Quote from: windjc on July 11, 2014, 12:55:46 AM

Quote from: vuduchyld on July 10, 2014, 10:34:29 PM

Quote from: windjc on July 10, 2014, 09:52:56 PM

Quote from: vuduchyld on July 10, 2014, 09:42:49 PM

Quote from: windjc on July 10, 2014, 09:31:57 PM

Quote from: harposox on July 10, 2014, 09:30:38 PM

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?

Oh, I see. I re-read the article and you are correct on the 5 shares = 1 bitcoin. I suppose they want to target an ETF price that is lower than the price of bitcoin.

Still, $938,000,000 divided by 12,000,000 mined coins (factoring in their 100,000 bitcoin stash which accounts for $62 million--again, you're correct about a fact that I hadn't included) gets you to $78.

Could it drive the price up a LOT further due to market factors? Sure...absolutely, in part, because, as you say, $1 billion of incoming investment operates a lot differently than just adding that $1 billion equitably in market capital. Especially when you factor in that about 1000 people own about 50% of the mined bitcoins, the available float becomes more scarce if the 1000 are all hodling. It could drive the price up considerably if there are only, say, 2 million coins that aren't being hodled no matter what.

But there are a lot of what ifs. What if the 1000 decide that a big influx of investment capital represents the perfect time for them to cash out without destroying the value? What if the bitcoin ETF doesn't attract $1 billion, but more like $200 million? The Winklevii have about 1/3 of that covered already, so you're only talking about a demand of 200,000 bitcoins.

This probably isn't very scientific, but I just pulled up the weekly chart and looked at the last 3 weeks I could find with 200K volumes. One was an
up week and two were down weeks. Might see a 20% change...might not.

Don't get me wrong...I think it's a great thing for a variety of reasons. A short term bump of some sort is one of them. Keep in mind, also, that the bump will likely be spread out a little bit...won't hit on the day the ETF opens. More liquidity is helpful long term. I just don't see this as a moon shot. Could it be 20-25%? Sure. Could be a little more. Could be a little less.

Let's split the difference and say they need to buy 500 million worth. Where do they buy them? Someone's going to sell for 800$? No. They have to go to exchanges and that's going to be another bubble.

Could happen. I kind of doubt it, but i might be hoping instead of predicting. Maybe an even better scenario would be a more sustained influx of capital...it starts at $200 mil, which raises the price, which attracts more capital, which raises the price, which attracts even more...and that sustains over a period of time. That might be better than $500 mil or $1 bil that causes a bubble, which attracts the shorts and bubble pokers.