When an investor buys 5 shares, the fund has to buy one bitcoin. But where will the fund go to buy the bitcoin--from the open market, or from the twins?
It's a bit more complicated than that. The fund
already has about 200.000 BTC - the ones the twins have. Based on that, the fund will sell shares, so the twins will essentially cash out on their BTC. However, this by itself will not depress the BTC price, since it is not equivalent to dumping 200k BTC on the market.
When an investor buys shares, the fund doesn't have to buy BTC - it already has them. The fund just gets dollars from the investor, who now owns shares. (Theoretically, he owns BTC, but can redeem them only at multiples of 50k shares.)
The
only case when the fund will have to buy BTC is if the public is buying ETF shares faster than it is buying BTC. Then the fund will have to create shares, sell them and buy BTC with the proceedings, in order to get the prices of BTC and the shares back in sync. Since the difference in demand (of shares and BTC) is unlikely to be large for significant periods of time, these operations will be relatively small. But, yes, in such cases the fund will have to buy BTC on the open market.
If the fund buys bitcoins from the open market, then it should have a very positive influence on the dollar equivalent value of bitcoin, which we'll all enjoy.
Only while the public is buying ETF shares faster than it is buying BTC, and only until the difference in demand is brought back into equilibrium. Do
not expect a moonshot because of the fund's operations, and do not forget that it will act in reverse too (if demand for the shares is lower than demand for BTC, the fund will have to dump some BTC on the market, suppressing the price of BTC).
The prositive effect of the fund will be different - it will bring more liquidity to the market (more buyers and sellers) and will reduce the volatility a bit (and will probably reduce the price differences between the different exchanges).