to a German bank account doesn’t trigger a capital-gains event in the US?
If there's a currency change, it absolutely does trigger a capital-gains event, unless you have a truly terrible accountant. Just like when any other asset is disposed of, the value is calculated at that point. If you move USD from one bank to another that's different, but try to move USD - EURO - CAN - USD and you'll absolutely be taxed on any gains that happen (if they catch it).
Re: Coinbase Index Fund
#135As a few others here seem to have hinted at. Although this seems to be not only an interesting idea and also a natural space for Coinbase it appears to be limited in a number of different ways. Has anyone had any other experience with other crypto style index funds such as Crypto20? If so any thoughts, advice or recommendations would be most welcome.
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Re: Coinbase Index Fund
#136I have attempted to duplicate this index fund manually by purchasing the top 25 cryptocurrencies (market-cap weighted) over the past year or so. I'll say that it was hardly worth the enormous work involved, and these index funds cannot come soon enough to non-accredited investors. In some cases it's not possible to do perfectly alone: NEO has a minimum unit of 1 coin, and so if you wanted it to not be overweighted, y…
I suggest those interested in Crypto Index Traded Funds to look into Crypto20. This fund provides a way to track the performance of the crypto markets as a whole by holding a single crypto asset.
"Crypto20 is a tokenized, closed-end index fund (CEF) which passively tracks the top twenty cryptocurrency assets by market capitalisation. All profits are reinvested into the fund."
Here is the link to the whitepaper for those interested: https://static.crypto20.com/pdf/c20-whitepaper.pdf
Re: Coinbase Index Fund
#137Reminder people. Crypto exchange tokens held tokens means counterparty risk.
You don't hold the crypto. They owe you it and they may not pay out due to court orders, bankruptcy, hackings, they think you are laundering money, a terrorist etc.
Re: Coinbase Index Fund
#138Earlier quoted context omitted.
Yeah, this is an index of 4 securities and is rebalanced annually. Coinbase is charging a 2% fee for what amounts to automating a max of 4 transactions a year. I get that people are excited about cryptocurrencies becoming available in more traditional investment vehicles, but this particular index fund seems almost completely unnecessary.
> Coinbase is charging a 2% fee for what amounts to automating a max of 4 transactions a year. I came up with some more they do for 2%/y: * Buy more coins when their fund expands * Secure the shit out of those private keys
> Secure the shit out of those private keys
Well I hope they are doing that already.
Initial coin buy is part of those 4 / yr.
Re: Coinbase Index Fund
#139Earlier quoted context omitted.
Yeah, this is an index of 4 securities and is rebalanced annually. Coinbase is charging a 2% fee for what amounts to automating a max of 4 transactions a year. I get that people are excited about cryptocurrencies becoming available in more traditional investment vehicles, but this particular index fund seems almost completely unnecessary.
I'm admittedly not up on rebalancing policies. With a fund of highly volatile assets, would rebalancing more frequently be necessary? I'm not thinking daily, but perhaps every month or so?
The point of market cap weighting is that rebalancing is mostly unnecessary. The only events that require a rebalance is when a coin is added or removed from the index.
Re: Coinbase Index Fund
#140Earlier quoted context omitted.
Yeah, this is an index of 4 securities and is rebalanced annually. Coinbase is charging a 2% fee for what amounts to automating a max of 4 transactions a year. I get that people are excited about cryptocurrencies becoming available in more traditional investment vehicles, but this particular index fund seems almost completely unnecessary.
I'm admittedly not up on rebalancing policies. With a fund of highly volatile assets, would rebalancing more frequently be necessary? I'm not thinking daily, but perhaps every month or so?
A fund weighted by market cap doesn't have to be rebalanced. With crypto assets, you only have to adjust for newly mined coins. The Bitcoin supply, for example, is currently growing at about 4% per year. But if the other currencies in the Coinbase Index are mined at a similar rate, yearly rebalancing should be accurate enough.