When BitMEX co-founder Arthur Hayes was interviewed earlier, he put forward a different approach to the Bitcoin spot ETF, which has been hotly discussed recently. He worries that if institutions like BlackRock hold too much BTC, it may kill Bitcoin in the future. Why?
(Previous summary: Arthur Hayes: Short-term government bonds have turned to cryptocurrencies, it’s time to invest in BTC)
(Background supplement: Arthur Hayes: War turmoil will become a new driving force for “Bitcoin price”)
The expectation that the Bitcoin spot ETF may soon be approved by the U.S. Securities and Exchange Commission (SEC) is a major factor that many investors believe is a major reason for the recent rise in currency prices.But according to “Blockworks” today (6)reportBitMEX co-founder Arthur Hayes raised concerns in an earlier interview:
If BlackRock’s ETF gets too big, it could actually “kill Bitcoin” because it would be a pile of Bitcoin that can’t be moved.
Institutional Bitcoin ETFs are too big and could kill Bitcoin
Hayes explained that if the country needs its citizens to remain in the fiat currency banking system in order to tax them through inflation to pay off the growing debt. Then the state may influence these institutions (become state agents) to hold user funds through instruments such as ETFs.
Institutions are essentially subservient to the state and park their funds in ETF instruments…
Hayes believes that in such a system, people would actually be unable to use Bitcoin because it becomes a financial asset rather than Bitcoin itself. People buy this derivative with fiat currency, and the asset manager then buys some Bitcoin and holds it in a custodian.
While Hayes can’t be 100% sure, he suggests a situation we may not ultimately want to see.
Institutions may control a small number of mining companies
On the other hand, Hayes also warned that if these institutional investors hold a large number of shares in Bitcoin mining companies in the future, they may further strengthen their control over the network consensus mechanism. He pointed out:
Ensuring that Bitcoin remains a “rock-solid crypto asset” may require certain upgrades, particularly around encryption and privacy, that may not necessarily align with traditional financial institutions’ positions.
Hayes believes that Bitcoin is the antithesis of national currencies and that it exists “for us the people” to give people the ability to send money around the world. But he also asked what would happen if most of the Bitcoin ended up in the custody of one or a few institutions?
Of course, Hayes also believes that when Bitcoin gains wider adoption, it will undoubtedly push the price up again, but he believes that if we are excited about short-term benefits today, it may lead to huge disasters in the future.
Yes, ETFs are coming and prices may rise to new highs — but if one institution holds all these cryptocurrencies, what is the end result?
Arthur Hayes explains the recent surge in Bitcoin prices?
As recently as the end of October, Arthur Hayes also pointed out that the reason behind the recent surge in Bitcoin prices was not just due to the widely anticipated approval of a Bitcoin spot ETF. Other reasons include tensions in the Middle East and the impact it may have on financial markets.
Hayes: As long-term U.S. Treasuries lose their appeal, investors will seek alternative assets, with gold and Bitcoin becoming the top choices.Switching to Bitcoin is a hedge against future high inflation caused by dollar depreciation and war.
Extended reading: Arthur Hayes: Never mind Bitcoin ETFs, the reason for BTC’s surge is the flight from U.S. debt
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2023-11-06 02:09:54
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