BitMEX founder has a dire warning about spot ETF approval

Arthur Hayes, co-founder of the BitMEX crypto exchange, is sounding the alarm regarding what he sees as possible dire outcomes of the pending regulatory approval of the spot Bitcoin exchange-traded fund (ETF).

The concern lies in traditional finance asset managers, such as BlackRock, potentially undermining Bitcoin (BTC) by dominating the spot Bitcoin ETF market.

In a blog post on Dec. 22, Hayes highlighted the risk of such firms holding “all the Bitcoin in circulation.” If that happens, he says, an over-successful ETF managed by traditional asset managers could ultimately lead to the decline of the cryptocurrency.

Hayes argues that BlackRock and similar entities “vacuum up assets, store them in a metaphorical vault, issue a tradable security, and charge a management fee for their ‘hard’ work.”

“They don’t use the things they hold on behalf of their clients, which presents a problem for Bitcoin if we take an extreme view of a possible future,” he added.

The public may then opt for Bitcoin ETF derivatives instead of buying and holding Bitcoin by themselves, impacting the use of the Bitcoin blockchain, Hayes says.

Hayes surmised a future where Bitcoin is merely stored in vaults, with miners no longer receiving income due to the lack of network use. This scenario, he warns, could lead to the network’s death and the disappearance of Bitcoin.

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Hayes also pointed to Bitcoin’s 228% growth since 2020, where he claims it outperformed most traditional assets. This growth signifies BTC’s dominance as a hedge against fiat debasement, he adds.

BTC growth since 2020 compared to traditional assets. Source: Arthur Hayes

Hayes advised investors to avoid permission-based DeFi projects, tokenized real-world assets, and governance tokens tied to debt yields.

Before penning his latest blog post, Hayes had taken to social media to reveal that he had moved his investments from Solana (SOL) to Ether (ETH), despite having criticized Solana and even forecasting that the token could breach the $100 mark based on its current rally.

Fam … I have a confession to make.

I received a msg from the Lord while meditating. He said dump that Sam coin POS, and profess your love for Archangel Vitalik.

So I dumped $SOL, and bot more $ETH.$ETH = $5,000

— Arthur Hayes (@CryptoHayes) December 22, 2023

By shifting to ETH, Hayes appears to be bucking the trend, as Solana has outpaced Ether in performance during the current crypto market resurgence.

Nonetheless, Hayes anticipates that Ether will hit $5,000, surpassing its previous peak of $4,800 achieved in November 2021.

It’s worth noting that Hayes was previously critical of Solana, even expressing scathing reviews of the project when he acquired the tokens in November.