Bitcoin is subject to high volatility with little means of hedging. The available ways of hedging being to be short or buy puts on VERY ILLIQUID exchanges that contain no market participants, no market makers, or any order book depth.
could a hedged bitcoin fund with redeemable shares act as a stabilized security?
This, of course, creates a quasi-central banker role, where proper management can lead to stability, but proper management may not always be. But it is more inline with commodity hedging, where a producer (of crops for instance), hedges his output with futures. Such a quasi-hybrid role being fit for a quasi-commodity currency.
As such, an Exchange Traded Fund (ETF) or Exchange Traded Notes (ETN) can be created on existing exchanges. Securitization is practically the wild west even amongst the myriad of regulators, making the leverage and hedging possibilities endless.
Anyway, thoughts on why this would or would not work for bitcoin as the underlying asset?
proper tags: securitization, securities, etf, etn, hedging