In his latest essay titled "ETF With Hat," Arthur Hayes, the founder of the cryptocurrency exchange BitMEX, explores the complex relationship between traditional finance (TradFi) and the growing field of cryptocurrencies, particularly Bitcoin. Hayes draws parallels between the current financial strategies of global elites and historical practices, suggesting a consistent pattern of maintaining existing financial structures. Elite aims to control Bitcoin through ETFs - Arthur Hayes
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How Shadow Elites Are Trying To Control Bitcoin
Hayes begins by comparing the efforts of the elite to maintain the global financial status quo to the high costs incurred in end-of-life healthcare. He argues that since the 2008 global economic crisis, triggered by subprime mortgage loans in the United States, the existing financial order, referred to as "Pax Americana," has been in danger. He asserts that the elites in charge of Pax Americana and its allies are willing to do whatever it takes to preserve the current world order because they have benefited the most from its existence. As a result, central banks around the world, including the Federal Reserve (Fed) in the US, the European Central Bank (ECB), the People’s Bank of China (PBOC), and the Bank of Japan (BOJ), resorted to massive money printing efforts to alleviate various symptoms of this crisis.
Hayes points out that this strategy led to an unprecedented global debt-to-GDP ratio and historically low interest rates, with nearly $20 trillion in corporate and government bonds yielding negative returns at their peak. According to Hayes, this situation did not benefit the majority of the world’s population, who do not own sufficient financial assets to gain from such monetary policies. In this context, Hayes introduces Bitcoin, created by the pseudonymous Satoshi Nakamoto, as a groundbreaking development offering an alternative to traditional financial systems. He describes Bitcoin’s creation as a moment where “a lotus blooms in a pond of dung,” signaling a new era in financial independence and global scalability.
However, Hayes notes that Bitcoin was initially too immature to serve as a credible alternative following the 2008 crisis. It wasn’t until the financial turmoil of 2022, which included the collapse of several major banks and crypto firms, that Bitcoin and other cryptocurrencies demonstrated their resilience. Unlike traditional financial institutions, these digital assets did not receive bailouts yet continued to operate, with BTC blocks being produced every 10 minutes. In 2023, according to Hayes, it became evident that traditional financial systems could not sustain further monetary tightening. This led to a curious shift where BTC prices started to rise alongside increasing long-end US Treasury yields, suggesting a growing investor skepticism towards traditional government bonds and a pivot towards assets like Bitcoin and major tech stocks.
The Same Playbook As With Gold?
To counter this shift and retain capital within the traditional system, Hayes suggests that the elite are turning to financialize Bitcoin through the creation of Exchange Traded Funds (ETFs). He draws a parallel to the gold market, where the introduction of ETFs like SPDR GLD by the US Securities and Exchange Commission (SEC) in 2004 allowed for easier trading of gold without the need for physical possession.
Hayes argues that to avoid this reckoning, the elite must financialize Bitcoin by creating a highly liquid Exchange Traded Fund (ETF), similar to the approach taken in the gold market. He posits that a Bitcoin ETF would enable traditional finance (TradFi) firms to manage Bitcoin investments, keeping the capital within the system. Hayes also highlights the significance of Blackrock, a major asset management firm, applying for a Bitcoin ETF in June 2023.
He finds it noteworthy that the SEC, after years of rejecting similar applications, including one from the Winklevoss twins in 2013, seemed receptive to Blackrock’s application, approving it within six months. This, according to Hayes, indicates a strategic move by the elites to integrate Bitcoin into the traditional financial system at a critical juncture.
However, the BitMEX founder warns that a spot ETF is fundamentally different from owning Bitcoin directly. Hayes cautions that a spot Bitcoin ETF is a trading product, purchased with fiat to earn more fiat, and is not a path to financial freedom or outside of the TradFi system.
Looking ahead, Hayes discusses the market impact of the spot ETF, focusing on the Blackrock ETF due to its global reach and distribution capabilities. He predicts that the crypto ETF complex will continue to gather assets as inflation persists, driven by the ongoing unwinding of the post-WW2 global economic and military arrangement and the inflationary nature of war.
In conclusion, Hayes reflects on the potential of the financialization of Bitcoin by TradFi to initially drive up the price of BTC in fiat terms.
The bull market is just beginning. 2024 will be a choppy year with regards to price action, but I still expect by year-end, we will be at or above an all-time high in the market cap of Bitcoin and the entire crypto complex. In the name of Lord Satoshi, Yahtzee!!!
At press time, BTC traded at $42,822.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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