
Coinbase Eyes Bitcoin ETF with New Cryptocurrency Index Fund - justboxing
http://fortune.com/2018/03/06/coinbase-bitcoin-cryptocurrency-fund/
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ThrustVectoring
Cryptocurrency index funds make no sense in general - the correlation between
coins is too negative for holding a basket of them to make sense. You want to
diversify over _uncorrelated_ assets. Holding offsetting long and short
positions makes zero sense, and due how most alt-coins are priced by their
ALT/BTC pair, holding most altcoins essentially means shorting everything
other than Bitcoin and maybe Ethereum.

If you want crypto exposure, just buy BTC and Eth. Due to their volatility,
you'll want to have a healthy cash balance and target a constant fraction of
that in exposure - essentially, selling half your coins if the price doubles
and buying back double when the price halves. Read up on the Kelly Criterion
for the full explanation as to why.

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babaganoosh89
I think you mean correlation between coins is too positive, all coins tend to
move up or down together.

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ThrustVectoring
It's both. The correlation is too positive in dollar terms, and too negative
once you back out the BTC correlation by repricing things in terms of BTC
(which is usually the base currency in crypto-only trading pairs).

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dsl
I signed up for this just in the hopes that someone from Coinbase reaches out
to me.

Their support is completely unresponsive, even for high net worth individuals
you'd think they would cater to.

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justboxing
> Their support is completely unresponsive,

Yep. You'll see a few horror stories every week on
[https://www.reddit.com/r/CoinBase/](https://www.reddit.com/r/CoinBase/) and
usually once a horror story hits the front page of this sub-reddit (there are
2 horror stories today on the front page), then someone from Coinbase
responds.

This is the case pretty much with all the top crypto-exchanges since the 2017
Holidays Media hype.

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machinecontrol
It’s interesting that crypto was supposed to democratize investing and level
the playing field, but this is only available to accredited investors.

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conanbatt
To be fair, there's very little point in the fund if you ask me.

Any third party can robo-copy it and tell anyone how their portfolio should
look like.

Also index funds in crypto does not mean the same as in stocks, there is
extremely high systemic risk and negative correlations between coins.

These are some weird times.

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Stanleyc23
simply put its “Most Advanced Yet Acceptable” -- Raymond Loewy

I'm guessing its a user acquisition tactic for people who traditionally invest
in mutual funds, ETFs, etc. this way they feel like they "understand" what
they're buying into instead of actually needing to suffer through the learning
curve of how blockchain works.

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conanbatt
I see that, but there is a huge problem with this index that I'm amazed is not
illegal. They control the index with the coins the same platform adds.

That is a major incentives no-no. Coinbase can make more money pumping coins
into the index than managing the index itself. If I wanted and index'd
solution for crypto, I would not use one like this.

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ryanmonroe
It's common for brokerages to have exchanges for both their own index funds
and the assets those funds track.

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conanbatt
I can't possibly understand how there isn't a breach of fiduciary duty.

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greenyoda
Earlier post, where the main discussion of this is happening:
[https://news.ycombinator.com/item?id=16532788](https://news.ycombinator.com/item?id=16532788)

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tomc1985
If its anything like BLCN then I'd be interested if its correlation with
bitcoin was closer to 1 than 0

