BITCOIN A 3678 DOLLARI ? ENTRO MENO DI UN MESE LO SAPREMO!
LEGGI QUESTO ARTICOLO DI SEEKING ALPHA
Bitcoin ETF Approved In March 2017: A Black Swan With Asymmetric Risk/Reward
Our thesis is that the probability of a Bitcoin ETF approved in the near term has been misevaluated as a "very low chance" event by major investment and research firms.
As such, there is an attractive return/risk ratio for investors taking positions in the OTC market before March 2017.
We provide a target price of .............CONTINUA QUA DI SEGUITO A LEGGERE
$3,678 for Bitcoin in case an ETF is approved in 2017 and a target price of $551 in case it is rejected this year.
We assign a probability of 35% for approval against 65% probability for rejection, making our final weighted average expected price $1645.45 or a +67.8% expected return above the current price.
As such, there is an attractive return/risk ratio for investors taking positions in the OTC market before March 2017.
We provide a target price of .............CONTINUA QUA DI SEGUITO A LEGGERE
$3,678 for Bitcoin in case an ETF is approved in 2017 and a target price of $551 in case it is rejected this year.
We assign a probability of 35% for approval against 65% probability for rejection, making our final weighted average expected price $1645.45 or a +67.8% expected return above the current price.
CONTEXT - INTRODUCTION
In this analysis, we will focus on the facts surrounding an upcoming notable event: the final decision on the Winklevoss Bitcoin ETF (Pending:COIN) approval by the Securities Exchange Commission on March 11th, 2017 and the attractiveness of opening long positions before this date.
In its 8 years of existence, Bitcoin has polarized analysts, investors, and scholars. Consensus on Bitcoin's merit has not been reached, and observers usually engage in two opposed extremes of opinions that either deplore it or aggrandize it. Although its utility as a means of exchange is controversial, from a purely quantitative point of view the evidence suggests continued growth in transaction volume through the Bitcoin network, continued growth in interest from new markets, and continued growth in entrepreneurial attention. We describe the current state of the Bitcoin economy, the upcoming ETF approval chances, and the potential implications for investors.
Steady growth in transactions processed by the Bitcoin network
Transactions processed by the payment network have been growing at a stable pace for the past 5 years. This was the original use case of Bitcoin and the data indicates that it is fulfilling its goal at a current rate of ~250,000 transactions per day.
Bitcoin price near all-time high
Although
the original intention of Bitcoin was to become a digital currency
payment network, probably the most successful use of Bitcoin today is as
a speculative vehicle. At $981 per unit and a total market
capitalization of $16 billion, the cryptocurrency is heavily traded back
and forth for CNY, USD, EUR, among other 26 national currencies. Just
in the 30 day period of 12/24/16 to 1/22/17 the aggregate of Bitcoin
exchanges have reported a combined trading volume of 154,713,805.60 BTC,
or approximately $141.6 billion at today's price, an average of $4,719
million per day of trading (source: Bitcoinity.org). Since end of
January Bitcoin trading volume has declined substantially in China due
to new exchange fees after pressure from the Chinese central bank;
however the price of Bitcoin shows robustness and keeps approaching the
all time high of 2013.
Bitcoin price chart in log scale, expressed in USD - Source: Coindesk.com
Exponential
growth of internet searches related to Bitcoin in high inflation
countries: the case of Nigeria, Ghana & Venezuela
The
appeal of Bitcoin as a kind of "digital gold" that has no borders and
can be concealed easily seems to be an attractive angle for developing
economies that suffer highly inflationary regimes. Based on data
provided by Google, internet search volume for the keyword "bitcoin" has
been growing geometrically in Venezuela, Nigeria, and Ghana during the
last year, being on the list of the top 5 countries in the world with
most interest on the subject. In Nigeria, the buying pressure to acquire
the cryptocurrency made the price soar in the local markets to the
equivalent of USD 1,730 on Jan 4th, the highest price ever recorded in
Bitcoin's history (source: Luno.com).
