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> The SEC will decide by March 11 whether to approve one filed almost four years ago by Cameron and Tyler Winklevoss. If approved, it would be the first bitcoin

by pdog 10y ago

> The SEC will decide by March 11 whether to approve one filed almost four years ago by Cameron and Tyler Winklevoss. If approved, it would be the first bitcoin ETF issued and regulated by a U.S. entity. This would combine the ridiculous volatility of bitcoin with the all-day tradeability of an ETF. What could go wrong?

mrb 10y ago
60 ETFs are more volatile than Bitcoin: https://www.bloomberg.com/view/articles/2016-11-01/five-reasons-the-winklevoss-bitcoin-etf-should-be-approved https://www.bloomberg.com/view/articles/2016-11-01/five-reas...
- slg 10y ago
  It doesn't list all of the ETFs that are more volatile but the one they do list is a leveraged ETF. I would imagine most of the other 59 are as well. These leveraged ETFs are specifically designed to be multiple times more volatile than the market they represent. They are meant for traders to speculate on movement of the markets and no sane person would hold them for any extended period of time. A Bitcoin ETF being more stable than them is not an accomplishment and anyone saying as much is showing a complete misunderstanding of the goals of those two investment vehicles.
  - mrb 10y ago
    Similarly, a Bitcoin ETF is "specifically designed" to track Bitcoin's volatility for traders who want to speculate on movements of BTC. There is nothing wrong with that, just like there is nothing wrong with these 60 other ETFs. My point is the initial poster (pdog) is wrong to assume volatility was a problem in and of itself for these ETFs.
    - slg 10y ago
      >Similarly, a Bitcoin ETF is "specifically designed" to track Bitcoin's volatility for traders who want to speculate on movements of BTC. Except the Bitcoin ETF isn't leveraged like the example ETF. To borrow a term from your linked article, "It’s a wolf in wolf’s clothing." The example ETF is designed to be volatile, it is clear up front, and anyone investing knows it. The Bitcoin ETF isn't designed to be volatile, it just is because of the volatility of Bitcoin. If the Bitcoin ETF is marketed as a buy and hold type investment, then the volatility is a problem.
      - mrb 10y ago
        And the article precisely makes the point that everybody knows Bitcoin is volatile, hence volatility isn't a "problem" for this ETF.
        slg 10y ago
        This is based on an assumption. These things shouldn't have to be assumed. For example, check out the page for the example ETF from the article [1]. >Leveraged and inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. [1] - http://www.direxioninvestments.com/products/direxion-daily-junior-gold-miners-bull-3x-etf http://www.direxioninvestments.com/products/direxion-daily-j... It makes the volatility clear. It tells you not to buy and hold. Would a Bitcoin ETF have those same type of warnings?
        frgtpsswrdlame 10y ago
        It tells you not to buy and hold, not because of the volatility but because of the leverage. Leveraged ETFs are rebalanced daily and designed to offer 2x or 3x returns only on a daily basis, this is why they say: >...should not be expected to track the underlying index over periods longer than one day. You shouldn't hold a leveraged ETF for very long because it will become unhinged from a layman's expectation of performance. AKA if I buy $SSO this morning and sell it this afternoon, I will get double the S&P's returns. If I buy $SSO this morning and sell it in June, I may get 1.5x returns or 2.5x returns or anything in between. This bitcoin ETF won't behave like that so it should be fine, it's a volatile investment, investors should do their DD.
        modeless 10y ago
        > Would a Bitcoin ETF have those same type of warnings? No need to speculate. The answer is yes, the COIN ETF has all the appropriate warnings. The risks are quite clearly spelled out in the S-1 as is standard with these sorts of things: https://www.sec.gov/Archives/edgar/data/1579346/000119312517034708/d296375ds1a.htm#toc296375_4 https://www.sec.gov/Archives/edgar/data/1579346/000119312517...
SilasX 10y ago
Four years for approval?
npongratz 10y ago
> What could go wrong? GBTC [0] has been trading since March 2015 [1], as of today is up 714% since inception [2]. My understanding is that nothing serious has gone wrong, so far, in nearly two years. Also, for some, "ridiculous volatility" is a desirable feature for some portion of their portfolio. [0] https://grayscale.co/bitcoin-investment-trust/ https://grayscale.co/bitcoin-investment-trust/ [1] http://www.investopedia.com/articles/investing/073015/bitcoin-etfs-how-do-they-work.asp http://www.investopedia.com/articles/investing/073015/bitcoi... [2] https://grayscale.co/bitcoin-investment-trust/#market-performance https://grayscale.co/bitcoin-investment-trust/#market-perfor...
- minimax 10y ago
  My understanding is that nothing serious has gone wrong, so far, in nearly two years. GBTC is a bad way to trade bitcoin and the chart in reference [2] you posted shows exactly why. A good BTC tracking ETF would have NAV = market cap, but here you can see that NAV and market cap are unlinked (as are returns for GBTC vs bitcoin) and people are generally paying way over NAV (in some cases over 50%!) to own GBTC. This is presumably due to unsophisticated traders buying GBTC without understanding that they're getting a terrible deal. In summary, yes something is seriously wrong with GBTC and has been wrong for the entire life of the product.
  - npongratz 10y ago
    Thank you for pointing that out. I was trying to explain that any new Bitcoin-based ETF is not unprecedented, and no catastrophe has occurred ("What could go wrong?") despite a Bitcoin-based product being publicly traded for nearly two years. To clarify, I'm not saying I'd touch GBTC. I certainly would not ever buy it. Nor would I consider buying any ETF or ETN claiming exposure to Bitcoin. I have no desire to shoulder such substantial counterparty risk, fees, and tracking risk (among many other issues, these are simply my top three). I agree that GBTC is a terrible way to trade Bitcoin. Same as how many other ETFs, ETNs, mutual funds, and other financially engineered products are fantastically terrible ways to gain exposure to various assets. They apparently meet some people's needs, though. I don't understand it, but so what? I don't judge. Good for them.
clock_tower 10y ago
Just find funds that track bitcoin volatility, you should be fine. :)
placeybordeaux 10y ago
Most of the markets that were engaging in trading were already all-day. Some of the markets in China were also offering huge leveraged positions.
jliptzin 10y ago
Just wait for the triple inverse bitcoin etf to come out that's when the real casino opens for business!
- npongratz 10y ago
  As if there hasn't already been 3x (and more) margin trading for the last three years? From my first search attempt: http://www.coindesk.com/okcoin-international-markets-margin-trading-launch/ http://www.coindesk.com/okcoin-international-markets-margin-...
  - Obi_Juan_Kenobi 10y ago
    For anyone interested, 20x has been around for 2 (IIRC) years, providing endless entertainment for trading forums for the duration.
deleted 10y ago
[deleted]

