Why Some Participants in the Crypto Community See Spot Bitcoin ETF as Problematic

In recent months, many members of the crypto community have eagerly awaited the approval of the first spot Bitcoin ETF in the United States. However, despite positive forecasts, not everyone shares the joy of the potential launch of this instrument. In this review, we will explore three main reasons why some investors and experts express concerns about the spot Bitcoin ETF and its impact on the digital asset market.

One key aspect drawing criticism is the risk of market centralization and increased control by regulators. Former CEO of BitMEX, Arthur Hayes, warns that the approval of a spot Bitcoin ETF, especially from major asset managers like BlackRock, could result in a significant portion of bitcoins falling under the control of a small circle of participants, thereby contributing to market centralization and heightened regulatory intervention.

Another aspect highlighted by critics is the potential for false expectations of further market growth following the launch of the spot Bitcoin ETF. The history of the crypto market suggests that such expectations may prove unfounded. Examples from the launch of Bitcoin futures and the Bakkt platform demonstrate that the market does not always react in line with investor anticipations, creating risks for those solely basing investment decisions on expectations of growth due to the introduction of a new instrument.

A significant aspect of the debate surrounding the spot Bitcoin ETF is the harm that mass speculation could inflict on the market. Peter Schiff, President of Euro Pacific Capital Inc. and a vocal Bitcoin critic, expresses concerns that speculators may drive up the price of Bitcoin until the ETF launch, after which they could start cashing in profits, potentially leading to a sharp price crash. This perspective underscores the potential risks associated with mass speculation and market price instability.