E036: “COIN ETF & Bitcoin Pump”

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BTC Status Update as of 2/23/2017
Bitstamp $1155
Okcoin ¥7604
Localbitcoins vol (7d) $24 mil
Network vol (24h) $155 mil
Difficulty est. +0.5%
Segwit 26%

Sources: PricesLocalBitcoinsBlockchain VolumeDifficulty, SegWit


Trending Topics ATHs, COIN ETF 11 Mar

13:00 – COIN ETF News

Many people are bearish on it, Needham and Co. <25%, also Tone Vays is adamant that it won’t happen.

Links

COIN website

Needham and Co. Report

Unchained podcast (blockchain space), episode with Spencer Bogart of Needham and Daniel Masters Director of Global Advisors’ Bitcoin products

SEC filings

ETF Basics

  • ETFs have a stock of underlying asset. Stocks, bonds, emerging market stocks, emerging market bonds, commodities, metals, currency
  • They have a sponsor, custodian, Trust, NAV, fees
  • Have two halves. Creation and redemption, and trading shares
  • Authorized Participants deal in creation and redemption, play arbitrage by sourcing baskets of the underlying
  • Average joe investor deals with the trading shares
  • Each share is 0.1 btc
  • Baskets are 10,000 shares for the authorized participants and redemptions
  • Multiple exchanges can be used to source the bitcoin
  • The NAV is determined everyday with the Gemini Auction Price
  • Backups are Gemini spot and ItBit.

Point/Counterpoint

  • This is the wild west, they won’t approve something that so volatile and unregulated
    • Gemini is the most regulated exchange in the world
    • markets have been robust in the past couple of years from attacks, govt crackdowns and fake volume
  • The first digital asset is too hard to secure
    • The S-1 spends several pages to describing a propietary process of securing the bitcoin
    • Cold Storage (no bitgo), hardware keys, geographically separated, background checked and fingerprinted, multisig, proof of control system
  • Bitcoin is not liquid enough
    • Less liquid markets that have an ETF (ie emerging market ETFs)
    • bitcoin is liquid enough for the creation and redemption side
    • The ETF itself will go a long way to increasing liquidity on a different “layer”
  • The govt/banks hate bitcoin and won’t let it get this kind of legitimacy
    • They don’t understand bitcoin
    • They don’t understand hodling
    • They probably think the ETF, and especially the first major ETF will be able to “control” bitcoin
    • They are stupid

Very positive things that are overlooked

  1. Winklevoss are very well connected and wouldn’t keep pushing this if it was an obvious rejection
  2. Trump mantra of America, America, America don’t want to lose market share to the rest of the world.
    1. other jurisdictions have more bitcoin instruments (Europe), China seems to trying to corner the market
    2. Chinese bitcoin miner ETF
  3. Lastly, and most obvious, the market seems to be betting on approval, or at least saying the rejection isn’t that bad.

Final point about altcoin ETF. If some of the things I outlined above were applied to altcoins, altcoins would not be nearly as easy to defend. Plus, many altcoins have centralized parties that would complicate the whole issue, especially where HFs are concerned. Security will be much harder to guarantee.

SEC Memo

The SEC release a memo on 22 Feb about a meeting they had with COIN ETF insiders on 14 Feb. I got though who was there, and what it “could” mean.


Patreon Companion Episode

On Patreon this week I’ll be discussing the bitcoin price more in depth, differences between markets, and altcoins.

Ansel Lindner Written by:

Ansel is a bitcoin specialist, economist, and podcast host.