Arthur Hayes, co founder of BitMEX, proposed a different approach to Bitcoin spot ETFs, which have been highly discussed recently, in an earlier interview. He is concerned that if institutions like BlackRock hold too many BTCs, they may kill Bitcoin in the future
Arthur Hayes, co founder of BitMEX, proposed a different approach to Bitcoin spot ETFs, which have been highly discussed recently, in an earlier interview. He is concerned that if institutions like BlackRock hold too many BTCs, they may kill Bitcoin in the future. Why?
The expectation that Bitcoin spot ETFs may soon receive approval from the US Securities and Exchange Commission (SEC) is a major factor that many investors believe is the recent rise in coin prices. However, according to Blockworks today (6), BitMEX co founder Arthur Hayes raised concerns in an earlier interview:
If BlackRock's ETF becomes too large, it may actually "kill Bitcoin" because it would be a pile of immovable Bitcoins.
The scale of institutions' Bitcoin ETFs is too large, which may stifle Bitcoin
Hayes explained that if the country requires its citizens to stay in the fiat currency banking system in order to tax through inflation and repay growing debts. So the state may influence these institutions (becoming state agents) to hold user funds through tools such as ETFs.
Institutions are essentially subject to the state, depositing funds in ETF tools
Hayes believes that in such a system, people cannot actually use Bitcoin because it has become a financial asset rather than Bitcoin itself. People purchased this derivative using legal tender, and asset managers subsequently purchased some Bitcoin and deposited it in custody institutions.
Although Hayes cannot be 100% certain, he proposes a situation that we may not ultimately want to see.
Institutions may have control over a small number of mining enterprises
On the other hand, Hayes also warned that if these institutional investors hold a large stake in Bitcoin mining companies in the future, they may further strengthen their control over the online consensus mechanism. He pointed out that:
To ensure that Bitcoin remains a 'rock solid cryptocurrency asset', certain upgrades may be required, especially in terms of encryption and privacy, which may not necessarily align with the stance of traditional financial institutions.
Hayes believes that Bitcoin is the opposite of a national currency, it exists "for us people," giving people the ability to transfer funds to various parts of the world. But he also raised questions about what would happen if most Bitcoin ultimately fell into the custody of one or a few institutions?
Of course, Hayes also believes that when Bitcoin is adopted more widely, it will undoubtedly drive up prices, 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 here, and prices may rise to new highs - but what is the ultimate outcome if an institution holds all of these cryptocurrencies?
Arthur Hayes explains the recent surge in Bitcoin prices?
At the end of October, Arthur Hayes also pointed out that the reason behind the recent surge in Bitcoin prices was not solely due to the widely anticipated approval of Bitcoin spot ETFs. Other reasons include the tension in the Middle East region and its potential impact on financial markets.
Hayes will seek alternative assets when long-term US treasury bond lose their attractiveness, so gold and Bitcoin have become the first choice. Switching to Bitcoin is a risk aversion measure for the future US dollar depreciation and high inflation caused by war.
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