Nostr Web Client

I have a sinking feeling that there is going to be a big problem with these new ETFs:

-To create additional shares of an bitcoin ETF, an authorized participant (AP) will purchase bitcoin and then exchange that bitcoin with the ETF issuer in exchange for new shares and then sell those shares on the stock market

-To delete (redeem) shares the issuer will buy shares on the market and deliver them to the ETF issue who gives them bitcoin in exchange.

Then the AP sells the bitcoin and gets cash

The APs make money by arbitraging the difference between the price of the shares and the bitcoin (or vice versa)

If they are attempting to create shares (buying bitcoin) but there is not bitcoin on the market then no shares can be created and the share price will dislocate wildly (trade above the number of bitcoin held in the ETF)

If they are deleting shares and the price has dislocated then they will be buying back bitcoin from the issue using shares that are above NAV. (meaning they are losing money buying less bitcoin back with expensive priced shares)

This works fine for stocks where there is always enough shares on the market at the clearing house.

This might not work so well when there are UTXOs that are not interested in being brought into exchanges participating with the ETF and there is a fixed and inelastic supply.

9b

unsure 1y ago

Will on-chain fees be impacted by this activity?

Replying to

Maria2000

Hi nostr, its been a mostly relaxing Sunday, and i have thoroughly enjoyed this day. I spent alot of outdoor time, just enjoying the sunshine and perfect temps.

I'm part of a small local Telegram group that kinda keeps me updated about local politics in our town, and up to now we've only had one meetup. But I suggested we start meeting more regularly, to discuss a variety of things. A couple of members are ham operators, so we'll be having a meetup soon, about ham radio and being able to communicate with each other in case of emergencies or loss of internet, etc. I'm looking forward to learning a bit about it, plus i just think its a good idea to keep in touch with freedom minded locals. I know for sure that one of them is a bitcoiner, and i might ask at the meetup if anyone is interested in doing a btc meetup next. I hope so.

Well thats about all i have to report today. We're just living our quiet lives out here in the country, just the way we like it. Yall have a good evening nostr friends. #grownostr #countrylife #homesteading

"There is no gardening without humility. Nature is constantly sending even its oldest scholars to the bottom of the class for some egregious blunder."

Alfred Austin

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