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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

by 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...

by mrb 10y ago

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...