Bitcoin Flying As ETF Gets Second Shot
Would-be bitcoin ETF investors are in wait-and-see mode as the Securities and Exchange Commission reconsiders whether to allow the first bitcoin exchange-traded fund to come to fruition. To the dismay of many, the SEC rejected the Winklevoss Bitcoin ETF (COIN) in a March 10 decision, citing a lack of regulation and surveillance-sharing agreements between exchanges.
Bats Global Markets, operator of the exchange on which the ETF would trade and which is owned by the same parent company—CBOE—as ETF.com, responded to the SEC's verdict by filing a "petition for review" of the disapproval on March 24.
Bats argued that the commission's initial conclusion "is clearly erroneous," "inconsistent with prior ETP [exchange-traded products] approval orders" and that "the manipulation concerns . are overstated and largely theoretical."
Bats urged the SEC to approve its proposed rule change, which would open the door to the listing of the ETF and "provide investors access to bitcoin through a regulated and transparent investment vehicle."
On April 24, the SEC agreed to consider Bats’ petition for review, and asked for public comments on the original disapproval order. The last of those comments was submitted on May 15, setting the stage for a new round of deliberations by the commission.
High Bar For Approval
Though hopes are high that the bitcoin ETF will eventually be approved―public comments on the fund have been largely positive―analysts aren't confident the SEC will turn around so soon after its previous negative ruling and suddenly give it the green light.
Spencer Bogart, managing director and head of research for Blockchain Capital, is skeptical that the SEC will change its tune on the bitcoin ETF.
"Their reason for disapproval was the underlying markets for bitcoin, which haven't changed in the weeks since they made their decision,” he said. “One of the issues was that Bats hadn't set up surveillance-sharing agreements with the major exchanges on which bitcoin is traded, with the purpose of identifying and stomping out market manipulation. Even if they did, a lot of those exchanges reside in jurisdictions that don't have much of a regulatory body that can go and take action against people that are doing something bad to the market."
However, Bogart did leave open the possibility that the SEC's thinking could change on the ETF if a new set of people look into the matter.
“It is possible that, in the short time period from when the SEC disapproved to when the petition was granted, there was a significant regime change at the SEC," explained Bogart. "You could have a different group of people who want to review the matter because they aren't sure the decision to disapprove was a good choice. I’ve heard whisperings that there are many people within this administration who are friendly or at least amicable to digital currencies like bitcoin."
Bitcoin Surging Even Without ETF
Regardless of what the future holds for bitcoin ETFs, the digital currency itself isn't fazed. Since March 10—the day the SEC originally rejected the Winklevoss Bitcoin ETF—the price of bitcoin is up an incredible 91%, last hitting an all-time high of more than $2,200 on Monday. Year-to-date, bitcoin is up 130%.
If anything, the price only accelerated on the upside after the SEC's disapproval, though most analysts attribute the surge to other factors.
"The big driver of the rally seems to be what’s going on in Japan and Korea," noted Bogart. "In Japan, recently there's been a change to acknowledge bitcoin as a legal payment method. That in and of itself wasn't significant as, generally, people don't like to spend bitcoin; they like to hold it."
"But Japan's move provides some regulatory clarity, and now there are major tech companies that want to open up bitcoin exchanges in Japan,” Bogart said. “So what you saw was volume in existing bitcoin exchanges in Japan went through the roof and pushed the prices up. Koreans look closely at Japan and tend to imitate a lot of activity there, so there's been a lot of demand from that area of the world also."
"That's been the story of bitcoin,” added Bogart. “A lot of times it's just sitting there doing nothing and then either something falls apart in a particular corner of the world, or in some corner of the world, some regulatory agency decides to be favorable to bitcoin and then you see these random rallies. Then as you begin to rally, speculators pile in, and it becomes a self-perpetuating cycle."
Have Bitcoin And Other Cryptocurrencies Peaked For Good? (BTC)
From Jill Mislinski: With all the focus on bitcoin lately, we’ve added a new weekly update that tracks the three largest cryptocurrencies by market share: bitcoin, Ether, and Ripple.
According to Wikipedia, a cryptocurrency is “a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets.”
