Why Bitcoin ETF Can Kill Bitcoin

The crypto industry is awaiting the approval of a Bitcoin ETF (Exchange Traded Fund) in the United States. However, one major industry leader believes that the success of such financial products could lead to the end of BTC.

BitMEX founder Arthur Hayes warned that the launch of spot Bitcoin ETFs could challenge the existence of the pioneering cryptocurrency.

How Bitcoin ETF Can Kill BTC

According to Hayes, if Bitcoin ETFs managed by traditional asset managers become too successful, they will “completely destroy Bitcoin.”

Explaining his statement, TradFi argued that organizations will continue to earn more BTC. As a result, Bitcoin transactions may slow down as people tend to choose ETFs instead of holding Bitcoin directly.

“Imagine a future where the big Western and Chinese asset managers hold all the bitcoins in circulation. This happens organically when people confuse a financial asset with a store of value. Due to their confusion and laziness, people buy Bitcoin ETF derivatives instead of buying and storing Bitcoin in their own wallets. Right now a handful of organizations hold all the bitcoins and have no real use for the Bitcoin blockchain,” Hayes said.

The end result is that miners are forced to shut down their equipment, unable to maintain the energy costs necessary for the operation. Such a situation can lead to the tragic death of Bitcoin.

Moreover, besides killing Bitcoin, Hayes argued that if these ETFs become too successful, the crypto industry could lose its fight to separate itself from state money.

Blackrock updates the EFF file

Despite Hayes' warning, there seems to be nothing stopping traditional firms from their interest in acquiring the Bitcoin ETF space. Several Bitcoin ETF applicants, including BlackRock, Hashdex and Pando, have filed updated documents with the financial regulator.

Bloomberg analyst James Seifert noted that asset manager BlackRock's revised filing comes with a $10 million seed funding proposal. While a quick launch isn't guaranteed, this proposed funding shows the Bitcoin ETF's potential readiness for an upcoming launch.

“BlackRock expects to seed IBIT with $10 million on Jan. 3 … a familiar date and a significant increase from the $100,000 they seeded in October,” said Eric Balchunas, ETF analyst at Bloomberg.

Seyfert said BlackRock's timeline is in line with earlier predictions of a January launch, indicating the company's willingness to move the license forward quickly. This move follows BlackRock's December 19 update, which included SEC-recommended in-cash redemptions in its Bitcoin ETF application.

Read more: How to prepare for a Bitcoin ETF: A step-by-step approach

Amidst these developments, the price of Bitcoin has shown resilience. At the time of writing, the cryptocurrency touched $44,000 before correcting to $43,642.

Crypto trader Marco Johanning says Bitcoin will remain below the current key resistance level of $44,400. However, he stated that he does not see any new lows in the property.

“I see three main scenarios: 1. Break this resistance and go higher, maybe by making a small false network before, for example on Sunday (weekly close). 2. Support the red trend line from the wick to the order block, then up and up. 3. Christmas seasonal and close to annual,” Johanning said.