Merrill Lynch Restriction on Bitcoin Trading

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recyclersteve
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Merrill Lynch Restriction on Bitcoin Trading

Postby recyclersteve » Fri Jan 05, 2018

Merrill Lynch and Merrill Edge, both owned by Bank of America (Ticker: BAC) announced on December 8th a restriction regarding the trading of the Bitcoin Fund (Ticker: GBTC) in Merrill's brokerage accounts. The restriction is that no new positions can be created. If you already owned GBTC, you can sell it but you cannot buy it or add to an existing position.

In managed accounts, you will no longer be able to hold GBTC.

They cited Bitcoin as being "unsuitable".

Even though this was announced on December 8th, I didn't see it hit the news til two days ago (Wednesday the 3rd). Not sure why there was such a delay.

I have no way of knowing, but suspect that other firms will follow suit and place restrictions in some shape, form or fashion.

For what it is worth, firms have been doing stuff like this for years when they feel it is appropriate. For instance, Charles Schwab will not let clients buy Samsung stock, even though some firms will. My understanding is that this has something to do with the South Korean government knowing your personal information. Other stocks, for instance those with a high incidence of fraud, have been restricted from time to time at various firms. So I wouldn't take this personally if you like Bitcoin. It is just business.

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Bucketeer
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Re: Merrill Lynch Restriction on Bitcoin Trading

Postby Bucketeer » Sat Jan 06, 2018

However, you can trade Bitcoin futures on E*TRADE.

I opened an ML account when they were trolling for new customers a couple of years ago. I've been a BOA customer for years, so I thought I'd give them a chance.

If you wanted to trade "deep-otc" or pink sheet stocks, you could make an offer and then wait for ML to approve it. In the meantime, the price of the security was a moving target, and you could never get a fill. These weren't even Bitcoin related stocks.

I'll stay with E*TRADE. Nothing personal, it's just business.
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jcz1
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Re: Merrill Lynch Restriction on Bitcoin Trading

Postby jcz1 » Sat Jan 06, 2018

It doesn't look like GBTC tracks BTC very well, from what I can tell. It looks like it went up about 10% on Friday, but didn't BTC go up at least twice that around the same time?

People talk about the danger of losing your entire investment in BTC, but it looks like GBTC is worse than that. Google Finance shows after hours trading resulted in a change of -183% :shock:

I've heard of stocks going up 183%, but down that much is a new one. :lol:

https://finance.google.com/finance?q=GB ... mAGTkaz4CQ

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Bucketeer
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Re: Merrill Lynch Restriction on Bitcoin Trading

Postby Bucketeer » Sat Jan 06, 2018

GBTC is a terrible product. Better products are coming, but don't forget thats the nature of Bitcoin. It was up over $1400 yesterday.
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recyclersteve
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Re: Merrill Lynch Restriction on Bitcoin Trading

Postby recyclersteve » Sun Jan 21, 2018

GBTC is based on someone else's bitcoin holdings. It doesn't move the same amount as Bitcoin itself because it trades at a premium to the Net Asset Value (NAV) of the underlying investment. So Bitcoin could go up 10% and this could go down the same day. All that would mean is that the premium vs. NAV is collapsing. This is to be expected. There are short sellers who like to short things that trade well in excess of NAV. It is nothing personal against Bitcoin- they would do the same thing with other ETF's that are way over NAV.

By the way, GBTC has announced a very unusual stock split. Usually they might be 2:1 or 3:1. This one is a whopping 91:1. That will, at current prices, bring the stock down to around $20ish per share.

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Bucketeer
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Re: Merrill Lynch Restriction on Bitcoin Trading

Postby Bucketeer » Fri Jan 26, 2018

91:1 lol
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