Bitcoin is the world’s first cryptocurrency and decentralized digital currency. The first bitcoin transaction occurred in early 2009 and has since grown worldwide. Ether is another cryptocurrency run on the Ethereum blockchain platform and has the second largest market share, despite being the newest of the three with its launch in July 2015. The third largest market share of cryptocurrency, XRP, is owned by Ripple and launched in 2012.
Here are all three cryptocurrency prices over time along with their trading volume. Data for all three is sourced from Coinbase.com and by request, we have shortened the time frame for a more recent picture.
We have also created an index in order to chart these together given their very different pricing history. Notice that Ether tops the chart – the price of an ether has changed the most out of all three cryptocurrencies.
Check back next week for another update.
This article is brought to you courtesy of Advisor Perspectives.
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I created a yahoo/email account long ago but I lost access to it; can y'all delete all my yahoo/yahoo account except for my newest YaAccount
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I want all my lost access yahoo account 'delete'; Requesting supporter for these old account deletion; 'except' my Newest yahoo account this Account don't delete! Because I don't want it interfering my online 'gamble' /games/business/data/ Activity , because the computer/security program might 'scure' my Information and detect theres other account; then secure online activities/ business securing from my suspicion because of my other account existing will make the security program be 'Suspicious' until I'm 'secure'; and if I'm gambling online 'Depositing' then I need those account 'delete' because the insecurity 'Suspicioun' will program the casino game 'Programs' securities' to be… more
chithidio@Yahoo.com
i dont know what happened but i can not search anything.
Golf handicap tracker, why can't I get to it?
Why do I get redirected on pc and mobile device?
Rahyaftco@yahoo.com
RYAN RAHSAD BELL literally means
Question on a link
In the search for Anaïs Nin, one of the first few links shows a picture of a man. Why? Since Nin is a woman, I can’t figure out why. Can you show some reason for this? Who is he? If you click on the picture a group of pictures of Nin and no mention of that man. Is it an error?
Repair the Yahoo Search App.
Yahoo Search App from the Google Play Store on my Samsung Galaxy S8+ phone stopped working on May 18, 2018.
I went to the Yahoo Troubleshooting page but the article that said to do a certain 8 steps to fix the problem with Yahoo Services not working and how to fix the problem. Of course they didn't work.
I contacted Samsung thru their Samsung Tutor app on my phone. I gave their Technican access to my phone to see if there was a problem with my phone that stopped the Yahoo Search App from working. He went to Yahoo and I signed in so he could try to fix the Yahoo Search App not working. He also used another phone, installed the app from the Google Play Store to see if the app would do any kind of search thru the app. The Yahoo Search App just wasn't working.
I also had At&t try to help me because I have UVERSE for my internet service. My internet was working perfectly. Their Technical Support team member checked the Yahoo Search App and it wouldn't work for him either.
We can go to www.yahoo.com and search for any topic or website. It's just the Yahoo Search App that won't allow anyone to do web searches at all.
I let Google know that the Yahoo Search App installed from their Google Play Store had completely stopped working on May 18, 2018.
I told them that Yahoo has made sure that their Yahoo members can't contact them about anything.
I noticed that right after I accepted the agreement that said Oath had joined with Verizon I started having the problem with the Yahoo Search App.
No matter what I search for or website thru the Yahoo Search App it says the following after I searched for
www.att.com.
WEBPAGE NOT AVAILABLE
This webpage at gttp://r.search.yahoo.com/_ylt=A0geJGq8BbkrgALEMMITE5jylu=X3oDMTEzcTjdWsyBGNvbG8DYmyxBHBvcwMxBHZ0aWQDTkFQUEMwxzEEc2VjA3NylRo=10/Ru=https%3a%2f%2fwww.att.att.com%2f/Rk=2/Es=plkGNRAB61_XKqFjTEN7J8cXA-
could not be loaded because:
net::ERR_CLEARTEXT_NOT_PERMITTED
I tried to search for things like www.homedepot.com. The same thing happened. It would say WEBPAGE NOT AVAILABLE. The only thing that changed were all the upper and lower case letters, numbers and symbols.
Then it would again say
could not be loaded because:
net::ERR_CLEARTEXT_NOT_PERMITTED
This is the same thing that happened when Samsung and At&t tried to do any kind of searches thru the Yahoo Search App.