Nigeria: 15.38% CPI inflation rate (2016)
Google search volume in Nigeria 1/29/2012 to 1/22/2016, keyword "bitcoin" - Source: Google Trends
Ghana: 17.02% CPI inflation rate (2016)
Google search volume in Ghana 1/29/2012 to 1/22/2016, keyword "bitcoin" - Source: Google Trends
Venezuela: 475.61% CPI inflation rate (2016)
Google search volume in Venezuela 1/29/2012 to 1/22/2016, keyword "bitcoin" - Source: Google Trends
WHY THE BITCOIN ETF IS CLOSER TO REALITY THAN WHAT THE MARKET CONSENSUS IMPLIES
Our
main argument in favor of taking positions in Bitcoin is sustained on
five pieces of evidence that cover regulation, insider knowledge, market
forces, competitive actions, and political considerations. We believe
this evidence has not been described in the past by mainstream
investment and research firms while analyzing it now provides an edge to
take profitable positions.
Exhausted terms by
SEC in the approval process of the first Bitcoin ETF - Inaction by SEC
in March '17 will approve de-facto the ETF
The
rule-change application of COIN was submitted on July 2nd 2016, after
almost three years of preparation with previous SEC filings. The SEC has
consecutively requested three extensions to make a decision: the first
one was in September '16, another in November '16, and the last one in
January '17. Based on the timelines described in the SEC response, the
last date for approval or disapproval of the rule-change is March 11th
2017, date after which the ETF would be approved by default if the SEC
does not communicate a decision.
Applicant of the first Bitcoin ETF taking steps that indicate positive SEC consideration
The
Winklevoss brothers are behind the COIN ETF application. We identify
several steps they have publicly taken that might indicate progress in
conversations with SEC or at least their aligned involvement as
promoters:
- On Feb 19th, 2014 the Winklevoss brothers created Winkdex, an index to track Bitcoin prices that is now divulged by major financial information vendors as Bloomberg and Reuters. This could be a pre-requisite for information transparency.
- Since Jan 23rd, 2015 they are now operating a Bitcoin spot exchange (Gemini.com) based in New York that is fully operates under US law. It is plausible that their intention is to source liquidity for their Bitcoin ETF through their own spot exchange. This could be a pre-requisite for orderly trading, liquidity access, and capital formation.
- Through Gemini.com, on Sep 21st, 2016 they created a daily auction process to settle the Bitcoin price once a day. This could be a pre-requisite for fair market price fixation.
- On Dec 8th, 2016, the Winklevoss brothers inaugurated a website specifically for investor relationship management and promotion of the COIN ETF. Taking action to launch the ETF website after 3 years of conversations with the SEC might be indicative of a change of perception of the twins, pointing to their optimism.
- On Feb 8th, 2017, the Winklevoss brothers communicated to the SEC that they had secured the services of three of the largest high frequency trading firms to provide liquidity and efficiency to the COIN ETF: Convergex, KCG, and Virtu Financial.
Premiums on closed-end fund GBTC suggest the SEC might step up to benefit market function with an open-end ETF
The
Bitcoin closed-end fund GBTC floats on the OTCQX exchange with
notorious premiums. In the past few years, there have been sessions
where the GBTC market prices have reached up to 2x-3x net asset value
(NAV). The fund has closed every week since inception significantly
above NAV. GBTC has been wildly successful as an investment vehicle
delivering returns in the triple digits to investors, but the closed-end
nature of the fund is presenting friction to market participants and an
ETF would be a more efficient tracker of the underlying asset.
GBTC market price per share vs NAV per share - Source: Grayscale Investments
More than one chance: three Bitcoin ETFs are under consideration by the SEC
The
Winklevoss Bitcoin Trust started the application process with the SEC
almost four years ago but only last year it entered into the realm of
possibilities with its application for a rule-change for the BATS
exchange. However it is not the only candidate to materialize a publicly
traded ETF:
- SolidX Bitcoin ETF (XBTC) applied to become publicly traded on NYSEArca on June 22nd, 2016, being the approval SEC deadline on March 30th, 2017. The main peculiarity of this vehicle is its proposed 100% insurance on holdings.
