In a recent blog post, Arthur Hayes, the founder of BitMEX, made a bold prediction regarding the potential impact of the approval and success of a Bitcoin (BTC) spot ETF (exchange-traded fund). Hayes suggests that if the Bitcoin spot ETF gains significant traction, it could lead to a shift in price discovery from the East to the West, disrupting traditional financial markets.
Hayes introduced Bitcoin as a potential escape from the fiat monetary debasement that has characterized the post-2008 era. Acknowledging the immaturity of Bitcoin during the 2008 financial crisis, Hayes contends that the cryptocurrency, and the broader crypto market, have proven resilient and capable of weathering severe crises, as demonstrated in 2022.
The narrative shifts to the events of 2023, when the Federal Reserve's attempt to tighten financial conditions led to the failure of several U.S. banks and significant disruptions in the crypto market. Hayes underscores the contrasting resilience of decentralized assets like Bitcoin compared to centralized entities that faced bankruptcy.
He contends that the only way to prevent global financial system collapse is to financialize Bitcoin by introducing a highly liquid Bitcoin ETF. Drawing parallels with the gold market, Hayes suggests that the approval of a Bitcoin ETF is a strategy employed by financial elites to keep capital within the system.
Long-term trend
Hayes then shifted his focus to the potential market impact of the spot Bitcoin ETF, particularly focusing on BlackRock's ETF due to its prominence and global distribution capabilities. Hayes outlines various trading opportunities that may arise, including the creation and redemption process, spot exchange arbitrage, ETF derivatives such as listed options and the impact of the ETF financing trades.
One notable prediction is the emergence of arbitrage opportunities in the Bitcoin market, especially with the ETF's potential to concentrate trading on less liquid exchanges. Hayes believes this could create inefficiencies that skilled arbitrageurs could exploit.
The blog post concludes with a discussion of the potential shift in global inflation dynamics and the long-term trend favoring the crypto ETF complex. Hayes predicts that, despite potential market choppiness, the financialization of Bitcoin will continue to drive the crypto market to new highs by the end of 2024.
Yuri Molchan
Vladislav Sopov
Dan Burgin
Alex Dovbnya