BitMEX founder: How do the elites control BTC through ETFs?
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BitMEX founder: How do the elites control BTC through ETFs?
Hayes believes the existing financial order has always been precarious.
Navigating Web3 tides with focused insightsSource: Bitcoinist
Compiled by: Blockchain Knight
Arthur Hayes, co-founder of the crypto asset exchange BitMEX, has in his latest article titled "ETF Wif Hat," delved into the complex relationship between traditional finance and the emerging world of crypto assets—particularly BTC.
Hayes draws parallels between today’s global financial elite strategies and historical practices, proposing a sustainable model for preserving the existing financial structure.
Hayes begins by comparing the efforts of the elite to preserve the current global financial order with the exorbitant costs associated with end-of-life medical care.
He argues that since the 2008 global economic crisis triggered by U.S. subprime mortgages, the existing financial order—which he calls the "Pax Americana"—has been hanging by a thread.
Hayes asserts: "The elites who manage the American financial order and their affiliates are willing to pay any price to maintain the status quo because they benefit the most from its continued existence."
As a result, central banks around the world—including the U.S. Federal Reserve (Fed), the European Central Bank (ECB), the People's Bank of China (PBOC), and the Bank of Japan (BOJ)—have engaged in massive money printing to mitigate various issues arising from the crisis.
Hayes points out that this strategy has driven global debt-to-GDP ratios to unprecedented levels and interest rates to historic lows, with nearly $20 trillion in corporate and government bonds yielding negative returns at their peak.
Hayes notes that this situation has not benefited the majority of people worldwide, as most lack sufficient financial assets to gain from such monetary policies.
Against this backdrop, Hayes introduces BTC, created by the pseudonymous "Satoshi Nakamoto," viewing it as a breakthrough development offering an alternative to the traditional financial system.
He describes Satoshi's creation of BTC as a "lotus rising from the mud"—a moment marking the dawn of a new era of financial independence and global scalability.
However, Hayes notes that BTC was initially too immature to serve as a reliable alternative immediately after the 2008 crisis. It wasn't until the financial turmoil of 2022—including the collapse of several major banks and crypto companies—that BTC and other crypto assets demonstrated their resilience.
Unlike traditional financial institutions, these digital assets received no bailouts, yet continued operating—BTC blocks still being produced every 10 minutes.
Hayes states that by 2023, it became clear the traditional financial system could not withstand further monetary tightening. This led to a peculiar shift: BTC prices began rising alongside increases in U.S. long-term Treasury yields, indicating growing investor skepticism toward traditional government bonds and a shift toward assets like BTC and major tech stocks.
He also believes that, in response to this shift and to keep capital within the traditional system, elites are now financializing BTC through the creation of ETFs.
Hayes compares this to the gold market, where in 2004 the U.S. Securities and Exchange Commission (SEC) approved ETFs such as SPDR GLD, making gold trading easier without requiring physical ownership.
To avoid such a reckoning, elites must financialize BTC by creating highly liquid ETFs—a move identical to the trick they played in the gold market.
Thus, BTC ETFs will allow traditional financial firms to manage BTC investments while keeping capital within the system. Hayes emphasizes the significance of BlackRock, the giant asset manager, filing for a BTC ETF in June 2023.
Notably, after years of rejecting similar applications—including the Winklevoss brothers’ proposal in 2013—the SEC appeared receptive to BlackRock’s application, approving it within six months.
This suggests a strategic move by the elites to integrate BTC into the traditional financial system at a critical juncture.
Nevertheless, Hayes warns that spot ETFs are fundamentally different from direct BTC ownership. A spot BTC ETF is a tradable product that can be bought with fiat currency to earn more fiat, but it is not BTC itself, nor a path to financial freedom, as it remains inside the traditional financial system.
Looking ahead, Hayes discusses the market impact of spot ETFs, focusing particularly on BlackRock’s ETF due to its global influence and distribution capabilities.
Hayes predicts that as inflation persists, the crypto ETF complex will continue to accumulate assets, driven by the unraveling of post-WWII global economic and military arrangements and the inherently inflationary nature of war.
Finally, Hayes reflects on the likelihood of traditional finance financializing BTC, believing this will initially push up BTC’s fiat-denominated price:
"The bull market has only just begun. In terms of price action, 2024 will be a volatile year. But I still expect that by year-end, the market cap of BTC and the broader crypto asset complex will reach or exceed all-time highs."
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