4 ms·

Follow-up: the same question, but for $1m in index funds through Vanguard.

wapz 9y ago
I'm gonna take a guess and say 5 minutes or less. I've moved much less index funds (magnitude of 10x less) and it was no problem.
SirLJ 9y ago
For SPY for example instantly with no or max few cents slippage...
brainflake 9y ago
Average daily volume of VOO over the last 60 days is about 2,000,000 shares. At ~$200/share (it's actually about $220 right now), that's about $400m dollars daily, so unloading $1m would be well under 1% of shares traded in a typical day.
- ajross 9y ago
  And notably the fraction of VOO shares traded on any given day to the total market cap of the fund is about 100:1. With bitcoin it's more like 10k:1. Thus the liquidity worries.
ajross 9y ago
One security isn't really the right point of comparison though. Someone with a ton of money to park in "the market" obviously has the choice of doing so in a diverse portfolio from which they can sell in enormously high volume. Bitcoin is just one thing.
- dreistdreist 9y ago
  No, lots of index fund investors don't have a diverse portfolio, they get the diversity through the index fund (see bogleheads). A worldwide index fund from Vanguard is all you need if you want to own the whole market. Optionally add a few bonds to reduce volatility.
  - ajross 9y ago
    Unless you have millions of dollars to park, in which case a single security is a liquidity risk (which has nothing to do with diversity risk) and you take the obvious path of manually diversifying. Same treatment, different problem. The point was that you can't "diversify" Bitcoin holdings like this. It's inherently illiquid on these scales.
    - monochromatic 9y ago
      What liquidity issues have there ever been with the big index funds?
      - ajross 9y ago
        If you try to dump $100M in shares of VOO (to finance a luxury hotel purchase, say), you'll flood the market and the share price will drop, and you either won't have access to your funds quickly or you won't get all your money back. There simply aren't enough interested buyers for your single security to absorb your giant sell order. This would not be true if you had manually diversified that holding, which is why no one with liquidity requirements holds single securities in anything like that kind of volume (i.e. people do it, but they do it for e.g. corporate board vote share reasons). Again, though, the point is that while holdings in big funds only hit this level at really obscene order volume, bitcoin sees liquidity problems at something more like $1M orders.
        monochromatic 9y ago
        Gotcha.
        davidgerard 9y ago
        > bitcoin sees liquidity problems at something more like $1M orders. $100k or less. http://www.coindesk.com/high-seas-bitcoin-trading-whales-still-make-waves/ http://www.coindesk.com/high-seas-bitcoin-trading-whales-sti...
Veratyr 9y ago
Held as ETFs? Assuming it's in big ones like VOO, they can see $400M turnover in a business day, so if you're not picky about getting the best fill price and just sell at the bid, you should be able to do it within a minute or two. You can then call your broker for a wire transfer and have it in your bank account within the same day.
- aminorex 9y ago
  Or ask for a Bitcoin transfer and have it in seconds.
  - robk 9y ago
    Well 45 min to 1050 min actually https://blockchain.info/charts/avg-confirmation-time https://blockchain.info/charts/avg-confirmation-time
    - aminorex 9y ago
      Confirmations are optional.
  - patio11 9y ago
    By what pathway do you believe it is possible to start a day with money in Vanguard, end the day with money in Bank of America, and hold ~$1 million in Bitcoin for some portion of the day. Wiring a million dollars from Vanguard to BoA is a routine transaction, despite the degree of surprise that causes some geeks. More interesting commerce happens every day. The Bitcoin transaction you have outlined, though, is not a routine transaction. I'd go further than that: it is impossible.
tptacek 9y ago
That's so mean.
rb808 9y ago
The S&P500 index funds are linked to the S&P500 where there are multiple ways to trade and are arbitraged to the nearest cent. People have mentioned VOO & SPY already but most liquid are futures which are super liquid. Eg yesterday there was 2,394501,116,312=$78 Billion traded in the Chicago e-mini contract alone. Which is more than $3mil a second. http://www.cmegroup.com/trading/equity-index/us-index/e-mini-sandp500_quotes_volume_voi.html#tradeDate=20170519 http://www.cmegroup.com/trading/equity-index/us-index/e-mini...

wapz 9y ago

I'm gonna take a guess and say 5 minutes or less. I've moved much less index funds (magnitude of 10x less) and it was no problem.

