BitMEX CEO and co-founder Arthur Hayes has noted the potential impact of successful spot Bitcoin exchange-traded funds (ETFs), suggesting they could spell doom for the leading cryptocurrency. Hayes expressed his concerns in a blog post on December 23, emphasizing the intrinsic value of Bitcoin in its dynamic nature.
"Expression" is my last article of 2024. I offer some thoughts on expressions of the #crypto investment theme that will ultimately prove to be worthless.
— Arthur Hayes (@CryptoHayes) December 23, 2023
According to Hayes, spot Bitcoin ETFs, designed to amass assets and store them away metaphorically, risk siphoning off Bitcoin from active circulation. This shift towards passive storage rather than active trading could lead to a significant decline in Bitcoin transactions. Hayes argues that the network’s transactional vitality would diminish if investors predominantly opt for Bitcoin derivatives over holding the actual cryptocurrency.
Moreover, Hayes predicts a dire consequence if ETF issuers hoard all available Bitcoin on BitMEX. A decline in transactional activity diminishes miners’ incentive to validate transactions, and this, in turn, leads to a shutdown of BitMEX mining operations. In this scenario, Hayes envisions the collapse of the network and the disappearance of Bitcoin.
Bitcoin at Risk from ETF Decision
Hayes expresses concern over the potential dominance of traditional financial asset managers. He suggests that if Bitcoin ETFs managed by traditional entities thrive, they could fundamentally undermine Bitcoin’s essence. In addition, He speculates on the emergence of a new cryptocurrency monetary network. This network could surpass the original vision of peer-to-peer electronic money envisioned by Satoshi Nakamoto.
Furthermore, in a hopeful twist, Hayes sees the beauty in such a transformation. If Bitcoin succumbs to state control through financial assets, a new non-state-controlled monetary asset and financial system could emerge. Hayes cautions against trusting Wall Street with private keys, advocating for lessons from past mistakes in a prudent approach.
Moreover, at a critical juncture, these warnings emerge. The approval of pending spot Bitcoin ETF applications is expected between Jan 5 and Jan 10, 2024. Major players like BlackRock, Grayscale, Bitwise, and others eagerly anticipate the SEC’s decision. This decision holds the potential to reshape the future trajectory of Bitcoin.
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