Bitcoin news: GBTC becomes 3rd ETF filing at 2% annual fee; avoid ICOs unless you have an angle

My recent trades: I sold my Zcash position. I took a position in Dash. I increased my position in Monero. Right now my portfolio is 90% bitcoin, 10% other. I’m watching ICOs, but haven’t invested any money yet (and don’t recommend you do, either, which I explain at the end of the email).

The Bitcoin Investment Trust becomes the 3rd bitcoin ETF filing (ticker: GBTC) [source]. The trust owns 170K bitcoins at a current market cap of $190M, a 10% premium over bitcoin’s spot price. The product is similar to the other 2 filings, the Winklevoss COIN and SolidX XBTC. This is the first filing with a publicly stated fee: 2% annually. It’s still a foot race to see which ETF is approved first, COIN being the first to file. ETNs already exist in Europe, eg, COINXBT and BitcoinETI. The difference? ETFs hold and allow redemption of bitcoin. ETNs track an asset price but are really just unsecured debt with more counterparty risk

Bitcoin in China looks safe for now: Less risk of an outright ban now. Still a good chance the PBOC will choose to formally regulate bitcoin – a process that could take years and involve multiple agencies and lots of painful news “leaks” – instead of its current usage of ad hoc fines and brief public statements. But I’d expect such formal regulation to happen only if another major local bitcoin investment scam succeeds or bitcoin‘s renminbi price skyrockets 5-10x. The government’s priorities are to #1 constrain capital outflows and #2 protect the middle class

China exchange volume plummets: Just what did the PBOC’s investigations and the exchanges’ subsequent removal of margin and no-fee trading do to global trading volumes? Have a look (the leading renminbi exchanges are BTCChina, Huobi, and OKCoin) [source]:

Bitcoin Unlimited nodes (22.2%) have surpassed SegWit nodes (21.6%), as of the last 1000 blocks (~1 week). Here are two sites where you can check node counts [source 1, source 2]. I believe we’ll see a hard fork with an outcome similar to Ethereum / Ethereum Classic.

How big can Bitcoin get? Here’s my favorite over-simplified chart to put into perspective its upside [source].

  • if Bitcoin = Paypal, a bitcoin = $5K USD
  • if Bitcoin = Visa, a bitcoin = $10K USD
  • if Bitcoin = the world gold supply, a bitcoin = $350K

People don’t use bitcoin for regular consumer transactions: Fiverr stopped accepting bitcoin for payment [source]. WordPress had also accepted then dropped support for Bitcoin. CEO Matt Mullenweg said at its peak bitcoin only accounted for 2 transactions per week [source]. More evidence that bitcoin isn’t used for normal merchant activity: existing payment solutions are good enough. Bitcoin is used, however, as a transactional and intermediary currency in the shadow economy. If you’re buying drugs online, you’ll use bitcoin. If you’re smart, you’ll use Monero, but the best way to get Monero is by buying and trading bitcoin.

China has no interest in ether. Amidst all the talk of China bitcoin trading volumes, we miss an incredible statistic: Renminbi trading volumes represent less than 1% of total Ether trading! [source, slide 28].

ICOs are promising but too early for your average crypto investor. As far as I can see, the smart ICO investors are getting big discounts and special deals that you’re not aware of and don’t have access to. Too much information asymmetry right now. Unless you have an angle or are connected, you’re better off observing and studying until the market grows and stabilizes.

Now, the ICOs are coming. And the ICO funds are also arriving. And a crash will be forthcoming. – William Mougayar [source]