Yahoo needs to fix the problem with their app.
Yahoo Search App from the Google Play Store on my Samsung Galaxy S8+ phone stopped working on May 18, 2018.
I went to the Yahoo Troubleshooting page but the article that said to do a certain 8 steps to fix the problem with Yahoo Services not working and how to fix the problem. Of course they didn't work.
I contacted Samsung thru their Samsung Tutor app on my phone. I gave their Technican access to my phone to see if there was a problem with my phone that stopped the Yahoo Search App from working. He went to Yahoo and… more
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Featured Story
When Is the Winklevoss Bitcoin ETF IPO?
By David Zeiler , Associate Editor , Money Morning • @DavidGZeiler - March 1, 2017
The Winklevoss Bitcoin ETF IPO launch date has not yet been set.
When it occurs depends on whether the SEC approves a rule change that will allow the Winklevoss Bitcoin Trust (the ETF's official name) to begin trading.
What happens with the Winklevoss ETF will determine the fate of two others also awaiting SEC approval.
Article Index
When Is the Winklevoss Bitcoin ETF IPO?
By David Zeiler , Associate Editor , Money Morning • @DavidGZeiler - March 1, 2017
Start the conversation
The Winklevoss Bitcoin ETF IPO launch date has not yet been set.
When it occurs depends on whether the SEC approves a rule change that will allow the Winklevoss Bitcoin Trust (the ETF's official name) to begin trading.
What happens with the Winklevoss ETF will determine the fate of two others also awaiting SEC approval.
What Is the Winklevoss Bitcoin ETF?
By David Zeiler , Associate Editor , Money Morning • @DavidGZeiler - February 28, 2017
Start the conversation
The Winklevoss Bitcoin ETF is an exchange-traded fund that will make it much easier to invest in the Bitcoin digital currency.
The Winklevoss Bitcoin Trust still requires SEC approval of a rule change. A decision is expected by March 11.
But if the SEC does approve this Bitcoin ETF, the price of Bitcoin could double in a very short time.
The First Bitcoin ETF Could Win Approval in March Despite Long Odds
By David Zeiler , Associate Editor , Money Morning • @DavidGZeiler - February 2, 2017
Start the conversation
The SEC has plenty of reasons not to approve the first Bitcoin ETF by next month's deadline. But there's a good chance the agency will surprise everyone and make the first Bitcoin ETF a reality.
Most analysts believe the SEC will turn down the three active bids to become the first Bitcoin ETF, which includes the Winklevoss Bitcoin Trust.
Winklevoss Bitcoin ETF Update This Week Could Help SEC Approval
By David Zeiler , Associate Editor , Money Morning • @DavidGZeiler - October 21, 2016
Start the conversation
As the Winklevoss Bitcoin ETF enters the home stretch in its bid for SEC approval, its latest filing shows it's doing all it can to convince the agency that its ETF will be a safe investing vehicle.
The latest amendment to the Winklevoss Bitcoin Trust's S-1 filing reveals that it has enlisted two respected partners, financial services company State Street Corp. and accounting firm Burr Pilger Mayer.
Why the First Bitcoin ETF Could Double the Price of Bitcoin
By David Zeiler , Associate Editor , Money Morning • @DavidGZeiler - September 9, 2016
Start the conversation
When the first Bitcoin ETF lands - an event that could happen any day now - it will have a dramatic impact on the price of Bitcoin.
The arrival of the first Bitcoin ETF will be a powerful Bitcoin price catalyst because it will mimic other commodity-based ETFs, particularly those based on gold and silver.
Those ETFs were primary factors in the steep rise in gold and silver prices a decade ago.
Bitcoin ETFs Can Work – but This Ethereum ETF Won't
By David Zeiler , Associate Editor , Money Morning • @DavidGZeiler - July 20, 2016
Start the conversation
Seeing two Bitcoin ETFs seeking regulatory approval, an upstart group has now filed for something even more radical - an Ethereum ETF.
The evidence suggests the group, the EtherIndex Ether Trust, threw together its S-1 filing with the SEC willy-nilly in an effort to be first in line to file for an Ethereum ETF.
But the problems with this ETF proposal run much deeper than that.
