How the Elite is Trying to Control Bitcoin
In his latest essay titled “ETF Wif Hat,” Arthur Hayes, the founder of BitMEX, explores the relationship between traditional finance (TradFi) and cryptocurrencies, particularly Bitcoin. He suggests that there is a parallel between the current financial strategies of global elites and historical practices, indicating a pattern of preserving existing financial structures.
The Threat to Pax Americana
Hayes begins by comparing the efforts of the elite to preserve the global financial status quo with the exorbitant costs incurred in healthcare during the last moments of life. He argues that since the 2008 global economic crisis, triggered by subprime mortgage loans in the US, the existing financial order, known as Pax Americana, has been at risk.
The Elites’ Strategy
Hayes asserts that those in charge of Pax Americana are willing to do whatever it takes to maintain the current world order because they have benefited the most from it. Central banks worldwide, including the Federal Reserve (Fed), European Central Bank (ECB), People’s Bank of China (PBOC), and Bank of Japan (BOJ), resorted to massive money printing efforts after the crisis.
The Consequences
This strategy led to an unprecedented global debt-to-GDP ratio and historically low interest rates. Nearly $20 trillion in corporate and government bonds yielded negative returns at their peak. According to Hayes, this situation did not benefit most of the world’s population who lacked sufficient financial assets.
Bitcoin’s Alternative Solution
Hayes introduces Bitcoin as a groundbreaking development offering an alternative to traditional financial systems. He describes its creation by Satoshi Nakamoto as a moment where a new era of financial independence and global scalability emerged.
Bitcoin’s Resilience
Hayes notes that Bitcoin was initially too immature to serve as a credible alternative after the 2008 crisis. However, during the financial turmoil of 2022, Bitcoin and other cryptocurrencies demonstrated their resilience. Unlike traditional financial institutions, these digital assets continued to operate without bailouts.
The Shift in 2023
In 2023, traditional financial systems could not sustain further monetary tightening. BTC prices started rising alongside increasing long-end US Treasury yields, suggesting growing investor skepticism towards government bonds and a shift towards assets like Bitcoin and major tech stocks.
Financializing Bitcoin Through ETFs
To counter this shift and keep capital within the traditional system, Hayes argues that the elite is now turning to financialize Bitcoin through the creation of Exchange Traded Funds (ETFs). He draws a parallel to the gold market, where the introduction of ETFs allowed for easier trading of gold without physical possession.
The Significance of a Bitcoin ETF
A Bitcoin ETF would enable TradFi firms to manage Bitcoin investments and keep the capital within the system. Hayes highlights Blackrock’s application for a Bitcoin ETF in June 2023 as significant, considering the SEC’s previous rejections of similar applications.
The Difference with Spot ETFs
However, Hayes warns that a spot ETF is fundamentally different from owning Bitcoin directly. He emphasizes that a spot Bitcoin ETF is a trading product that does not offer the same path to financial freedom or exist outside of the traditional finance system.
The Market Impact and Future Predictions
Hayes predicts that the crypto ETF complex will continue to gather assets as inflation persists. He believes that the financialization of Bitcoin by TradFi will initially drive up its price in fiat terms. He expects the bull market to continue, with Bitcoin and the entire crypto complex reaching or surpassing all-time highs by the end of 2024.
Hot Take: Bitcoin’s Path to Financial Independence
In conclusion, Hayes reflects on the potential of financializing Bitcoin through TradFi. He believes that despite the challenges and uncertainties, Bitcoin’s path to financial independence and a higher market cap is just beginning.
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