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Bitcoin spot ETF is expected to receive approval from the U.S. Securities and Exchange Commission (SEC) soon, which is considered one of the main reasons for the recent increase in Bitcoin prices by many investors. However, according to a report by "Blockworks" on November 6, BitMEX co-founder Arthur Hayes expressed concerns in a recent interview. He stated that if BlackRock's ETF becomes too large, it could essentially "kill Bitcoin" because it would create a pile of immovable Bitcoins.
Hayes explained that if nations need their citizens to stay in the fiat banking system to be taxed through inflation to pay off their ever-increasing debt, they could potentially influence these institutions to act as national agents, holding user funds through tools like ETFs.
"Institutions, at their core, are beholden to the state, holding user funds in ETF instruments," Hayes said. In such a system, people may effectively be unable to use Bitcoin because it would become a financial asset, not Bitcoin itself. People would purchase this derivative with fiat currency, and asset managers would subsequently purchase some Bitcoin and hold it in custody.
While Hayes cannot be 100% certain, he presents a scenario that we may ultimately not want to see. Institutions may end up holding shares of a small number of mining companies, further strengthening their control over the network's consensus mechanism. Hayes points out that certain upgrades may be needed to ensure Bitcoin remains a "rock-solid cryptocurrency asset," especially in terms of encryption and privacy, and these upgrades may not necessarily align with the positions of traditional financial institutions.
Hayes believes that Bitcoin is the opposite of national currencies, it exists "for people like us" to enable us to transmit money around the world. However, he also questions what would happen if most Bitcoin ends up under the custody of one or a few institutions?
Of course, Hayes also believes that as Bitcoin gains more widespread adoption, it will undoubtedly drive up the price. But he thinks that if we are excited today because of short-term gains, it may lead to a massive disaster in the future: yes, ETFs are coming, and the price may reach new highs, but what will be the ultimate result if one institution holds all these cryptocurrencies?
Arthur Hayes explains the recent surge in Bitcoin prices:
At the end of October, Arthur Hayes also pointed out the reasons behind the recent surge in Bitcoin prices, which is not just because the Bitcoin spot ETF is widely expected to be approved. Other reasons include the tense situation in the Middle East and the potential impact it could have on financial markets.
Hayes mentioned that with the long-term U.S. Treasury bonds losing their appeal, investors are seeking alternative assets, and both gold and Bitcoin have become top choices. Shifting to Bitcoin is a hedge against future dollar depreciation and the high inflation caused by war when long-term U.S. Treasury bonds are no longer attractive. |
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Post time 11-11-2023 06:58:06