Why the SolidX Bitcoin ETF Is a Step Behind the Winklevoss Bitcoin ETF
By David Zeiler , Associate Editor , Money Morning • @DavidGZeiler - July 13, 2016
Start the conversation
One Bitcoin ETF is good, but two are better. And now that the SolidX Bitcoin ETF has filed an S-1 with the Securities and Exchange Commission, we could have two Bitcoin ETFs trading on major U.S. exchanges by next year.
The only question now is which one will gain the bragging rights of making it first to the finish line.
How One Simple Hedge Could Actually Give the Biggest Profits of the 21st Century
By Michael A. Robinson , Defense + Tech Specialist , Money Morning • @Robinson_STI - February 9, 2016
Start the conversation
Millions of investors dedicate a portion of their portfolio to gold or some other precious metal as a hedge - as "insurance" - against trouble in other markets.
At its base, this is a sound strategy, because precious metals generally aren't affected by the ups and downs of the stock market.
This isn't a "gold service," however. Our interest is in tech investing. So let's spend today investigating what I think of as "the gold of tech."
Not only can you use this investment as a hedge, but financial players are beginning to eye the technology behind it as way to disrupt the $500 billion payments industry.
Bitcoin News: Now That the CFTC Says It's a Commodity, What's Next?
By David Zeiler , Associate Editor , Money Morning • @DavidGZeiler - September 18, 2015
Start the conversation
In a major piece of Bitcoin news, the Commodity Futures Trading Commission (CFTC) ruled that the digital currency is a commodity.
It's a significant step along the road toward Bitcoin regulation. While some early adopters of Bitcoin would prefer no government involvement with Bitcoin, Bitcoin regulation is necessary for the digital currency to play any meaningful role in the financial system.
Looking for a Bitcoin Stock Symbol? We've Got Them All
By David Zeiler , Associate Editor , Money Morning • @DavidGZeiler - June 12, 2015
Start the conversation
Looking for the Bitcoin stock symbol is not as straightforward as you might think.
Technically speaking, there's no such thing as a "Bitcoin stock symbol," although there are several tickers associated with Bitcoin.
Price of Bitcoin Creeps Up on Wave of Major Developments
By David Zeiler , Associate Editor , Money Morning • @DavidGZeiler - May 4, 2015
Start the conversation
A rapid-fire string of good news over the past week has help nudge up the price of Bitcoin.
A week ago the Bitcoin price was hovering around $225, somewhat disappointing since just six weeks earlier it was threating to break through the $300 level.
But then we started to get some major positive Bitcoin news. Over the past few days, the Bitcoin price is up about 7%, trading in the neighborhood of $240
The First Bitcoin ETF Offers Easy Way to Profit from Virtual Currency (GBTC)
By David Zeiler , Associate Editor , Money Morning • @DavidGZeiler - March 3, 2015
Start the conversation
The first Bitcoin ETF ordinary investors can buy will be the Bitcoin Investment Trust.
With approval last week from the Financial Industry Regulatory Authority (FINRA) to sell its shares on the OTC Markets, shares should start trading within the next couple of weeks.
The fund gives investors a way to invest in Bitcoin without going to the trouble of buying Bitcoin and worrying about having a secure place to store it.
This Bitcoin Price Chart Shows What's Blocking Faster Adoption
By David Zeiler , Associate Editor , Money Morning • @DavidGZeiler - February 3, 2015
Start the conversation
The Bitcoin price chart for January shows volatility is just as much of an issue for the digital currency as ever.
But for Bitcoin to gain mainstream adoption, this problem must be solved. A currency that can Bitcoin's tendency to lose 20% to 40% of its value in a matter of days, or even hours, discourages its use for daily transactions.
Winklevoss Bitcoin ETF Files to Sell 1 Million Shares (Nasdaq: COIN)
By David Zeiler , Associate Editor , Money Morning • @DavidGZeiler - January 2, 2015
Start the conversation
Taking one step closer to going live, the Winklevoss Bitcoin ETF filed an amendment Dec. 30 to its Securities and Exchange Commission (SEC) prospectus to list 1 million shares at an offer price of $20.09 per share.
If approved, the aggregate value of the shares will be $20.09 million.
