Arthur Hayes Strikes Again: Spot Bitcoin ETFs Could Potentially “Kill Bitcoin”

Key Insights

• Arthur Hayes believes new Spot Bitcoin ETFs could kill BTC.
• Hayes believes that Bitcoin’s value is tied to its movement, and ETFs would hinder this.
• Demand and supply will suffer, causing the miners to walk away.
• Hayes warns that BTC will now be open to manipulation and censorship.
• Overall, a new crypto may emerge if ETFs do end BTC.

The incoming Spot BTC ETFs, filed by Blackrock and several other asset managers, have been the source of most of the speculation, hype and FUD in the crypto space for months.

And now, with a new ETF so close to being approved, Arthur Hayes, the former CEO of BitMEX, has dropped some pretty disturbing bombshells.

Is it possible that these incoming ETFs could bring about the end of BTC?

Hayes seems to think so and let us take a look at some of his reasons.

Bitcoin ETF Could Completely “Destroy” Bitcoin

Arthur Hayes in a new tweet, has dropped a few insights on the noise around the upcoming BTC ETFs.

According to Hayes, a new Spot Bitcoin ETF could “completely destroy” BTC if it becomes too popular.

Hayes attached a link to a blog post published on 23 December to this tweet. And in this post, Hayes argued that Bitcoin only exists and has value because “it moves”.

But what does this mean?

Unlike fiat and other forms of money, which only have value because people believe they do, BTC is a peer-to-peer payment. Cryptocurrency is also highly scarce, making it a reliable form of money that will only continue to go up in price.

“Bitcoin is the first monetary asset in human history that exists only if it moves.”

However, Hayes argues that these coming ETFs are designed to “vacuum up assets” and “store them in a metaphorical vault”.

In essence, BTC will no longer be able to move around so freely, because spot Bitcoin ETFs would buy and store large amounts of Bitcoin on behalf of their investors.

As a result, the demand and supply of the cryptocurrency will suffer greatly on the open market, and decrease the number of transactions on the BTC network.

It Gets Even Worse

Hayes went further to warn that if these ETFs become too successful, most of the BTC in circulation will be gone, leaving only Bitcoin derivatives (and ordinals) for investors to trade.

In essence, BTC will lose most of its decentralization, becoming heavily dependent on the same financial systems it was designed to combat, like Banks and Brokers. BTC locked up in these ETFs, would now become open to manipulation, control, and censorship by these entities and the government under which they operate.

But that’s not all.

If Bitcoin stops moving around so much, miners have no transactions to validate, and therefore no block rewards to receive.

“Imagine a future where the largest Western and Chinese asset managers hold all the BTC in circulation […]. Because of their confusion and laziness, people purchase BTC ETF derivatives rather than buying Bitcoin in self-custodial wallets. Now that a handful of firms hold all the Bitcoin, and have no actual use for the Bitcoin blockchain, the coins never move again. […]. Bye-bye, BTC!”

Before long, these miners will end up turning off their machines for lack of money and “Without the miners, the network dies, and BTC vanishes.”

Things look so bleak, that Hayes even appears to have lost hope for Bitcoin.

He speculates that if these spot Bitcoin ETFs do kill BTC, another crypto network would emerge and replace it.

Hayes speculates that this new crypto would be very similar to Satoshi Nakamoto’s original vision, and will be more resistant to centralization attempts like the coming ETFs.

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.