Arthur Hayes warns that institutional custody can transform Bitcoin from a tool of financial freedom to an institutional asset. Institutional interests and those of Bitcoin ETFs could lead to hoarding, turning Bitcoin into a stagnant asset rather than a circulating currency. Despite the bullish market sentiment driven by institutional interest, Hayes’ narrative urges investors to consider the long-term implications on the essence of BTC.
As Bitcoin (BTC) continues to thrive, reaching new heights every year and gaining widespread adoption, Arthur Hayes, former CEO of BitMEX, expressed a concern that it could potentially strangle Bitcoin’s defining essence.
Hayes’ speech sheds light on a scenario in which institutional custody of Bitcoin could transform it from a tool of financial freedom to an institutionalized asset, thus derailing its original promise.
Institutional Interest: Bitcoin’s Real Killer
The ethos of Bitcoin since its inception has been decentralization, a financial system that operates without any centralized authority. It is in stark contrast to financial systems, which Hayes described as money “that is here for us, the people.”
However, growing institutional interest, especially the possible approval of spot Bitcoin ETFs (exchange-traded funds), could be a double-edged sword.
Hayes, in a recent conversation, laid out a rather bleak scenario. He speculated on the repercussions if financial moguls like BlackRock CEO Larry Fink and their ilk decide to grab a large chunk of free-flowing Bitcoin. This action could transform Bitcoin from a tool of financial freedom to simply another asset under institutional control. The core of the concern lies in how these institutional giants could potentially control Bitcoin, changing its fundamental use case.
Hayes noted that if entities like BlackRock and Fidelity come into play by launching Bitcoin mining ETFs, it would be as if they became “agents of the state,” a stark contradiction to what Bitcoin represents. In Hayes’ opinion, the State’s agenda to keep citizens within the trust banking system for tax purposes could find a new ally in these institutional entities.
If these institutions accumulate Bitcoin in ETF vehicles, the very essence of Bitcoin (being a decentralized and usable currency) is lost. “You can’t actually use Bitcoin. It is a financial asset. It is not Bitcoin itself,” Hayes explained in such a scenario.
Additionally, Hayes warned that if an entity like the BlackRock ETF grows too much, it could “kill Bitcoin.” The hoarded Bitcoin would become a stagnant asset rather than a currency in circulation. This, he argued, is trading “a sugar high today for a calamity tomorrow.”
Institutional Capital Will Drive the Bitcoin (BTC) Bull Market
The crux of Hayes’ argument is that Bitcoin’s main strength lies in its decentralized nature. However, institutional adoption, especially the possible approval of Bitcoin spot ETFs, may be a precursor to Bitcoin losing its essence.
On the contrary, it is undeniable that the influx of institutional interest generates bullish sentiment in the cryptocurrency market. Rachel Lin, CEO of DEX SynFuture, believes Bitcoin could skyrocket to nearly $50,000 by the end of the month, given historical trends.
“Last week cemented October’s reputation as Uptober, and Bitcoin witnessed a nearly 29% increase in value. Even more interesting is that when we look at the data, November tends to be even better than October, with an average return of over 35% in Bitcoin. If this November saw similar returns, we could see BTC reach $47,000.”
The options data also reveals bullish sentiment in the market. Big bets are being made, anticipating that Bitcoin will reach higher values in the near future.
By Leonardo Pérez