Officially known as the Winklevoss Bitcoin Trust, this exchange-traded fund is intended to be an easy way to invest in Bitcoin.
Bitcoin Forecast 2015: Four Powerful Trends Will Deliver a Pivotal Year
By David Zeiler , Associate Editor , Money Morning • @DavidGZeiler - December 18, 2014
Start the conversation
The Bitcoin forecast for 2015 is for major strides toward the promise we've been hearing about for more than a year.
The power of the idea - a decentralized, digital currency that includes ownership data and can move money around the world in an instant - just keeps gaining traction.
But the Bitcoin forecast 2015 isn't just for more of the same. For sure, mass adoption will continue. But next year we'll see a lot more activity on Wall Street as well as a lot more innovation from Bitcoin startups.
Bitcoin ETFs are Coming
November 9, 2017
It’s only a matter of time now before bitcoin makes its way to exchange traded funds (ETFs), according to the CEO of CBOE Global Markets Inc. Investors bullish on bitcoin can therefore expect more positive vibes from mainstream finance, which is slowly but surely embracing the digital asset.
Bitcoin Coming to ETFs?
The booming market for ETFs could get more interesting as major funds look for ways to integrate bitcoin. According to CBOE President Chris Concannon, this could happen gradually over time.
“With regulated futures of a certain asset class like a bitcoin, you do have an opportunity to introduce ETFs and over time we do envision ETFs coming to market,” Concannon said in an earnings call on Tuesday, according to Bloomberg Markets.
CBOE has already introduced plans for bitcoin futures, which are scheduled to hit the markets by the end of this year. Rival
It didn’t take long for rival CME Group to also announce plans for bitcoin futures by the end of this year or early 2018.
The Winkelvoss twins failed to launch their bitcoin ETF earlier this year, with the Securities and Exchange Commission (SEC) rejecting the proposal outright. In a statement, the regulator said the proposed ETF was not consistent with Section 6(b)(5) of the Exchange Act, which is intended to stamp out fraudulent and manipulative practices.
Booming ETF Market
ETFs are enjoying record inflows, with global assets under management reaching a staggering $4.3 trillion by the end of July. BlackRock, Vanguard and State Street continue to be the major leaders in the market. According to PricewaterhouseCoopers, total ETF assets are forecast to reach $5.9 trillion over the next four years.
A bitcoin ETF would be easily accessible by millions of investors through common investment vehicles, including retirement accounts. It would also raise the profile of the digital asset class and attract more people to it.
Featured image courtesy of Shutterstock.
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Financial Freedom
Considerations For Choosing An Immediate Annuity
When it comes time to retire, one method for receiving income from your savings is to purchase an immediate annuity. The purpose of an immediate annuity is to provide a regular payment over a certain period of time or over the investor’s lifetime.
An immediate annuity can preserve a minimum level of income that you cannot outlive. Allocating a portion of your retirement money to an option that will provide income for life can make sense for many retirees.
So how does an investor decide what immediate annuity to purchase?
The scenarios discussed in this article apply in the United States. Readers are encouraged to consult their accountants about tax considerations related to buying annuities.
It’s also important to consider that when earnings from an annuity are withdrawn, they will be taxed as ordinary income, no matter how long the owner has owned the account.
Different Types Of Immediate Annuities
Steve Vernon, a research scholar for the Stanford Center on Longevity, writing for CBS News’ “Money Watch,” noted that immediate annuities can be fixed, inflation adjusted and variable and guaranteed lifetime withdrawal benefit (GLWB). GLWB combines the features of traditional annuities and systematic withdrawals.
Once you purchase a fixed or inflation adjusted immediate annuity, your payout is locked in, Vernon noted. Your payments will not be adjusted based on changes in capital markets.
The monthly payout on a variable annuity, by contrast, will change based on the annuity’s stock and bond portfolio. The owner can modify the portfolio even after they start receiving payments. Vernon recommends keeping the stock allocation between one third and two thirds.
When shopping for GMWB annuities, Vernon recommends annuities with management fees around 50 basis points or lower, and insurance fees round 100 basis points.
Vernon encourages people to use online annuity purchase services like www.immediateannuities.com and Income Solutions and Immediateannuities.com to compare different immediate annuities.
