Bitcoin ETFs Likely a Huge Mistake

in bitcoin •  3 months ago

Several Bitcoin ETFs have been denied over the summer. People thought that ETFs were finally going to get approved, but they weren't. The hype is that if ETFs are approved, it will end the bear market and boost Bitcoin and crypto values to save current investors as new money poors in and make a lot of people happy. It's looked at as taking crypto to the next level in the financial markets.

Source, Source, Source

But Andreas Antonopoulos doesn't think ETFs are good thing for crypto. In a video from two weeks ago, he explained that an ETF means an exchange-traded fund, which is a fund that has a custodian or manager creating a financial "instrument" similar to a stock. Bitcoin ETFs would hold Bitcoin and sell shares in a Bitcoin reserve representing a price of Bitcoin as a stock. This "stock" is then traded through the stock market.

The custodian ETF creator holds the actual Bitcoin, while customers buy a share of those funds. The selling point is that the customer would go through the custodian, instead of having to register at a cryptocurrency exchange, validating user identity through Know Your Customer (KYC), getting encrypted key and using wallets.

Antonopoulos correctly states the dangers of this money game, citing what happened to gold as an example, as well as issues with consensus for forks where the people who buy shares in an ETF won't actually own any BTC and won't have any ability to decide what happens with BTC fork debates:

I'm going to burst your bubble. I know a lot of people want to see Bitcoin ETFs because 'lambos' and 'to the moon' and all that. I think it's a terrible idea. I still think it's going to happen, but I think it's a terrible idea. I'm actually against Bitcoin ETFs.


If there is ever a fork debate, which is very likely to happen again in any cryptocurrency, then the fund that controls that Bitcoin now has a very large voice. Their shareholders don't. They don't get to choose which fork the fund is going to follow in a Bitcoin debate...

We already saw that level of influence during the August 1st fork, user activated software forks, Bitcoin cash, the scaling debate… Large custodial exchanges had a very strong voice in the ecosystem. They were able to decide if they were going to support or not on behalf of 10 million customers… an ETF will do that and it will do that on an even bigger scale

ETF custodians will be centralized fund managers and will hold a lot of power with millions of votes. This can position them to manipulate the price, influence debates on forks, scaling issues and transaction fees. Antonopoulous sees disagreements between centralized fund managers of major ETFs leading to "corporate Bitcoin" and a separate corporate Bitcoin market.

With Wall Street getting more involved in Bitcoin, yes there is more potential for investment and that means the value of BTC and other coins will rise. But at what cost? What will this mean for the future of crypto in general?

Crypto was an alternative to the bad practices of Wall Street. Crypto was supposed to change the world and bring more freedom to the individual. The future of crypto might be worth more with ETF and other Wall Street involvement, but it might mean the hopes and dreams of crypto changing the world for the better will go down the drain.

What do you think? Do you care about the future potential of crypto to bring greater freedom to the world, or do you just care about the money to be made from crypto?

Thank you for your time and attention. Peace.


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I for one am very much anti-ETF for crypto. To me that is crypto accepting failure and looking to the financial institution we're trying to distance ourselves from as some sort of savior. To put it bluntly: Fuck that.


Fuck that indeed. But the crypto freedom ppl aren't the ones who get to decide if all this happens. Wall Street will just suck us into their world anyways :/

My opinion on the matter has already been stated.

ETFs are bad for the decentralization movement but are going to happen anyway. Luckily, we all got in before all this madness goes down. From a financial perspective, who cares if Bitcoin gets pump and dumped at 100k to 25k if you bought in at 7k?

Hopefully, the coins of the future find a way to cut themselves off from traditional markets. We don't need their toxicity.


Yeah, hopefully we can cut the cord at some point...

well, here is the rub. the minute you treat a currency as a derivative the you are going all out to destroy it. you are tokenizing currency and that will devalue it. After all currency is itself a token from some tangible asset.

Remember there are a lot of people on wall street who want to invade the crypto space. if they cannot do it directly, they will do it another way.

Imagine that the person receiving coins will not know the actual value because the value is itelf traded on a platform! go figure!


Yeah, derivative suck. All ppl see if more money and want it, but all this money magic manipulation just ruins shit.

The same old same old sounds to me. Seems that we have already began traveling down this road with the gambling that is known as futures. How such gambling on a commodity is even legal should make others wake up. I am thinking the time to get into crypto for investment for the average person is drawing to its end. Once they have all the regulations and games installed, those of us in already will make out nicely, the door will not be normal person friendly for those coming in later.


