Arthur Hayes Warns of Bitcoin’s Future Risks

The threat spelled out by Arthur Hayes, the former CEO and co-founder at BitMEX, said a potential downfall of Bitcoin’s recent statement is underlined. Hayes particularly concentrated on the launch of Spot BTC ETFs, highlighting that traditional financial (TradFi) asset managers could be an ugly brute threat against the pioneer cryptocurrency.

In his year-end article, Hayes wrote that were ETFs by traditional asset managers to administer themselves any time soon and run scot-free, they could “completely destroy Bitcoin.” He argued that the one-of-a-kind nature of Bitcoin was such that it did not host itself for control by these asset managers. He speculated that the cryptocurrency would lose value if the world’s largest asset managers accumulated all circulating BTC.

Hayes Warns: Bitcoin Thrives with Active Trading

Hayes alluded to Bitcoin as an asset class gaining vitality from movement and usage. He argued that the digital currency would “die” if the circulation amount dried up. Hayes emphasized the necessity of using an active trading ingredient for Bitcoin to thrive. He explained that holding idle tokens without trading them would result in the loss of mining fees, ultimately causing the BTC network to become inactive.

Hayes’ comments come ahead of the imminent decision on a trio of Spot BTC ETF applications. The former head at BitMEX has made disparaging remarks about the funds and their issuers in the past. He hinted that traditional financial institutions aim to become “crypto gatekeepers” rather than embracing Bitcoin’s ideals of decentralization.

Hayes remains critical of institutional interest in BTC. In contrast, experts such as Bloomberg Analyst Eric Balchunas see potential benefits in approving Spot BTC ETFs. Baluchunas highlights the convenience these ETFs offer investors.

Additionally, some are optimistic about the possible increase in capital inflows that could follow their approval. The debate regarding institutional involvement in BTC’s impact is ongoing. It raises questions about whether such involvement would eventually deter, rather than speed up, the mainstream institutionalization of the cryptocurrency.

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