The Crypto ETF

 BITO, if you have not been paying attention, is the ETF that tracks Bitcoin performance. It is an instrument that makes owning Bitcoin more palatable to a lot more people because they don't have to deal with Crypto trading platforms, figure out if they want to own a hardware wallet or in my case worry about how IRS would treat it and so on. GLD is a great analogy for BITO and normalizes the way you could think of crypto currency. 

Last weekend while Bitcoin plunged 15%, if you were holding BITO, all you could do was look at Bitcoin price and wonder what it would look like for BITO on Monday morning. This is a classic case of a liquidity trap, where your instrument is not liquid why you watch price action on it helplessly. I can't but think back to 2008 when GE was trying to refinance its short term notes and the market had frozen over. It was a scary day as GE went to 6$ and C went to 0.95$. 

My point is this, when buying into an instrument in the market, the first thing you should look at is where the liquidity comes from and how it would disappear. If you are investing for the long term, obviously it wont matter as much, but if you are trading, that is all that matters. 

Bitcoin has done this on multiple occasions, where it would gap down over the weekend and recover over the next week. But buyer beware, there might come a time, when the gap down will not get closed and you might wake up on a Monday morning to find that the BITO that you hold, does not have any buyers until much further down.