SirLJ 9y ago

For SPY for example instantly with no or max few cents slippage...

brainflake 9y ago

Average daily volume of VOO over the last 60 days is about 2,000,000 shares. At ~$200/share (it's actually about $220 right now), that's about $400m dollars daily, so unloading $1m would be well under 1% of shares traded in a typical day.

ajross 9y ago
And notably the fraction of VOO shares traded on any given day to the total market cap of the fund is about 100:1. With bitcoin it's more like 10k:1. Thus the liquidity worries.

ajross 9y ago

One security isn't really the right point of comparison though. Someone with a ton of money to park in "the market" obviously has the choice of doing so in a diverse portfolio from which they can sell in enormously high volume. Bitcoin is just one thing.

dreistdreist 9y ago
No, lots of index fund investors don't have a diverse portfolio, they get the diversity through the index fund (see bogleheads). A worldwide index fund from Vanguard is all you need if you want to own the whole market. Optionally add a few bonds to reduce volatility.
- ajross 9y ago
  Unless you have millions of dollars to park, in which case a single security is a liquidity risk (which has nothing to do with diversity risk) and you take the obvious path of manually diversifying. Same treatment, different problem. The point was that you can't "diversify" Bitcoin holdings like this. It's inherently illiquid on these scales.
  - monochromatic 9y ago
    What liquidity issues have there ever been with the big index funds?
    - ajross 9y ago
      If you try to dump $100M in shares of VOO (to finance a luxury hotel purchase, say), you'll flood the market and the share price will drop, and you either won't have access to your funds quickly or you won't get all your money back. There simply aren't enough interested buyers for your single security to absorb your giant sell order. This would not be true if you had manually diversified that holding, which is why no one with liquidity requirements holds single securities in anything like that kind of volume (i.e. people do it, but they do it for e.g. corporate board vote share reasons). Again, though, the point is that while holdings in big funds only hit this level at really obscene order volume, bitcoin sees liquidity problems at something more like $1M orders.
      - monochromatic 9y ago
        Gotcha.
      - davidgerard 9y ago
        > bitcoin sees liquidity problems at something more like $1M orders. $100k or less. http://www.coindesk.com/high-seas-bitcoin-trading-whales-still-make-waves/ http://www.coindesk.com/high-seas-bitcoin-trading-whales-sti...

Veratyr 9y ago

Held as ETFs? Assuming it's in big ones like VOO, they can see $400M turnover in a business day, so if you're not picky about getting the best fill price and just sell at the bid, you should be able to do it within a minute or two. You can then call your broker for a wire transfer and have it in your bank account within the same day.

aminorex 9y ago
Or ask for a Bitcoin transfer and have it in seconds.
- robk 9y ago
  Well 45 min to 1050 min actually https://blockchain.info/charts/avg-confirmation-time https://blockchain.info/charts/avg-confirmation-time
  - aminorex 9y ago
    Confirmations are optional.
- patio11 9y ago
  By what pathway do you believe it is possible to start a day with money in Vanguard, end the day with money in Bank of America, and hold ~$1 million in Bitcoin for some portion of the day. Wiring a million dollars from Vanguard to BoA is a routine transaction, despite the degree of surprise that causes some geeks. More interesting commerce happens every day. The Bitcoin transaction you have outlined, though, is not a routine transaction. I'd go further than that: it is impossible.

tptacek 9y ago

That's so mean.

rb808 9y ago

The S&P500 index funds are linked to the S&P500 where there are multiple ways to trade and are arbitraged to the nearest cent. People have mentioned VOO & SPY already but most liquid are futures which are super liquid. Eg yesterday there was 2,394501,116,312=$78 Billion traded in the Chicago e-mini contract alone. Which is more than $3mil a second. http://www.cmegroup.com/trading/equity-index/us-index/e-mini-sandp500_quotes_volume_voi.html#tradeDate=20170519 http://www.cmegroup.com/trading/equity-index/us-index/e-mini...