Immediate Fixed Annuity Considerations
Steve Goldberg, an investment adviser writing in Kiplinger, thinks of an immediate fixed annuity as term life insurance in reverse, the longer you live, the better you do.
The insurance company pools the premiums from thousands of its annuities and invests them primarily in bonds. The company also makes educated guesses about how long its annuity buyers will live. It then makes monthly payments to policyholders each month based upon both expected longevity and expected investment returns.
In today’s low-interest-rate environment, that’s much better than an investor can do in all but the riskiest bonds, according to Goldberg. It’s also likely better than an investor can do if he put all his money into stocks.
But there is a catch: With an annuity, you don’t get your money back, unless the buyer opts for what’s known as a “certain period annuity” or similar option. Additional features, however, usually bring additional costs.
Goldberg believes immediate fixed annuities usually make sense only for retirees. The older the retiree, the fewer years the insurance company will have to pay the benefits – so the bigger the monthly checks.
Immediate annuities seldom make sense for all of an investor’s money, Goldberg notes.
Like Vernon, Goldberg suggests going to ImmediateAnnuities.com to compare different immediate annuities. Plug in the state you live in, your age and your gender, and the website provides quotes from numerous companies.
How Immediate Annuities Are Bought
There are three typical ways to purchase immediate annuities, according to Rich White, a financial writer writing in Investopedia.
One method is the annuitization of a tax-deferred annuity. The purpose of a tax-deferred annuity, unlike an immediate annuity, is to build funds to create an income stream at a later date. Most tax-deferred annuities permit the account to be converted at some point in time to a guaranteed income stream.
Another method is the lump sum payment, in which the investor’s funds are transferred to an insurance company to purchase a revenue stream. Oftentimes, the investor is using cash from a retirement plan distribution, lottery winnings or an award from a personal injury settlement.
A third method is the terminal funding of a retirement plan. Some retirement plans offer annuity payouts. The plan in this case terminates its liability to the participant by transferring the participant’s funds to an insurance company. When retirement plans “pay out” in this manner, a “qualified immediate” annuity of offered for tax efficiency.
These choices all present options. The owner of a tax-deferred annuity who wants to annuitize is not limited to the payout offered by the insurance company, White notes. The policyholder can shop payouts offered by competing companies and conduct a tax-free transfer to the company offering the best terms. This is known as a Section 1035 exchange.
If a retirement plan offers a particular insurance company for terminal funding, the policyholder can shop for others and select the plan they find most suitable.
An annuity payout over a fixed number of years that is purchased with a single sum can be converted to an annual interest rate equivalent, White noted.
If, for example, the policyholder is quoted an annuity of $600 per month for 20 years in exchange for paying a premium of $10,000, an annuity rate calculator will find this payout converts to an annual interest rate of 3.96%. This rate can then be compared to other fixed-period annuity payouts, perhaps over longer or shorter periods, and also to rates available on bonds, money market funds or CDs.
For a lifetime annuity payout, there is no fixed period to evaluate. Death could occur at any time, and the payments would discontinue. White recommends a good starting point is to use the annuitant’s life expectancy as the payout period.
If a 67-year-old female is offered a lifetime payment of $600 per month for a $100,000 premium, her life expectancy would be 17.67 years, based on the 2007 Period Life Table published by the Social Security Administration.
Immediate Annuity Payout Options
One payout option for immediate annuities is income for a guaranteed period, which is also called “certain period annuity,” according to CNN Money, as noted in a previous article on annuities’ role in financial planning. This guarantees a specific payment for a specific time period. If the owner dies before the period ends, their beneficiary receives the remainder of the payments.
Another option is lifetime payments that guarantee a payout for the owner as long as they are alive, but there is no survivor benefit. The payouts can be variable or fixed, depending on the type of annuity selected. The amount of the payout depends on the amount invested and the owner’s life expectancy.
Still another payout option is life with a guaranteed period certain benefit, also known as “life with certain period.” The owner receives a guaranteed payout for life along with a period certain phase. If the owner dies during the certain period, the beneficiary continues to receive the payment for the remainder of that period.
Joint and survivor annuity is one in which the beneficiary continues receiving payments for the rest of their life after the owner dies.
