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Anyone know how to estimate whether there's enough liquidity in existing bitcoin exchages to support it, and allow them to track the price accurately in the ETF?
Can someone offer a non-securities person a description of what an ETF is? What is the impact on Bitcoin?
Overview: An Exchange Traded Fund or ETA was originally a way to buy an index or basket of funds. Say you wanted to buy Standard and Poor's top 500 stocks. As an individual investor, you'd would need a lot of money and would pay a lot of fees to buy up all 500. Then if some stocks were added and others were removed from the index, you would have to pay to get in and out of those. Enter the ETF ticker symbol SPY. If y…
I would like to buy bitcoin with my 401(k). I can't do that right now, but if my investment bank had access to a bitcoin ETF...
Earlier quoted context omitted.
Investing in bitcoins by buying bitcoins means choosing an exchange, funding an account, holding the bitcoins, worrying about the security of the bitcoins being held by whatever exchange you've chosen or the security of whatever computer you're holding them on... Investing in a bitcoin ETF means clicking a buy button in your online brokerage account. You invest with minimal effort and minimal risk aside from your inv…
> ...minimal risk aside from your investment losing value. Classic.
In my opinion allowing Bitcoin ETF options might be the next step in allowing widespread Bitcoin adoption because corporate entities can hedge against the fluctuations in the bitcoin exchange rates.
Earlier quoted context omitted.
Investing in bitcoins by buying bitcoins means choosing an exchange, funding an account, holding the bitcoins, worrying about the security of the bitcoins being held by whatever exchange you've chosen or the security of whatever computer you're holding them on... Investing in a bitcoin ETF means clicking a buy button in your online brokerage account. You invest with minimal effort and minimal risk aside from your inv…
> ...minimal risk aside from your investment losing value. Classic.
Surprise - a good idea from the Winklevii. The convenience of buying and selling bitcoin from the comfort of an ordinary brokerage account, and making it possible to hedge bitcoin by selling and shorting. Anyone know how to estimate whether there's enough liquidity in existing bitcoin exchages to support it, and allow them to track the price accurately in the ETF?
Yes. The daily volume in the ETF must be a small fraction of the daily volume in the underlying asset, and it must be possible to both buy & short the underlying.
So net net: An ETF is incredibly premature. This is the Winklevii taking serious advantage of folks who don't understand ETFs in depth.
Edit: Clarified the relative quantity.
What will this mean for bitcoin? Will the ETF be investing the bitcoins it purchases? Or will this just mean more transfers that steadily increase the value of accounts that never make any debits?
Earlier quoted context omitted.
Investing in bitcoins by buying bitcoins means choosing an exchange, funding an account, holding the bitcoins, worrying about the security of the bitcoins being held by whatever exchange you've chosen or the security of whatever computer you're holding them on... Investing in a bitcoin ETF means clicking a buy button in your online brokerage account. You invest with minimal effort and minimal risk aside from your inv…
> ...minimal risk aside from your investment losing value. Classic.
If you're just investing, why should you have to become a crypto expert just to make sure eastern European teenagers don't copy a keyfile from your computer entitling them to $500k in bitcoin?
What will this mean for bitcoin? Will the ETF be investing the bitcoins it purchases? Or will this just mean more transfers that steadily increase the value of accounts that never make any debits?