Arthur Hayes, co-founder of crypto exchange BitMEX, is sounding the alarm over what he sees as the potential dire consequences of the pending regulatory approval of the spot Bitcoin exchange-traded fund (ETF).
The concern is that traditional financial asset managers like BlackRock may be undermining Bitcoin (BTC) by dominating the spot Bitcoin ETF market.
In a Dec. 22 blog post, Hayes highlighted the risk of such firms holding “all Bitcoin in circulation.” If that happens, he says, an over-performing ETF managed by traditional asset managers could ultimately lead to the cryptocurrency's demise.
Hayes argues that BlackRock and similar companies “accumulate 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 own on behalf of their customers, which is a problem for Bitcoin when we have an extreme view of a possible future,” he added.
The public could then opt for Bitcoin ETF derivatives instead of buying and holding Bitcoin themselves, which would impact the use of the Bitcoin blockchain, Hayes says.
Hayes hypothesized a future in which Bitcoin is simply stored in vaults and miners no longer receive any income due to the lack of network usage. He warns that this scenario could lead to the downfall of the network and the disappearance of Bitcoin.
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Hayes also pointed to Bitcoin's 228 percent growth since 2020, where he said it outperformed most traditional assets. This growth means the dominance of BTC as a hedge against the devaluation of fiat currencies, he added.
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 writing his latest blog post, Hayes revealed on social media that he had shifted his investments from Solana (SOL) to Ether (ETH), despite criticizing Solana and even predicting that the token would reach 100 -Dollar mark could break current rally.
Fam… I have a confession to make.
While I was meditating, I received a message from the Lord. He said throw away the Sam coin and confess your love to Archangel Vitalik.
So I dumped $SOL and added more $ETH. $ETH = $5,000
— Arthur Hayes (@CryptoHayes) December 22, 2023
By switching to ETH, Hayes appears to be bucking the trend as Solana has outperformed Ether during the current crypto market resurgence.
Nevertheless, Hayes expects Ether to reach $5,000, surpassing its previous high of $4,800 in November 2021.
It's worth noting that Hayes was previously critical of Solana and even gave scathing reviews of the project when he acquired the tokens in November.
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