I don't know jack about traditional Wall Street mumbo jumbo, but I read today that the Winky ETF is modeled after the GLD fund which set records by attracting over a $billion in new investment in just 3 days. Obviously that's a pretty lazy comparison, but consider this: Bitcoin represents an entirely new asset class. Lots of institutions and investors will want to get in on this on the ground floor, whether they support or even understand virtual currencies at all. Once the general public sees how much easy money can be made, money will start pouring in. IMO the ETF is the next big step for bitcoin and it will likely be the spark for the next bubble...
If $1 billion came in the first 3 days of the COIN, how many bitcoins would have to be purchased on the market?
I could be wrong, but I remember reading that there was something like a 1:5 leverage ratio, so divided by $620 (price today) and divided by 5, it's about 307,000 coins.
Another way to look at it would just be to take $1 billion divided by the 12,000,000 mined coins and that comes to about $83 per coin.
Or that the current market capitalization would be about $8 billion, so you're adding 12.5%. It probably ain't the moon. And that's not even considering whether or not a bitcoin ETF would be as attractive as gold, which it might well not be.
I'd welcome it, but I don't think it's going to pay for my daughter's college or anything.
Well, its not a 5 to 1 leverage ratio. 5 shares = 1 Bitcoin.
So lets redo that math, shall we??
The fund already has 100,000 btc. So if 1 billion came in, the first 100k btc (@ $620) would equal $62 million.
So that would leave an additional $938 MILLION worth of bitcoins that would need to be purchased.
You still think that would not effect the price in a substantial way?
PS. You realize that $1 billion in INVESTMENT capital is a completely different beast than 1/8 increase in market capitalization. Right?