- Grayscale Bitcoin Investment Trust ETF (OTCQX:GBTC) applied to modify its current status from a closed-end fund (traded on OTCQX) to an open-end ETF (on NYSEArca) on January 20th, 2017, and by end-October 2017 the SEC should communicate its final decision.
Heavy
pro-Bitcoin presence in President Trump's Administration leans the
balance towards a higher chance of a Bitcoin ETF approval
The
Trump Administration is well known for its anti-regulation stance, as
it was seen with the Dodd-Frank Act repeal. There are multiple
pro-Bitcoin enthusiasts involved in some way or another with the current
US administration, including Mick Mulvaney (director of the U.S. Office
of Budget nominee), Peter Thiel (Paypal co-founder), Balaji Srinivasan
(21.co CEO and potential FDA director nominee), Travis Kalanick (UBER
CEO), and others. Trump's entourage leans the balance towards a more
accepting perspective for Bitcoin.
WHY THE BITCOIN ETF WILL DELIVER IMMEDIATE RETURNS FOR BITCOIN HOLDERS
We
propose the case for a massive increase in the accessibility of Bitcoin
as an investment asset class if an open-end style fund like the Bitcoin
ETF starts trading on a major equity exchange and how this new
disponibility will grow the returns of Bitcoin investors.
Buying pressure on the Bitcoin ETF will shift the demand curve of Bitcoin's digital tokens
As
per the SEC filing, every 10,000 units of the ETF can be redeemed or
exchanged for the underlying. The COIN ETF shares will impact demand of
spot bitcoins through their interchangeability.
If Bitcoin is currently a $16 Billion technology startup, the ETF will be equivalent to its IPO
Currently,
Bitcoin trading is dominated by OTC exchanges that operate under no
explicit guidelines. A move into public exchanges will deliver:
- Guarantee of regulatory oversight for investors
- Qualitative increase in visibility as an asset class
- More credibility in the financial scene
- Further consideration and analysis of its technical capabilities
As
Bitcoin has achieved its current multi-billion market value without
access to organized financial markets, we foresee great interest in case
it becomes publicly traded in the form of an ETF.
Useful or not as an actual currency, Bitcoin will be used as a diversification asset
Independently
of its merits as a technology or financial innovation, Bitcoin excels
as a lowly correlated asset against major asset classes (see Ark Investments 2017).
As such, it has a place in modern portfolio management. For as long as
the Bitcoin network continues to find use in the developing world,
underground markets or even collectible memorabilia, this emerging asset
class will continue attracting investors looking to reduce portfolio
beta.
Bitcoin exhibits a 0.037 correlation with S&P 500 on 30 day returns
Because
hedge funds ($2.7 trillion assets under management) and endowment funds
($1.4 trillion AUM) are sophisticated players inclined to zero beta
multi-asset portfolios, they will be the least hesitant to take
positions to achieve lower return correlation with equities. After them,
other sophisticated investors will follow.
The Bitcoin ETF will
invite the entrance of significant amounts of capital, while the event
is not accompanied by more units in circulation
The
supply curve is fixed in the Bitcoin protocol to a maximum total
emission of 21 million bitcoins, a circulation to be reached in 2130.
The current volume of bitcoins in circulation stands at 16,119,688 BTC
units (source: Blockchain.info) and the rest up to the maximum 21
million would be issued following a logarithmic schedule that enforces
limited supply for Bitcoin.
To manipulate or
sabotage the supply of Bitcoin and place more units in circulation, a
malicious actor would need to out-invest the Bitcoin network
computational power, which currently stands at 3,398,970 Tera hashes per
second (source: Blockchain.info). With last generation supercomputing
hardware (NVIDIA Tesla S2070 GPU parallel processors), the total
investment needed to reach the required computational power to change
the supply stands at $150 billion. With custom-made specialized hardware
(i.e. made-to-order by a semiconductor fab like TSMC or Samsung), the
cost could be reduced to a few billion dollars as per industry experts.
Based on these data points, we consider unlikely any change in the
Bitcoin issuance schedule.
