The main point of the vehicle is to make it easier to trade BTC by removing the need to acquire BTC directly and by allowing trading to occur on conventional financial markets.
It is difficult, for example, for investors to trade physical gold because it is difficult to acquire and store, difficult to trade in smaller amounts, and does not trade on conventional markets. Gold ETFs solve these problems.
The creation/redemption process is intended for market makers known as Authorized Participants (APs) to arbitrage differences in the ETF price and the underlying price. While, yes, you can sell bitcoins to the trust in exchange for shares of the ETF, you would then need to sell those ETF shares in the market. So in other words, you would only have liquidity if there were demand for the ETF. It's possible that there will be more demand for the ETF than for bitcoins simply because ETFs are more accessible.
Could those cash out holdings in the ballpark of the Winklevoss twins? Another comment put their holdings at about 100K BTC. I didn't think there were any exchanges that had near that sort of volume.
I see the down votes but I'm genuinely curious. I'm assuming the Winklevi stand to profit from this and hold a large number of BitCoins that would probably be hard to get liquidity from.
From looking at market volumes, I think a skilled group using trading software could probably sell a few million USD worth of bitcoin per week without giving up a huge edge.
But I agree that this is one of the few ways to get liquidity on a huge position.
huh? they're talking about starting this with 200k worth, I though (1M shares at 0.2 BTC each).
On Bitstamp right now "A market order to sell 200000.0000 USD worth of bitcoins right now would sell 639.80163 bitcoins and would take the last price down to 310.7300 USD, resulting in an average price of 312.5969 USD/BTC."
Ticker last is currently $315.15, so just dumping it on a public market orderbook would only cost you two tents of one percent.
One million would cost you 2% in market movement. Four million would cost you 10% in market movement.
So that gives you some boundaries on how much volume you're talking before "just press sell" is no longer a reasonable sales strategy.
"1M shares at 0.2 BTC each" is correct, but that's 200k BTC or roughly $60 million at current prices. The S-1 was originally drafted when BTC was at ~$100 back in June 2013.