by pdog 10y ago

mrb 10y ago

60 ETFs are more volatile than Bitcoin: https://www.bloomberg.com/view/articles/2016-11-01/five-reasons-the-winklevoss-bitcoin-etf-should-be-approved https://www.bloomberg.com/view/articles/2016-11-01/five-reas...

slg 10y ago
It doesn't list all of the ETFs that are more volatile but the one they do list is a leveraged ETF. I would imagine most of the other 59 are as well. These leveraged ETFs are specifically designed to be multiple times more volatile than the market they represent. They are meant for traders to speculate on movement of the markets and no sane person would hold them for any extended period of time. A Bitcoin ETF being more stable than them is not an accomplishment and anyone saying as much is showing a complete misunderstanding of the goals of those two investment vehicles.
- mrb 10y ago
  Similarly, a Bitcoin ETF is "specifically designed" to track Bitcoin's volatility for traders who want to speculate on movements of BTC. There is nothing wrong with that, just like there is nothing wrong with these 60 other ETFs. My point is the initial poster (pdog) is wrong to assume volatility was a problem in and of itself for these ETFs.
  - slg 10y ago
    >Similarly, a Bitcoin ETF is "specifically designed" to track Bitcoin's volatility for traders who want to speculate on movements of BTC. Except the Bitcoin ETF isn't leveraged like the example ETF. To borrow a term from your linked article, "It’s a wolf in wolf’s clothing." The example ETF is designed to be volatile, it is clear up front, and anyone investing knows it. The Bitcoin ETF isn't designed to be volatile, it just is because of the volatility of Bitcoin. If the Bitcoin ETF is marketed as a buy and hold type investment, then the volatility is a problem.
    - mrb 10y ago
      And the article precisely makes the point that everybody knows Bitcoin is volatile, hence volatility isn't a "problem" for this ETF.
      - slg 10y ago
        This is based on an assumption. These things shouldn't have to be assumed. For example, check out the page for the example ETF from the article [1]. >Leveraged and inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. [1] - http://www.direxioninvestments.com/products/direxion-daily-junior-gold-miners-bull-3x-etf http://www.direxioninvestments.com/products/direxion-daily-j... It makes the volatility clear. It tells you not to buy and hold. Would a Bitcoin ETF have those same type of warnings?
        frgtpsswrdlame 10y ago
        It tells you not to buy and hold, not because of the volatility but because of the leverage. Leveraged ETFs are rebalanced daily and designed to offer 2x or 3x returns only on a daily basis, this is why they say: >...should not be expected to track the underlying index over periods longer than one day. You shouldn't hold a leveraged ETF for very long because it will become unhinged from a layman's expectation of performance. AKA if I buy $SSO this morning and sell it this afternoon, I will get double the S&P's returns. If I buy $SSO this morning and sell it in June, I may get 1.5x returns or 2.5x returns or anything in between. This bitcoin ETF won't behave like that so it should be fine, it's a volatile investment, investors should do their DD.
        modeless 10y ago
        > Would a Bitcoin ETF have those same type of warnings? No need to speculate. The answer is yes, the COIN ETF has all the appropriate warnings. The risks are quite clearly spelled out in the S-1 as is standard with these sorts of things: https://www.sec.gov/Archives/edgar/data/1579346/000119312517034708/d296375ds1a.htm#toc296375_4 https://www.sec.gov/Archives/edgar/data/1579346/000119312517...

