in his last rehearsal Titled “ETF Wif Hat,” Arthur Hayes, founder of cryptocurrency exchange BitMEX, delved into the intricate relationship between traditional finance (TradFi) and the burgeoning field of cryptocurrencies, specifically bitcoin. Hayes draws parallels between the current financial strategies of global elites and historical practices, suggesting a continuing pattern of preservation of existing financial structures.
How shadowy elites are trying to control bitcoin
Hayes begins by comparing the elite's efforts to preserve the global financial status quo with the exorbitant costs incurred in the last moments of life in medical care. He argues that since the 2008 global economic crisis, sparked by subprime mortgage lending in the United States, the existing financial order, which he refers to as “Pax Americana,” has been in danger.
He states: “The elites in charge of the Pax Americana and its vassals are willing to do whatever it takes to preserve the current world order because they are the ones who have benefited the most from its existence.” As a result, central banks around the world, including the US Federal Reserve (Fed), the European Central Bank (ECB), the People's Bank of China (PBOC) and the Bank of Japan (BOJ), resorted to massive money printing. efforts to alleviate various symptoms of this crisis.
Hayes notes that this strategy led to unprecedented global debt-to-GDP ratios and historically low interest rates, with nearly $20 trillion in corporate and government bonds yielding negative yields at their peak. This situation, according to Hayes, did not benefit the majority of the world's population, who do not possess sufficient financial assets to benefit from such monetary policies.
In this context, Hayes presents bitcoin, created by the pseudonym Satoshi Nakamoto, as an innovative development that offers an alternative to traditional financial systems. He describes the creation of bitcoin by Satoshi Nakamoto as a moment when “a lotus blooms in a pond of manure,” signaling a new era in financial independence and global scalability.
However, Hayes notes that bitcoin was initially too immature to serve as a credible alternative after the 2008 crisis. It wasn't until the financial turmoil of 2022, which included the collapse of several major banks and crypto companies, that bitcoin and other cryptocurrencies demonstrated their resilience. Unlike traditional financial institutions, these digital assets did not receive ransoms but continued to operate and btc blocks were produced every 10 minutes.
In 2023, according to Hayes, it became clear that traditional financial systems could not support further monetary tightening. This led to a curious change where btc prices began to rise alongside rising long-term US Treasury yields, suggesting growing investor skepticism towards government bonds. traditional stocks and a turn toward assets like bitcoin and major tech stocks.
The same manual as with gold?
To counter this shift and keep capital within the traditional system, Hayes argues that the elite are now turning to financializing bitcoin by creating exchange-traded funds (ETFs). He draws a parallel with the gold market, where the introduction of ETFs like SPDR GLD by the US Securities and Exchange Commission (SEC) in 2004 allowed for easier trading of gold without the need for physical possession.
“To avoid this reckoning, the elite must financialize bitcoin by creating a highly liquid exchange-traded fund (ETF). “This is the same trick they pulled in the gold market,” Hayes argues. Therefore, a bitcoin ETF, Hayes proposes, would allow traditional financial companies (TradFi) to manage bitcoin investments, keeping capital within the system. Hayes highlights the importance of Blackrock, a major asset management company, filing for a bitcoin ETF in June 2023.
He finds it noteworthy that the SEC, after years of rejecting similar requests, including one from the Winklevoss twins in 2013, seemed receptive to Blackrock's request and approved it within six months. Hayes suggests that this indicates a strategic move by elites to integrate bitcoin into the traditional financial system at a critical time.
However, the BitMEX founder warns that a spot ETF is fundamentally different from owning bitcoin directly. Hayes warns: “A spot bitcoin ETF is a commercial product. You buy it with fiat to earn more fiat. It's not bitcoin. It is not a path to financial freedom. It is not outside the TradFi system.”
Looking ahead, Hayes analyzes the impact on the spot ETF market, focusing on the Blackrock ETF due to Blackrock's global reach and distribution capabilities. He predicts that the complex crypto ETF will continue to accumulate assets as inflation persists, driven by the ongoing dismantling of the post-World War II global economic and military settlement and the inflationary nature of war.
In conclusion, Hayes reflects on the potential of TradFi's financialization of bitcoin to initially drive up the price of btc in fiat terms:
The bull market is just beginning. 2024 will be a choppy year as far as price action is concerned, but I still expect that by the end of the year we will be at or above an all-time high in the market cap of bitcoin and the entire crypto complex. In the name of Lord Satoshi, Yahtzee!!!
At the time of publication, btc was trading at $42,822.
Featured image of DALL·E 3, chart from TradingView.com
