The cryptocurrency industry is looking forward to the approval of a spot Bitcoin ETF (exchange-traded fund) in the United States. However, key industry leaders believe that the success of these financial products could spell the end of BTC.
BitMEX founder Arthur Hayes has warned that the launch of a spot Bitcoin ETF could challenge the existence of the pioneering cryptocurrency.
How Bitcoin ETFs Are Killing BTC
According to Hayes, if the Bitcoin ETF, which will be managed by traditional asset managers, is too successful, it will “completely destroy Bitcoin.”
Justifying the claim, he claimed that the TradFi company will continue to acquire more BTC. As a result, Bitcoin trading may decline as people tend to choose ETFs rather than holding Bitcoin directly.
“Imagine a future where the largest asset managers in the West and China hold every Bitcoin in circulation. This happens organically as people confuse financial assets with stores of value. Out of confusion and laziness, people buy Bitcoin ETF derivatives instead of buying Bitcoin and storing it in self-custodial wallets. Now, a few companies hold all the Bitcoin and they don’t really use the Bitcoin blockchain,” Hayes said.
The end result is that miners are forced to shut down their equipment and are unable to cover the energy costs required to operate. Such a scenario could lead to a tragic end for Bitcoin.
Moreover, Hayes argued that in addition to killing Bitcoin, the cryptocurrency industry could lose the fight to separate money from the state if these ETFs become too successful.
BlackRock Amends ETF Filings
Despite Hayes’ warning, there appears to be nothing stopping traditional companies from pursuing their ambitions to gain Bitcoin ETF approval. Several Bitcoin ETF applicants, including BlackRock, Hashdex, and Pando, have filed amended filings with financial regulators.
Bloomberg analyst James Seyffart pointed out that asset manager BlackRock’s revised filing included an offer to raise $10 million in seed funding. While not guaranteeing an immediate launch, this proposed fund indicates the Bitcoin ETF’s potential readiness for an upcoming launch.
“BlackRock expects to seed $10 million in IBIT on January 3…the date is noteworthy and a significant uptick from the $100,000 it seeded in October,” said Erich Balchunas, senior ETF analyst at Bloomberg. He said.
Seyffart noted that BlackRock’s schedule is consistent with previous predictions of a January launch, indicating that the company intends to proceed immediately while awaiting approval. The move follows BlackRock’s previous amendment on December 19 that incorporated SEC-recommended cash redemptions into its Bitcoin ETF application.
Read more: How to Prepare for a Bitcoin ETF: A Step-by-Step Approach
Amid these developments, the Bitcoin price has shown resilience. The top cryptocurrency briefly reached $44,000 before being corrected to $43,642 at the time of this writing.
Crypto trader Marco Johanning pointed out that Bitcoin currently remains below the key resistance level of $44,400. But he said there were no new lows for the asset.
“There are three main scenarios. 1. A small fakeout, for example on Sunday (weekly close), can break this resistance and go higher. 2. Retest the red trendline, which is likely to be the wick for an order block, then back up and go higher. 3. It continues until Christmas and the end of the year.” Johanning said.
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