Bitcoinpricelive.com has published a story titled Bitcoin ETF – 5 Reasons the Winklevoss Bitcoin ETF will send Bitcoin to 10,000+ . which has generated a little bit of a discussion on Reddit . I thought Id throw in my few cents (or Satoshis, this being Bitcoin and all) about why each of these are none issues, why the launch of the Winklevoss Bitcoin Trust wont have a huge impact on the Bitcoin markets.

Before going any further, I apologize in advance. Im sure this could have been edited to be more concise, but I didnt do so.

Obligatory image of physical Bitcoins, which were produced by Casascius

The reasons the article gives are:

1 Wall Street. As soon as a person can go to their brokerage account, type in the symbol COIN and buy now, it will put upwards pressure on the price of Bitcoin.

True, but only in the case of individual investors.

OK this is the ONE reason that there could be a positive benefit for Bitcoin people who so far have heard about its meteoric price rise (of course, theyll also have hear about its almost equally gut-wrenching price drops) but who havent had the courage to acquire coins through one of the existing exchanges will now have the means to make purchases. Those investors will be individual investors.

Institutional investors (those who are required to do actual due diligence) will not be buying large amounts of shares of the ETF. If they have interest in Bitcoin, then they will learn enough about it to feel comfortable purchasing it directly and holding it themselves, most likely in cold-storage or an offline wallet.

This is equivalent to Bitcoiners telling one another to store their Bitcoins in their own wallets rather than at exchanges. Bitcoin is not such an esoteric asset that hedge funds, pension plans or high net-worth individuals would bar their advisors from purchasing it only if it were available as an ETF; these people commonly buy and hold assets that dont trade on traditional markets .

2 The Winklevoss ETF will be promoted as currency diversification on Wall Street It will be advertised to clients as a high risk, high reward alternative currency .

False. 

Bitcoin is far too volatile to be considered cash and equivalent by Wall Street. Cash is a distinct asset class, from which investors dont seek returns beyond what is achievable from either bank interest or the money markets. Its a risk-free asset for portfolios (inflationary risk notwithstanding), which enables investors to adjust the overall volatility (expected risk and return) of their portfolios by increasing or decreasing their allocation to cash and its equivalents (money markets, T-Bills).

TLDR: Bitcoin is far too volatile an asset for investors to consider part of their cash allocations.

3 (a) Trading of the ETF will only be open during stock market hours (b) In the downtime there will be massive speculation about where the Bitcoin ETF will open and for what price (c) There will be discrepancies of the price between Bitcoin exchanges and the Bitcoin ETF.

False.

(a) That trading of COIN will occur between 9:30 and 4:30 means nothing for the price of Bitcoin.

(b) There will be zero speculation about where the price of COIN will be the following day its price is directly correlated with Bitcoins price. Each share will start out owning 0.20 Bitcoins when it commences trading, though every day each share will accrue a fee that will be due to the Funds sponsor (Math-Based Asset Services, i.e, the Winklevoss twins ), so over time each share will represent less and less of a Bitcoin. An investor who is curious about what price shares of the ETF will trade at the following day will simply need to look at prices on the Bitcoin exchanges. Bitcoin went up 2% in China overnight? Then thats what will happen to shares of the ETF. This is exactly how it works with more widely traded ETFs such as SPY (the ETF that owns and tracks the S&P 500 companies) and the Gold ETFs (IAU and GLD) there is never a mystery about where those ETFs will open or close relative to the value of their underlying assets.

In short investors know that ETFs gets their value from their underlying assets.

(c) Discrepancies will exist, but they wont last long. Such is how ETFs work. Institutional investors can and will cause baskets of shares of the ETF to be created and/or redeemed whenever the discrepancies are large enough for profit to be made from taking those actions.

Tyler WInklevoss. Also could be Cameron WInklevoss, since theyre identical twins and all.Image from Wikipedia.

4 Liquidity in Bitcoin markets will increase dramatically. There will be many more Bitcoins trading hands on a daily basis as the Bitcoin ETF will be required to allow shorting as well.

Neither True Nor False.

This is far from a given. Even if there is a huge amount of trading of the ETFs shares, the only times that the ETF will create volume on the Bitcoin exchanges is when institutional investors go about creating a new basket of shares of the ETF.

(Basket creation is when an authorized participant, typically an institutional type, purchases the assets that would be contained in 50,000 shares of an ETF and delivers those assets to the ETFs sponsor and receives 50,000 shares of that ETF in exchange)

As for the ETF allowing shorting ETFs dont have a choice whether they allow shorting or not, their shares trade just like every other asset that trades on an exchange, just as publicly traded companies dont have a choice whether or not their shares can be shorted. Either way, the action of shorting takes place at the stock brokerage, not on the Bitcoin exchanges.

5 The Bitcoin ETF is required to buy additional Bitcoins.

True, but it doesnt matter.

Ultimately and at the end of the day, what the articles author, and the many people who are eyeing the IPO of the ETF as being a huge event for the Bitcoin world, the fact is that the value of ETFs and mutual funds are driven by the value of their underlying assets and not the other way around.