Hayes believes that the existing financial order has been in a precarious state.
Source: Bitcoinist
Translation: Blockchain Knight
Arthur Hayes, the founder of the crypto asset exchange BitMEX, delves into the intricate relationship between traditional finance and the emerging crypto asset field (especially BTC) in his latest article titled "ETF Wif Hat."
Hayes compares the current global elite's financial strategy with historical practices and proposes a sustainable model for maintaining the existing financial structure.
Hayes first compares the efforts of the elite to maintain the global financial status quo with the high costs incurred in healthcare during the final moments of life.
He believes that since the global economic crisis triggered by the U.S. subprime mortgage in 2008, the existing financial order, which he refers to as the "American Great Harmony," has been in a precarious state.
Hayes asserts, "The elite who control the existing financial order and their minions are willing to maintain the current world order at all costs because they benefit the most from the existence of this order."
As a result, central banks around the world, including the Federal Reserve (Fed) of the United States, the European Central Bank (ECB), the People's Bank of China (PBOC), and the Bank of Japan (BOJ), have taken measures to print money on a large scale to alleviate various problems caused by this crisis.
Hayes points out that this strategy has led to a record level of global debt as a percentage of gross domestic product, and interest rates are at historic lows. At the peak, nearly $20 trillion in corporate and government bonds yielded negative returns.
Hayes believes that this situation has not benefited the majority of people in the world because they do not have enough financial assets to benefit from this monetary policy.
Against this backdrop, Hayes introduces BTC, created by the pseudonym "Satoshi Nakamoto," as a groundbreaking development that provides an alternative to the traditional financial system.
He describes the creation of BTC by Satoshi Nakamoto as a moment of "lotus in the mud," marking the arrival of a new era of financial independence and global scalability.
However, Hayes points out that BTC was not initially mature enough to become a reliable alternative after the 2008 crisis. It was not until the financial storm of 2022, including the collapse of several major banks and crypto asset companies, that BTC and other crypto assets demonstrated their resilience.
Unlike traditional financial institutions, these digital assets did not receive bailouts but continued to operate, with a new BTC block being produced every 10 minutes.
Hayes states that by 2023, the traditional financial system clearly could not withstand further monetary tightening. This led to a strange shift, with the price of BTC rising in tandem with the increase in long-term U.S. Treasury yields, indicating that investors' skepticism towards traditional government bonds is growing and shifting towards assets such as BTC and major tech stocks.
He also believes that in response to this shift and to keep capital within the traditional system, the elites are now taking strategic measures to financialize BTC by creating ETFs.
Hayes compares this to the gold market, where in 2004, the U.S. Securities and Exchange Commission (SEC) introduced ETFs such as SPDR GLD, making gold trading easier without the need for physical possession.
To avoid this liquidation, the elites must financialize BTC by creating highly liquid ETFs. This is exactly the same trick they played in the gold market.
Therefore, BTC ETFs will enable traditional financial companies to manage BTC investments and keep capital within the system. Hayes emphasizes the significance of the application for a BTC ETF by the large asset management company BlackRock in June 2023.
It is worth noting that after rejecting similar applications for many years (including the Winklevoss brothers' application in 2013), the SEC seems to have accepted BlackRock's application and approved it within six months.
This indicates that the elites have taken strategic measures to integrate BTC into the traditional financial system at a critical moment.
However, Hayes warns that spot ETFs are fundamentally different from directly owning BTC. A spot BTC ETF is a trading product that can be purchased with fiat currency to earn more fiat currency, but it is not BTC and is not a path to financial freedom because it is not outside the traditional financial system.
Looking ahead, Hayes discusses the market impact of spot ETFs, with a focus on BlackRock's ETF, as BlackRock has global influence and distribution capabilities.
Hayes predicts that as inflation continues, the crypto ETF complex will continue to attract assets, driven by the ongoing relaxation of post-World War II global economic and military arrangements and the inflationary nature of war.
Finally, Hayes reflects on the possibility of traditional finance financializing BTC, believing that this will initially push up the fiat price of BTC:
"The bull market is just beginning, and in terms of price trends, 2024 will be a turbulent year. But I still expect that by the end of the year, the market value of BTC and the entire crypto asset complex will reach or exceed historical highs."
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