In his last article of the year, Hayes claimed that TradFi asset managers would “completely destroy Bitcoin” if the ETFs they manage were a huge success. He made this statement while alluding to the uniqueness of Bitcoin.
Former CEO and co-founder of cryptocurrency exchange BitMEX, Arthur Hayes, shared his thoughts on what could lead to Bitcoin’s downfall.
His recent comment also echoes the reservations the cryptocurrency founder has about the possible launch of Bitcoin spot ETFs.
TradFi Could Lead to the Fall of Bitcoin
Hayes mentioned that the most important crypto token is different from “any other monetary instrument that humanity has ever used.”
Due to the uniqueness of Bitcoin, Hayes believes that it was not created to be in the hands of these asset managers. As such, they could end up destroying the crypto token, especially in a world where the world’s largest asset managers end up holding all the Bitcoin in circulation. If that were to happen, these companies would end up storing these crypto tokens, which should not be the case in Hayes’ opinion.
The BitMEX co-founder noted that Bitcoin “only exists if it moves” and that it “will die” if it is not used. His stance stems from the fact that he sees Bitcoin more as an asset meant to be actively traded rather than simply a store of value.
To justify this claim, he argued that TradFi companies will continue to acquire more BTC. As a result, Bitcoin transactions could decrease as people tend to choose ETFs instead of holding Bitcoin directly:
“Let’s imagine a future where the largest Western and Chinese asset managers hold all the Bitcoin in circulation. This happens organically, as people confuse a financial asset with a store of value. Due to their confusion and laziness, people buy Bitcoin ETF derivatives instead of buying and holding Bitcoin in self-custodied wallets. “Now that’s a handful of companies holding all of the Bitcoin, and they have no real use for the Bitcoin blockchain.”
He also highlighted the fact that the Bitcoin network would also die if this happened. Miners are known to earn transaction fees from the network they use. However, if these tokens were no longer traded but rather stored, these miners would have no choice but to shut down their operations.
The end result is that miners are forced to turn off their equipment, unable to sustain the energy costs necessary for its operation. This scenario could lead to the tragic demise of Bitcoin.
Hayes’ Doubts about A Bitcoin Spot ETF
Arthur Hayes’ latest comment comes ahead of a possible approval of pending Spot Bitcoin ETF applications. The former CEO of BitMEX had already made public his reservations about these funds and their issuers. He then mentioned that these TradFi institutions were not bullish on Bitcoin, but were simply making this move to become “crypto guardians.”
Hayes also went on to discuss how these companies’ interest in Bitcoin goes against Satoshi’s vision of a decentralized system. However, unlike Hayes, some are looking to see the silver lining and how institutional interest in the top cryptocurrency can help its widespread adoption.
Bloomberg analyst Eric Balchunas had once mentioned the importance of these Bitcoin spot ETFs, especially considering that many could choose to hold Bitcoin instead. In his opinion, these ETFs are important because of the convenience they offer investors.
Meanwhile, others are excited about the amount of capital that could flow when these ETFs are approved.
By Audy Castaneda