TARGET PRICE RECOMMENDATION
Our
recommendation is to allocate anywhere between 0.2% and 5.0% of
portfolio to Bitcoin using an OTC spot exchange. Avoid using the
closed-end fund GBTC as it trades at substantial premium vs NAV.
In
case of approval of a BTC ETF, our estimated target price for Bitcoin
is $3,678. The estimate is based on the calculations of Needham
Company of $300 million influx
in the first week of trading of the fund together with our assessment
of Bitcoin's top 8 spot exchanges' order book depth as per
BitcoinCharts.com 3-month historical order depth data.
In
case of rejection by the SEC, our estimated target price for Bitcoin is
$551, calculated on the basis of a mean reversion scenario for which we
used the weighted average of the last 5 years of prices of Bitcoin as
per BitcoinAverage.com data.
VARIANT VIEW
It seems unlikely, among all the other reasons, that the commission is going to want to move forward with a product where the major trading is done on exchanges [in China] that may not be following our AML guidelines.
-- David Brill, former General Counsel of Gemini.com in Coindesk.com interview 1/20/2017
Our
counter-argument to this view is that the vast majority of OTC gold
purchase transactions are happening also in China and India, with
combined purchase volume 9.5x larger than the US. Consumer gold has no
AML guidelines and can be acquired without identification requirements
in retail shops. These conditions did not present an obstacle to the SEC
for the approval of the first gold ETF (NYSEARCA:GLD) on 2005, and thus we believe the SEC will follow the same guidance with Bitcoin.
In
parallel, there is strong indication that the Chinese central bank and
regulatory organisms requested as recently as Feb 8th 2017 an immediate
enforcement of anti-money laundering procedures on all major Chinese
Bitcoin exchanges.
CONSUMER GOLD PURCHASES IN 2015
Consumer purchases of gold by country in 2015 - Source: Statista.com
CONCLUSION
The
probability of approval for a Bitcoin ETF is higher than what the
current market consensus implies. We consider this event a potential
Black Swan that will have a profound impact in the investment world.
Critical dates for the near term are March 11th (COIN ETF Security
Exchange Commission's decision deadline), March 30th (XBTC ETF decision)
and October (GBTC ETF decision). In case of ETF approval we predict a
large upside, while in case of rejection the losses could be limited to
50% of the capital. Our recommendation is speculative buy of Bitcoin
spot on OTC exchanges before March 11th, 2017 and hold at least until
October 2017.
Disclosure: I am/we are long BITCOIN.
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9 commenti:
Sono indeciso sul da farsi....venderne metà...uscire del tutto o attendere....firts they ignore you...then they laugh you...then they fight.....e se ci trovassimo proprio qui?mha...grazie paolo
Manca il link da dove è stato preso questo articolo !!!
Marco
Marcate queste parole:
-crisi europea --> fuga dall'euro
-crisi cinese --> fugga dal rmb anche se lo stato mette paletti
-situazione instabile negli usa --> fuga dal dollaro
Nel 2017 il bitcoin lascerá il segno molto più di quanto fino ad ora ipotizzato
Letto tutto,ergo come ha detto lei dottore:TROPPE ASPETTATIVE,si vende di brutto,del resto 65% contro 35% ,sempre che il mio patetico inglese non mi abbia impedito di comprendere appieno il significato,l'ignoranza non paga forse e' meglio che usi google translate.
Saluti
Claudio da genova
sono arrivati x le seconde case x servizio elettrico nazionale che non si capisce se è enel o no...? anche senza consumi delle quote fisse triplicate ...attenzione iniziano gli aumenti selvaggi ...c è qualcuno che ne sa qualcosa ???
seeekingalpha
vendere bitcoin.......AHAHHAh
È scritto all 'inizio poi basterebbe oltre he leggere anche cercare un po ' google è gratuito. Comunque eccolo http://seekingalpha.com/article/4044517-bitcoin-etf-approved-march-2017-black-swan-asymmetric-risk-reward
Trump era 20% contro 80% della Clitor
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