Former BitMEX CEO Arthur Hayes Warns Against Bitcoin ETFs
Date: 2023-12-25 Author: Dima Zakharov Categories: BUSINESS
The Threat of Bitcoin ETFs
Former BitMEX CEO, Arthur Hayes, has raised alarms regarding the possible emergence of Bitcoin Exchange-Traded Funds (ETFs) in the United States. He believes that these ETFs, if introduced, could pose a significant threat to the very existence of Bitcoin, the pioneering cryptocurrency.
Bitcoin's Unique Nature
Hayes argues that unlike gold or traditional fiat currencies, Bitcoin's value is intricately tied to the activity of traders and investors within its network. Bitcoin is a financial asset that only retains its value if it remains actively used. This becomes particularly crucial after the year 2140 when the Bitcoin network's block rewards are set to reach zero, and miners will rely solely on transaction fees for income. According to Hayes, if Bitcoin ceases to move, miners will be unable to maintain the network's security, leading to its collapse and disappearance.
Concerns Over Traditional Finance Players
Additionally, Hayes is troubled by the entry of major asset management companies from the traditional finance sector into the cryptocurrency space. These companies typically accumulate assets, hold them, and issue securities without actively utilizing the underlying assets. The co-founder of BitMEX fears that if these firms, alongside significant Western and Chinese asset managers, hoard the entire Bitcoin supply without actively circulating the coins, it could lead to the network's downfall. This scenario might materialize if people choose Bitcoin ETFs over direct coin ownership, mistakenly perceiving the financial instrument as a means of savings.
A Dire Prediction
Hayes stated, "If ETFs managed by TradFi companies become too successful, they could completely destroy Bitcoin. If Bitcoin becomes a financial asset controlled by the government and dies due to lack of user activity, it may lay the groundwork for the emergence of another cryptocurrency monetary network. This network could be a new version of Bitcoin."
A Different Perspective
Notably, Arthur Hayes recently suggested that the strengthening economic ties between Russia and China could contribute to Bitcoin's growth. According to his forecast, in the coming years, the price of the leading cryptocurrency could reach $760,000.
The potential introduction of Bitcoin ETFs has ignited a debate within the cryptocurrency community, with some sharing Hayes' concerns, while others see ETFs as a way to further legitimize and integrate Bitcoin into the mainstream financial system.
