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Winklevoss twins to offer Bitcoin ETF

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Re: Winklevoss twins to offer Bitcoin ETF

#51

Post by [deleted] »

jpdoctor wrote: post #43
sneak wrote: post #34

Earlier quoted context omitted.

Yeah, the whole public BTC order book on MtGox can be had right now for under $2mm USD. The other exchanges are smaller yet. The market is very loud, but still very tiny. This will change, and it's good to start early, but I agree wholeheartedly that an ETF is premature. This will not be the case in 12 months, though. I think the biggest risk to a fund like this is data security. If you have more than 50k bitcoin sit…

> Following that, liquidity. There needs to be an effective method of shorting in order for the ETF to be effective. I think it will take much more than a year.

[deleted]

Re: Winklevoss twins to offer Bitcoin ETF

#52

Post by jonnathanson »

paulsutter wrote: post #21

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?

Low transparency tends to lead to high transaction costs, low liquidity, and high volatility in a market -- which is pretty much what's going on with BTC right now. There's also very limited commercial exchange volume, from what anyone can tell, further hindering liquidity. Seems like it'd be pretty hard to earn a decent return from this ETF.

I'll be watching this one from the sidelines. Definitely not participating.

Re: Winklevoss twins to offer Bitcoin ETF

#53

Post by jpdoctor »

wmf wrote: post #44
sneak wrote: post #34

Earlier quoted context omitted.

Yeah, the whole public BTC order book on MtGox can be had right now for under $2mm USD. The other exchanges are smaller yet. The market is very loud, but still very tiny. This will change, and it's good to start early, but I agree wholeheartedly that an ETF is premature. This will not be the case in 12 months, though. I think the biggest risk to a fund like this is data security. If you have more than 50k bitcoin sit…

A thought occurs to me: Don't the twins own something like $10M of BTC? Perhaps they personally will provide liquidity for this ETF.

> * Perhaps they personally will provide liquidity for this ETF.*

That sounds suspiciously like "unloading".

Re: Winklevoss twins to offer Bitcoin ETF

#55

Post by swishercutter »

sneak wrote: post #48
mrb wrote: post #41

Earlier quoted context omitted.

"the whole public BTC order book on MtGox can be had right now for under $2mm USD" No it cannot. Some people have placed sell orders at $1000, $10k, $100k, etc. To the point it would take trillion and trillion of dollars to buy up all BTC. But you can be sure that if you tried to do this, a lot of other sell orders would pop up, making it effectively impossible to buy up all bitcoins.

> But you can be sure that if you tried to do this, a lot of other sell orders would pop up, making it effectively impossible to buy up all bitcoins. Yes, at entirely reasonable prices, right? :D A substantially higher cost basis starts to cut into fund profits... Also, a minor correction to your comment: the depth of the MtGox order book is public, and it was accurate at the time of my comment. It's up to $2.2mm USD…

Does the order book show all the "dark pool" trades? It surely cannot show all those who sit and wait (or have bots) for the price to change so they can move their ask price up.

Re: Winklevoss twins to offer Bitcoin ETF

#56

Post by [deleted] »

jpdoctor wrote: post #43
sneak wrote: post #34

Earlier quoted context omitted.

Yeah, the whole public BTC order book on MtGox can be had right now for under $2mm USD. The other exchanges are smaller yet. The market is very loud, but still very tiny. This will change, and it's good to start early, but I agree wholeheartedly that an ETF is premature. This will not be the case in 12 months, though. I think the biggest risk to a fund like this is data security. If you have more than 50k bitcoin sit…

> Following that, liquidity. There needs to be an effective method of shorting in order for the ETF to be effective. I think it will take much more than a year.

[deleted]

Re: Winklevoss twins to offer Bitcoin ETF

#57

Post by scarletham »

wmf wrote: post #44
sneak wrote: post #34

Earlier quoted context omitted.

Yeah, the whole public BTC order book on MtGox can be had right now for under $2mm USD. The other exchanges are smaller yet. The market is very loud, but still very tiny. This will change, and it's good to start early, but I agree wholeheartedly that an ETF is premature. This will not be the case in 12 months, though. I think the biggest risk to a fund like this is data security. If you have more than 50k bitcoin sit…

A thought occurs to me: Don't the twins own something like $10M of BTC? Perhaps they personally will provide liquidity for this ETF.

I'm no lawyer, but I'd be surprised if it's legal for ETF providers to seed their own fund. The need for authorized participants is rather important.

Re: Winklevoss twins to offer Bitcoin ETF

#58

Post by scarletham »

swishercutter wrote: post #55
sneak wrote: post #48

Earlier quoted context omitted.

> But you can be sure that if you tried to do this, a lot of other sell orders would pop up, making it effectively impossible to buy up all bitcoins. Yes, at entirely reasonable prices, right? :D A substantially higher cost basis starts to cut into fund profits... Also, a minor correction to your comment: the depth of the MtGox order book is public, and it was accurate at the time of my comment. It's up to $2.2mm USD…

Does the order book show all the "dark pool" trades? It surely cannot show all those who sit and wait (or have bots) for the price to change so they can move their ask price up.

The order book would show people who are sitting on either side of the market, so if they have a bot that's adjusting their quote it would still show it - unless I'm misunderstanding your question?

Re: Winklevoss twins to offer Bitcoin ETF

#59

Post by anonymoushn »

sneak wrote: post #34
jpdoctor wrote: post #27

Earlier quoted context omitted.

> 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…

Yeah, the whole public BTC order book on MtGox can be had right now for under $2mm USD. The other exchanges are smaller yet. The market is very loud, but still very tiny. This will change, and it's good to start early, but I agree wholeheartedly that an ETF is premature. This will not be the case in 12 months, though. I think the biggest risk to a fund like this is data security. If you have more than 50k bitcoin sit…

I expect we'd see more liquidity on MtGox if they figured out how to write a matching engine. I would never add liquidity on a venue that routinely takes hours to process orders and cancels.
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