Arthur Hayes, founder of cryptocurrency exchange BitMEX, explored the complex relationship between traditional finance (TradFi) and the burgeoning cryptocurrency sector, particularly Bitcoin, in a recent essay titled “ETF Wif Hat.” Hayes draws parallels between the current financial strategies and historical practices of global elites to suggest ongoing patterns that preserve existing financial structures.
How the Shadow Elite Wants to Control Bitcoin
Hayes begins by comparing elite efforts to maintain global financial health with the enormous costs incurred in the final moments of life in health care. He argues that the existing financial order, called ‘Pax Americana’, has fallen into crisis following the global economic crisis triggered by the US subprime mortgage loan in 2008.
He argues that “the elites in charge of the Pax Americana and their vassals are willing to do anything to preserve the current world order because they have benefited most from its existence.” Accordingly, central banks around the world, including the U.S. Federal Reserve (Fed), European Central Bank (ECB), People’s Bank of China (PBOC), and Bank of Japan (BOJ), began printing money on a large scale. Efforts to alleviate the various symptoms of this crisis.
Hayes points out that this strategy has led to unprecedented global debt-to-GDP ratios and historically low interest rates, with nearly $20 trillion in corporate and government bonds yielding negative yields at their peak. According to Hayes, this situation was not helpful to the majority of the world’s population, who did not own sufficient financial assets to be able to obtain through such monetary policies.
In this context, Hayes presents Bitcoin, created by the pseudonym Satoshi Nakamoto, as a groundbreaking development that offers an alternative to the traditional financial system. He describes Satoshi Nakamoto’s birth of Bitcoin as a “lotus blooming in a poop pond” moment, heralding a new era of financial independence and global scalability.
However, Hayes pointed out that Bitcoin was initially too immature to be used as a reliable alternative after the 2008 crisis. It wasn’t until the financial turmoil of 2022, which included the collapse of several major banks and cryptocurrency companies, that Bitcoin and other cryptocurrencies showed their resilience. Unlike traditional financial institutions, these digital assets were not bailed out, but continued to operate, with BTC blocks being created every 10 minutes.
According to Hayes, by 2023 it will be clear that the traditional financial system will not be able to sustain any further monetary tightening. This led to an interesting shift as BTC prices began to rise as US long-term Treasury yields increased, increasing investor skepticism towards traditional government bonds and hinting at a shift towards assets such as Bitcoin and major technology stocks.
Same playbook as gold?
To respond to these changes and maintain capital within the traditional system, Hayes argues that elites are now turning to financializing Bitcoin through the creation of Exchange Traded Funds (ETFs). He explains that this is similar to the gold market, where the U.S. Securities and Exchange Commission (SEC) introduced ETFs such as SPDR GLD in 2004, making it easier to trade gold without physical holdings.
“To avoid this calculation, elites should financialize Bitcoin by creating highly liquid exchange-traded funds (ETFs). This is the same trick they played in the gold market,” Hayes claims. Hayes therefore assumes that Bitcoin ETFs will allow traditional finance (TradFi) firms to manage their Bitcoin investments and keep their capital within the system. Hayes highlights the importance of Blackrock, a major asset management firm, filing for a Bitcoin ETF in June 2023.
He noted that the SEC appeared receptive to Blackrock’s application after years of rejecting similar applications, including that of the Winklevoss twins in 2013, approving it within six months. Hayes suggests that this represents a strategic move by elites to integrate Bitcoin into the traditional financial system at a critical time.
However, the BitMEX founder warns that spot ETFs are fundamentally different from owning Bitcoin directly. “Spot Bitcoin ETFs are tradable instruments,” Hayes said. To earn more fiat, buy with fiat. It’s not Bitcoin. That is not the path to financial freedom. This is not outside the TradFi system.”
Looking ahead, Hayes discusses the market impact of spot ETFs, focusing on the Blackrock ETF due to Blackrock’s global reach and distribution capabilities. He predicts that the cryptocurrency ETF complex will continue to accumulate assets as inflation persists due to the continued loosening of global economic and military agreements since World War II and the inflationary nature of the war.
In conclusion, Hayes reflected on the potential for TradFi to financialize Bitcoin, initially boosting the price of BTC in fiat terms.
The bull market has just begun. Although 2024 will be a tough year for price volatility, I still expect Bitcoin and overall cryptocurrency market cap to hit or exceed all-time highs by the end of the year. Yahtzee in the name of Satoshi!!!
At press time, BTC was trading at $42,822.
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