Do Your Homework
It is important to buy an annuity from a company that holds a top credit rating from the three leading agencies of U.S. insurance companies: A.M. Best, Moody’s and Standard & Poor’s.
The considerations for shopping for an immediate annuity are extensive. Investors must spend their time comparing options. Many retirees will find it worth their time to work with a financial adviser.
Those who seek the assistance of an insurance agent must keep in mind that insurance agents are paid commissions by the insurance companies offering the annuities. Investors have the option of working with a non-commissioned financial adviser.
Why Buy This Expensive Bitcoin Trust Instead of Actual Bitcoin?
If you're interested in getting invested in the digital currency world, now seems to be as good a time as ever. Bitcoin has seen repeated record-setting price levels, and a host of other digital currencies are becoming increasingly popular around the globe. And yet, there are some reasons why even seasoned investors may be reluctant to get involved in direct investments relating to cryptocurrencies. Fortunately for those people, there is an over-the-counter trust focusing on Bitcoin in particular that can simplify the process. It is called the Bitcoin Investment Trust (GBTC) and it is provided by Grayscale Investments. Here are some of the basic details about the new trust and its relationship to the digital currency itself.
Significant Returns Already
The Bitcoin Investment Trust has won a spectacular set of gains over the past year. According to MicroCap Daily, the trust was trading for less than $100 just one year ago, while in the intervening time it has risen to more than $1000. It has finally settled back to about $800 as of this writing. The trust's success mirrors that of Bitcoin, and that makes sense: the trust is exclusively tied to that cryptocurrency, and its value is derived solely from that of Bitcoin.
Why the Huge Premium for GBTC?
Potential investors are likely wondering why GBTC shares can be found at such a high premium over Bitcoin. The issue seems to lie in supply and demand. While Bitcoin demand has skyrocketed, GBTC has kept its shares outstanding close to 1.7 million in the two years that it has existed. In fact, the ETF seems unlikely to change the number of total outstanding shares in the future, according to the company's head of research, Ihor Dusaniwsky. He explains that "it is unlikely that GBTC's outstanding share amount will climb above 1.7 million anytime soon."
This is not to say that there aren't significant concerns about GBTC as well. Andrew Left of Citron Research has publicly criticized the trust, and Seeking Alpha speculates that his statements may be linked to GBTC's cratering premium relative to Bitcoin, possibly due to investors having sold off their shares in a rush of skepticism. According to Citron, GBTC marks the "most dangerous way to own Bitcoin."
It is useful to note that GBTC didn't always seem this expensive in comparison with Bitcoin. Before Bitcoin's price spiked in the past several weeks, the trust traded on an average premium of just 10% above the crypto currency in 2017. The issue seems to have come about when Bitcoin's demand blew up and GBTC's supply did not change. As Bitcoin continues to spread further into the financial world, it will be interesting to see where GBTC's share prices go as well.
Bitcoin Futures ETFs: SEC Requests Comment
Apr. 12, 2018 1:05 PM
In December last year the NYSE Arca Inc. filed a proposed rule change that would allow for the creation of Exchange Traded Funds investing in Bitcoin futures contracts, and, potentially, in other related Financial Instruments.
In January 2018 the U.S. Securities and Exchange Commission extended its review of this proposal. Also that month the director of the SEC’s Division of Investment Management outlined her concerns with the idea. These include valuation, liquidity, and transparency.
Most recently, on March 23, the SEC instituted a formal review of the proposal, soliciting comments from the public. Commenters have until April 19 to submit. Those who wish to rebut comments will have until May 3 to do so. The order is available here.
The investment objective of the proposed ProShares Bitcoin ETF will be to seek results that will mirror the performance of lead month bitcoin futures contracts listed and traded on either the CBOE Futures Exchange or the Chicago Mercantile Exchange’s Benchmark Futures Contract.
Comment Letters, and a Novelist
Before issuing the order the SEC had received one comment letter on the subject. This was from Abe Kohen of AK Financial Engineering Consultants LLC (December 27, 2017). It was a brief negative statement. Kohen called the idea of such an ETF a “house of cards” and said that “now mom and dad can lose money going long and short.”
