Arthur Hayes, co-founder of the BitMEX crypto exchange, is sounding the alarm regarding what he sees as possible dire outcomes of the pending regulatory approval of the spot Bitcoin exchange-traded fund (ETF).
The concern lies in traditional finance asset managers, such as BlackRock, potentially undermining Bitcoin (BTC) by dominating the spot Bitcoin ETF market.
In a blog post on Dec. 22, Hayes highlighted the risk of such firms holding “all the Bitcoin in circulation.” If that happens, he says, an over-successful ETF managed by traditional asset managers could ultimately lead to the decline of the cryptocurrency.
Hayes argues that BlackRock and similar entities “vacuum up assets, store them in a metaphorical vault, issue a tradable security, and charge a management fee for their ‘hard’ work.”
“They don’t use the things they hold on behalf of their clients, which presents a problem for Bitcoin if we take an extreme view of a possible future,” he added.
The public may then opt for Bitcoin ETF derivatives instead of buying and holding Bitcoin by themselves, impacting the use of the Bitcoin blockchain, Hayes says.
Hayes surmised a future where Bitcoin is merely stored in vaults, with miners no longer receiving income due to the lack of network use. This scenario, he warns, could lead to the network’s death and the disappearance of Bitcoin.
2024: A pivotal year
Hayes also pointed to Bitcoin’s 228% growth since 2020, where he claims it outperformed most traditional assets. This growth signifies BTC’s dominance as a hedge against fiat debasement, he adds.
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Author: Julius Mutunkei
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