Arthur Hayes Warns that Traditional Finance Could Devastate Bitcoin with Spot ETFs – Here’s Why
BitMEX founder Arthur Hayes has expressed concern that the traditional finance (TradFi) industry could gain excessive control over Bitcoin (BTC) if they manage to control spot BTC exchange-traded funds (ETFs). According to Hayes, if ETFs managed by TradFi asset managers become too successful, they could “completely destroy Bitcoin.”
In order for Bitcoin to survive, its coins must circulate enough to generate rewards for miners, thereby ensuring the security and decentralization of the network. With block rewards gradually decreasing and set to reach zero in 2140, miners will rely solely on transaction fees for income. However, if institutions hoard most of the coins in cold storage to back their ETFs, there will not be enough Bitcoin movement to generate fees and secure the blockchain.
Hayes points out that asset managers like BlackRock, the world’s largest TradFi asset manager, accumulate assets and store them without utilizing them. He envisions a future where the largest Western and Chinese asset managers hold all circulating Bitcoin, leading to a scenario where the coins never move again. This would result in miners shutting down their machines due to the inability to cover energy costs.
At the time of writing, Bitcoin is priced at $43,902.
Disclaimer: The opinions expressed in this article are not investment advice. Investors should conduct their own research before making high-risk investments in Bitcoin, cryptocurrency, or digital assets. The Daily Hodl does not endorse the buying or selling of any cryptocurrencies or digital assets.
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