Arthur Hayes Explores Elite Control Over Bitcoin Through ETFs in ‘ETF Wif Hat’
In his essay “ETF Wif Hat,” Arthur Hayes, founder of BitMEX, scrutinizes the potential influence of traditional finance elites on Bitcoin, drawing parallels between historical financial strategies and current efforts to control the cryptocurrency through ETFs.
The Elite’s Endeavor to Control Bitcoin
In “How Shadow Elites Are Trying To Control Bitcoin,” Arthur Hayes draws an analogy between the elite’s attempts to maintain the global financial status quo and the costly end-of-life medical treatments.
He traces the origins of the current financial instability to the 2008 global economic crisis, initiated by the subprime mortgage fiasco in the United States, which put the existing “Pax Americana” financial order at risk.
Hayes asserts that the elites, who have reaped significant benefits from the Pax Americana system, are determined to preserve this order at any cost. This led central banks globally, including the Federal Reserve, the European Central Bank, the People’s Bank of China, and the Bank of Japan, to embark on extensive money printing exercises to mitigate the crisis’s effects.
This approach, Hayes notes, resulted in a record global debt-to-GDP ratio and historically low interest rates, culminating in nearly $20 trillion of corporate and government bonds with negative yields at their height.
He argues that these policies largely failed to benefit the majority of the population, who lacked substantial financial assets to profit from such monetary strategies.
Against this backdrop, Hayes positions Bitcoin, the brainchild of the enigmatic Satoshi Nakamoto, as a revolutionary alternative to the traditional financial system. He eloquently describes Bitcoin’s emergence as akin to “a lotus blooming in a pond of dung,” symbolizing a new era of financial autonomy and global scalability, fundamentally different from the existing financial paradigms.
Bitcoin’s Maturity and Resilience Post-2008 Crisis
However, as Hayes points out, Bitcoin was initially too nascent to be a viable alternative in the aftermath of the 2008 financial crisis. Its real test came with the financial upheavals of 2022, marked by the collapse of several key banks and cryptocurrency firms.
During this period, Bitcoin, along with other cryptocurrencies, showcased remarkable resilience. Unlike traditional financial entities that often relied on bailouts, these digital assets persevered independently, with Bitcoin continuing to produce blocks every 10 minutes.
By 2023, Hayes observed a significant shift in the financial landscape. Traditional financial systems struggled to cope with further monetary tightening, leading to an intriguing scenario. During this time, Bitcoin prices began to rise in tandem with the increasing long-end US Treasury yields.
Is Bitcoin Following Gold’s Path? Hayes on ETFs and Financialization
In his analysis, Hayes suggests that to counter the growing shift towards cryptocurrencies like Bitcoin, the financial elite are employing a strategy reminiscent of their approach to gold. He notes that the elite are now aiming to financialize Bitcoin through the creation of Exchange Traded Funds (ETFs).
Hayes draws a parallel with the gold market, particularly citing the introduction of ETFs like the SPDR GLD by the US Securities and Exchange Commission (SEC) in 2004, which facilitated gold trading without the need for physical possession.
He argues that a Bitcoin ETF would allow traditional finance (TradFi) entities to control Bitcoin investments, effectively keeping the capital within the traditional financial system.
A notable example he highlights is Blackrock’s application for a Bitcoin ETF in June 2023, emphasizing the significant role such traditional asset management firms could play in shaping Bitcoin’s future within the financial ecosystem.
SEC’s Receptive Stance on Bitcoin ETF
Hayes finds the recent change in the SEC approach towards Bitcoin ETFs particularly telling. He notes the SEC’s historical reluctance to approve Bitcoin ETFs, including a notable rejection of the Winklevoss twins’ application in 2013.
However, the SEC’s swift, six-month approval of Blackrock’s application in 2023 marks a significant shift. Hayes interprets this as a strategic move by financial elites to integrate Bitcoin into the traditional financial system at a crucial time.
Hayes also cautions about the fundamental differences between a spot Bitcoin ETF and owning Bitcoin directly. He points out that a spot ETF is a trading product used for fiat gains, not a tool for financial independence or an escape from the traditional finance (TradFi) system.
Looking at the broader market implications, Hayes focuses on the potential impact of Blackrock’s ETF, given its extensive global reach and distribution capabilities. He anticipates that the crypto ETF market will continue to grow, fueled by persistent inflation and the unfolding of post-WW2 economic and military dynamics, including the inflationary aspects of war.
In his concluding remarks, Hayes shares an optimistic outlook for Bitcoin and the broader cryptocurrency market. He predicts that despite potential volatility, 2024 will see substantial growth, potentially reaching or surpassing all-time highs in market capitalization for Bitcoin and the entire crypto sector.
He concludes with a playful nod to the crypto community, invoking “Lord Satoshi” and declaring an enthusiastic “Yahtzee!” for the upcoming bull market.
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