SilasX 10y ago

Four years for approval?

npongratz 10y ago

> What could go wrong? GBTC [0] has been trading since March 2015 [1], as of today is up 714% since inception [2]. My understanding is that nothing serious has gone wrong, so far, in nearly two years. Also, for some, "ridiculous volatility" is a desirable feature for some portion of their portfolio. [0] https://grayscale.co/bitcoin-investment-trust/ https://grayscale.co/bitcoin-investment-trust/ [1] http://www.investopedia.com/articles/investing/073015/bitcoin-etfs-how-do-they-work.asp http://www.investopedia.com/articles/investing/073015/bitcoi... [2] https://grayscale.co/bitcoin-investment-trust/#market-performance https://grayscale.co/bitcoin-investment-trust/#market-perfor...

minimax 10y ago
My understanding is that nothing serious has gone wrong, so far, in nearly two years. GBTC is a bad way to trade bitcoin and the chart in reference [2] you posted shows exactly why. A good BTC tracking ETF would have NAV = market cap, but here you can see that NAV and market cap are unlinked (as are returns for GBTC vs bitcoin) and people are generally paying way over NAV (in some cases over 50%!) to own GBTC. This is presumably due to unsophisticated traders buying GBTC without understanding that they're getting a terrible deal. In summary, yes something is seriously wrong with GBTC and has been wrong for the entire life of the product.
- npongratz 10y ago
  Thank you for pointing that out. I was trying to explain that any new Bitcoin-based ETF is not unprecedented, and no catastrophe has occurred ("What could go wrong?") despite a Bitcoin-based product being publicly traded for nearly two years. To clarify, I'm not saying I'd touch GBTC. I certainly would not ever buy it. Nor would I consider buying any ETF or ETN claiming exposure to Bitcoin. I have no desire to shoulder such substantial counterparty risk, fees, and tracking risk (among many other issues, these are simply my top three). I agree that GBTC is a terrible way to trade Bitcoin. Same as how many other ETFs, ETNs, mutual funds, and other financially engineered products are fantastically terrible ways to gain exposure to various assets. They apparently meet some people's needs, though. I don't understand it, but so what? I don't judge. Good for them.

clock_tower 10y ago

Just find funds that track bitcoin volatility, you should be fine. :)

placeybordeaux 10y ago

Most of the markets that were engaging in trading were already all-day. Some of the markets in China were also offering huge leveraged positions.

jliptzin 10y ago

Just wait for the triple inverse bitcoin etf to come out that's when the real casino opens for business!

npongratz 10y ago
As if there hasn't already been 3x (and more) margin trading for the last three years? From my first search attempt: http://www.coindesk.com/okcoin-international-markets-margin-trading-launch/ http://www.coindesk.com/okcoin-international-markets-margin-...
- Obi_Juan_Kenobi 10y ago
  For anyone interested, 20x has been around for 2 (IIRC) years, providing endless entertainment for trading forums for the duration.

deleted 10y ago

[deleted]