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Why BlackRock’s spot ETF could ‘completely destroy’ Bitcoin

Why BlackRock’s spot ETF could ‘completely destroy’ Bitcoin
Crypto influencer Arthur Hayes says there's a serious downside to a Bitcoin ETF. Credit: Andrés Núñez/DL News.
  • Arthur Hayes blogged that Wall Street's push for Bitcoin ETFs could distort the market.
  • His contrarian view comes as the market is whipsawed by volatility.
  • BlackRock and other investment giants are poised to become powerful new players in crypto.

Happy Thursday!

Spot Bitcoin exchange-traded funds could spell Bitcoin’s doom in the long run, said BitMEX co-founder Arthur Hayes over the holidays.

Let’s dive into it.

Be careful what you wish for

The crypto industry is feverishly waiting for the US Securities and Exchange Commission to greenlight spot Bitcoin ETFs, which are expected to attract a wave of new investments in the digital asset.

But Hayes, an influential voice in the crypto markets, said in a recent blog post that if these ETFs become “too successful” they may “completely destroy Bitcoin.”

The problem, Hayes said, is that financial giants like BlackRock are playing ‘the asset accumulation game.’

The problem, Hayes said, is that financial giants like BlackRock are playing “the asset accumulation game.”

“They vacuum up assets, store them in a metaphorical vault, issue a tradable security, and charge a management fee for their ‘hard’ work,’” Hayes said.

“They don’t use the things they hold on behalf of their clients, which presents a problem for Bitcoin if we take an extreme view of a possible future.”

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Bitcoin miners, who maintain the blockchain, are rewarded for their efforts with transaction fees and an ever-decreasing amount of Bitcoin. But from 2140 onwards, miners will be solely subsidised through transaction fees.

In other words, unlike other assets like gold, the Bitcoin network needs to remain active in order to keep existing.

According to Hayes, if too many people purchase Bitcoin ETF shares or other Bitcoin derivative products instead of actual Bitcoins, the network will stop producing enough fees to sustain miners and their costly energy bills.

This would result in miners unplugging their machines and Bitcoin becoming more vulnerable to network attacks.

“If Bitcoin becomes just another state-controlled financial asset, it dies because it isn’t used,” Hayes said.

Crypto market movers

  • Bitcoin was down more than 5% in early morning trading UK time.
  • Ether tumbled 6.4% since Wednesday, according to CoinGecko.

What we’re reading:

Tom Carreras is a markets correspondent at DL News. Got a tip? Reach out at