“Cash ETFs could destroy the Bitcoin network” Arthur Hayes’ thoughts

11 months ago 73

Impact of spot ETFs

Arthur Hayes, co-founder and former CEO of the cryptocurrency exchange BitMEX, published an article on cryptocurrency investment on the 23rd.

“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.

May the Pump be with you! https://t.co/bG4ZnSjYu5 pic.twitter.com/nbru6yZlJD

— Arthur Hayes (@CryptoHayes) December 23, 2023

connection: BitMEX founder Arthur Hayes: “Chinese credit expansion could encourage capital inflow into Bitcoin”

In the article, Hayes also mentioned the Bitcoin spot ETF (exchange traded fund), which is expected to be approved as early as next month. And he believes that if traditional asset management ETFs become too successful, Bitcoin will be completely destroyed.

He compared Bitcoin to legal currency and gold, which exist as real objects. He went on to claim that “Bitcoin is the first financial asset in human history that exists through movement.”

Regarding the basis for this claim, Mr. Hayes mentioned the existence of miners. He explains that Bitcoin is designed to have no block rewards after 2140, meaning miners will only be able to earn income from transaction fees.

In other words, this means that if Bitcoin does not move and transaction fees are not generated, miners’ rewards will disappear. The basis for the above argument is that if Bitcoins no longer move and generate transaction fees, miners will stop working, the network will be disrupted, and there will be no Bitcoins.

Bitcoin monopoly risks

Unlike futures ETFs, which have already been approved by the U.S. Securities and Exchange Commission (SEC), spot ETFs actually hold and operate Bitcoins. Mr. Hayes points out the risk of traditional asset management companies buying up Bitcoin for ETFs, holding it and not using it.

Calling this an extreme view, he asked, “Imagine if major asset management companies in Europe, the United States, and China held all the Bitcoin in supply.”

He argues that if a handful of companies monopolize Bitcoin and it is no longer used, then Bitcoin will stop moving, and miners will turn off their equipment and there will be no more Bitcoin.

connection: “A bull market in cryptocurrencies will start next year,” Arthur Hayes predicts.

alternative virtual currency

Hayes also expressed the view that if Bitcoin were to disappear, other cryptocurrencies could play the role of Bitcoin.

He then explained that the virtual currency may be similar to Bitcoin, or it may be an improved version of Bitcoin. In either case, a currency and financial system not controlled by the state will be created again, and he hopes people have learned not to hand over their private keys to traditional financial institutions.

What is an ETF?

Abbreviation for “Exchange Traded Fund.” Refers to investment trusts listed on financial instruments exchanges, where a wide range of financial products, not just virtual currencies, are traded.

Virtual currency glossary