Yup, fuck the futures and all the speculation money number magic gambling bullshit. Yeah, the craze of huge investment and pumping hype is going to start soon in the next months and years. We got in early ;) Regulations will just make it so that hardly anyone can do what the early ppl did to get in.

The laughable thing about this ETF thing is that everyone was pinning their hopes on Bitcoin making a comeback when one would be approved.

Herein lies the hypocrisy of cryptocurrency investors, they all want Bitcoin and other cryptos to replace fiat, they don't want government agencies regulating or controlling it, yet an ETF would be just that. The only way the SEC will approve an ETF is if they can regulate and control cryptocurrency which would be disastrous.


Yeah, only some want the replacement for freedom. Most just care about making a killing by getting adoption anyway it can get adopted. Look at Steem, all the vote selling, they just care about making money as investors, not making the platform a great social media place.

Im glad that i saw this and im glad i saw your video. I wasn't sure how i felt on ETFs, but anything that has to do with centralization and the "stock market" is a bad idea. Crypto was made to get away from all of that and sure there will be crypto brokers that try to make a profit off of investing for other people that dont want to do their own research but we dont need the stock market, we just need time. More time for crypto to be more established and widely adopted


It will go the way of wall street and get more adoption, we can't stop them from sucking it all up :/

Exchanges and betting markets are separate things. The former is tied to the underlying value of Bitcoin, the other to speculation on this value - it is a tertiary layer. People need to understand this. Andreas Antonopoulos does, but people agreeing with him here don't seem to understand. ETF's do centralize a lot of voting power into the hands of WallStreet but hedge funds will play a dangerous game (dangerous for them) trying to control Bitcoin decisions b/c the value is in the use and if people don't like the direction they decide on then Fork Baby, Fork!! The exchange market decide at the end of the day, miners will join flooding to where the difficulty is highest which will not be the fund-backed btc, and the funds will have to come back to the table. The power is in the users' hands right now. Don't give it away, b/c then that screws up the value of Bitcoin. Antonopoulous is just concerned that ETFs will hold back innovation and create problems for the success of Bitcoin, not that ETFs can stop it. He is right. But it's inevitable (and maybe even desirable, like a testing ground, if Bitcoin's course will be less than perfect, as it can only be).

Interesting prospect. I think it’s just a whole scale bad idea. We need to keep the crypto and stock markets separated. Combining them will steal more people’s money in a worse fashion than already happens with ICO’s and other bad scenarios for beginners and intermediate investors.


i think when ETF is approved, it is up to ICO themselves to regulate an exit plan for small investor like limiting sell volume by percentage in earlier stage to give investor a breathing space.


Yes that would be ideal, but they want their piece of action, and we can't stop them. It's coming :/

I am also against ETFs for crypto, the whole point of crypto was to get away from the traditional financial market that is already skewed to favour institutions and sophisticated investors. ETFs are a traditional financial instrument that will allow for increasing influence of traditional market players in an industry that was specifically designed to combat them.

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it should be listed in all major exchanges (stock exchanges also)

I guess if you wanted to invest in it through a stock exchange, an ETF would be preferable. However, I would rather have the real thing.


Right. Exchanges and betting markets are separate things. The former is tied to the underlying value of Bitcoin, the other to speculation on this value - it is a tertiary layer even with (theoretical) physical delivery. Bitcoin's not like other commodities, though. You can have physical settlement of contracts in your office. You don't need a warehouse, just a computer and internet connection.


Yup, illusory promises that ppl fall for ...

Back to the few dominating the many. Losing the whole idea of decentralization.


Yup.. it's coming... they want their large piece of the pie...

Wasn't the consensus back in februari that wall street investors would buy bitcoin with their bonuses. Didn't happen. I'm bullish on crypto long term but this bear market is not over yet imho.


Yeah, who knows when, I don't :P

This is one of the best blogs for those who are new in the crypto market and they don't know about the best trading exchange option.

Thank you for the updates. Glad to peer you posting again.

Bitcoin will still be here in 100 years with or without ETF. facts!!!

Interesting point of view. I can't guess how big the threat is and if it is not overexagerrated. But I don't think owners of cryptos have that big voice anyway. It is the developer of blockchains. So I am not that much concerned about the forks. Nor am I about manipulations as it is what happens anyway.