Subsequent to the SEC’s request, three new comments were received on April 6. The most substantive of them is from Anita Desai, who writes that she believes such proposals are premature, since cryptocurrencies “are in their infancies with regard to the widespread understanding of even the fundamentals of what they are, which is a dangerous thing.”
Ms Desai doesn’t identify herself in the comment by any title or institutional affiliation, but there is a well-known Indian novelist of that name who teaches humanities at the Massachusetts Institute of Technology. The SEC’s commenter says, “A lot of people I personally knew lost their entire savings in places like India and Africa, when they drew their entire mutual funds out and plugged cash into ‘Ponzi’ schemes such as ‘Onecoin.’”
Ed Kaleda, of Charlotte, North Carolina, takes a more laissez-faire view. He asks the SEC to “please be open-minded and approve high quality Bitcoin ETFs, a new generation wants the product.”
The third commenter of that day, Scott Moburg, also says that he supports a Bitcoin ETF.
The SEC’s Questions
The SEC’s order lists twelve questions that are especially on its mind, and on which it seeks some illumination from commenters,. The questions, somewhat abbreviated and paraphrased, are as follows:
- Has the exchange (NYSE Arca) sufficiently described “how the Sponsors will select the applicable Benchmark Futures Contract, given that the contracts trading on these these two bitcoin futures exchanges have different terms … and trade at different prices?”
- The second concern begins with the aspect of the proposed rule that stipulates that the Funds may invest in other financial instruments such as listed options and OTC swaps referencing Bitcoin Futures Contracts. The SEC asks, “What are commenters’ views on the ability of the Funds to invest in Financial Instruments in the event that position, price, or accountability limits are reached with respect to Bitcoin Futures Contracts? What are commenters’ views on the ability of the Funds to invest in Financial Instruments if the market for a specific Bitcoin Futures Contract experiences emergencies or disruptions?”
- Would the Funds have the information necessary to adequately value the underlyings when determining an appropriate end-of-day NAV?
- How great is the potential impact of manipulation of the underlying markets on the proposed ETF’s NAV? Specifically, the SEC wants commenters to weigh in on the potential impact of such manipulation on the financial instruments discussed in question two above.
- How could the Funds’ valuation processes address the issue of a potential blockchain fork?
- “What are commenters views on the price differentials and trading volumes across bitcoin trading platforms (including during periods of market stress) and on the extent to which these differing prices may affect the trading” both of the contracts and of the shares in the ETF?
- The SEC asks about margin requirements and how might they affect the Funds’ ability to use available cash to achieve its trading strategy?
- Also about whether the Funds development would lead to an excess concentration of holdings, that would in turn impact portfolio management, the liquidity of the Funds involved, and the pricing of the underlying contracts or the Financial Instruments?
- What possible factors might impede the ability of arbitrage to keep the Funds’ NAV tied to the trading price of the shares? What is the impact on investors if the arb mechanism is impaired?
- What is the likely impact of manipulation and fraud in the underlying trading platforms upon trading in the ETFs?
- How may investors evaluate the price of shares in the Funds i n light of the concerns alluded to above about arb and manipulation?
- Finally, do the two bitcoin futures exchanges constitute a market of sufficient size to support an ETF?
Have Bitcoin And Other Cryptocurrencies Peaked For Good? (BTC)
From Jill Mislinski: With all the focus on bitcoin lately, we’ve added a new weekly update that tracks the three largest cryptocurrencies by market share: bitcoin, Ether, and Ripple.
According to Wikipedia, a cryptocurrency is “a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets.”
Bitcoin is the world’s first cryptocurrency and decentralized digital currency. The first bitcoin transaction occurred in early 2009 and has since grown worldwide. Ether is another cryptocurrency run on the Ethereum blockchain platform and has the second largest market share, despite being the newest of the three with its launch in July 2015. The third largest market share of cryptocurrency, XRP, is owned by Ripple and launched in 2012.
Here are all three cryptocurrency prices over time along with their trading volume. Data for all three is sourced from Coinbase.com and by request, we have shortened the time frame for a more recent picture.
We have also created an index in order to chart these together given their very different pricing history. Notice that Ether tops the chart – the price of an ether has changed the most out of all three cryptocurrencies.
Check back next week for another update.
This article is brought to you courtesy of Advisor Perspectives.
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