Bitcoin ETF is coming, but there is a downside: Warnings from three experts

Bitcoin real money
  • Arrival of the BlackRock ETF could “kill” Bitcoin, warns Arthur Hayes
  • Samson Mow also expressed his concerns about the institutional Bitcoin “fever”
  • Both agree that institutional custody could generate an undesirable effect
  • Meanwhile, skeptic Peter Schiff has warned of a possible price drop 
  • Bitcoin is targeting $38,000 amid expectations for a spot ETF

Cryptocurrency industry participants are increasingly confident about the approval of a first-spot Bitcoin exchange-traded fund (ETF) in the US market.

This week, the price of Bitcoin (BTC) recaptured highs not seen in 18 months, heading towards a height of USD $38,000, amid the latest developments on ETFs. Grayscale has reportedly begun discussions with the Securities and Exchange Commission (SEC) regarding plans to convert its flagship Bitcoin-based investment fund, GBTCinto an ETF.

Meanwhile, New York-based asset management giant BlackRock expressed confidence in the approval of its Bitcoin fund and also took the opportunity to formally apply for a physical Ethereum-based ETF.

Amid the advances and bullish price rallies, Bloomberg analysts James Seyffart and Eric Balchunas reiterated their opinion that there is a 90% chance that the US SEC will approve the dozen ETF applications of Spot Bitcoin under review before January 10, 2024.

With potential approval just around the corner, several observers have anticipated further price increases for cryptocurrencies towards the end of the year. And besides the ETF, there are other arguments that support the idea of ​​a bull run in the coming months. However, not everyone seems convinced that everything is as positive as it seems.

BlackRock ETF could “kill” Bitcoin: Arthur Hayes

Entrepreneur and co-founder of BitMEX , Arthur Hayes, is one of those who is not so convinced that such an event will be good for Bitcoin.

Speaking recently on the On the Margin podcast, Hayes warned that while the filing by BlackRock and other high-profile firms demonstrates a strong appetite among large traditional finance institutions for cryptocurrency, the approval of an ETF could put the existence of same as Bitcoin

If the BlackRock ETF gets too big it could actually kill off Bitcoin because it’s just a bunch of immovable bitcoins sitting there

The logic behind this argument lies in the very nature of ETFs, which acquire an asset by offering investors direct exposure without the need to hold that asset personally.

In Hayes’s eyes, Bitcoin represents the antithesis of statist money, designed to empower people with its decentralized nature. However, he questions the consequences if the majority of bitcoins end up in the custody of a few institutions.

In this regard, Hayes called asset managers like BlackRock “ agents of the state ” acting in accordance with state directives, and argued that  institutional interest in Bitcoin could “ herald a situation that in the end we may not like .” He raised concerns about further centralization thanks to institutional custody and warned of the possibility of cryptocurrency stagnating and becoming a financial asset rather than the decentralized technology it purports to be. 

Bitcoin could “fork,” warns Samson Mow 

In a similar vein of ideas, Samson Mow, the CSO of Blockstream, a leading provider of Blockchain technologies, also shared his opinion about one of the possible scenarios that could develop from the approval of the BlackRock ETF.

Mow, who is also of the opinion that requests from large managers to launch spot ETFs is a good sign that Bitcoin is emerging as “ an investable asset class and the reserve asset of the future,” warned That the not-so-positive side of the institutional rush is that it could lead to a “Bitcoin fork .” 

The businessman believes that with broader adoption by traditional financial institutions, two types of Bitcoin could emerge: one “ institutional ” and the other “ normal .” The first, according to Mow, can be locked in the ETFs of corporations like BlackRock, while the second would be free for use as a means of payment and other cases.

This, he believes, could lead to two different prices for the cryptocurrency, one that will likely trade at a discount due to its reduced utility as an institutional investment asset. Meanwhile, the future of “ free Bitcoin ” might not be so bad, since it could increase in price in the face of a reduction in circulating supply thanks to the Bitcoin held by institutions.

Ultimately, both experts appear to share a concern about the potential shift in focus around Bitcoin and its principles as a result of increased institutional adoption.

Skeptic Peter Schiff Predicts Big Drop for Bitcoin

The well-known economist and Bitcoin skeptic, Peter Schiff, is another who has also spoken out on the hot topic of ETFs, warning in a very different tone that the expected milestone could precede a major price decline.

Bitcoin Nears $38,000 as Speculators Continue to Anticipate a New Bitcoin ETF.” However, once that ETF is launched, all the speculators will have already bought. Then, when those buyers sell for profits, there won’t be many left to buy the ETF. Get ready for a crash,” he wrote. 

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