Arthur Hayes takes cautious view of Bitcoin ETF: it may pose a threat to the value and existence of Bitcoin

On December 23, BitMEX founder Arthur Hayes published a lengthy article on his blog, analyzing topics such as changes in Federal Reserve policy, regulated decentralized finance (Permissioned DeFi), real-world assets (RWA), and Bitcoin ETFs. Hayes believes that Bitcoin and cryptocurrencies are the best way to fight currency devaluation, comparing them to gold, the SP 500 index, and the Nasdaq 100 index, and pointing out that Bitcoin has outperformed other risky assets since 2020.

When discussing changes in Federal Reserve policy, Hayes particularly emphasized the important influence of political factors on Federal Reserve decisions. He pointed out that Federal Reserve Chairman Jerome Powell had emphasized the necessity of raising interest rates to deal with out-of-control inflation in the post-pandemic period. However, according to recent statements and actions, it seems that the Federal Reserve's policy has undergone a significant shift, beginning to consider a rate cut in 2024. This policy shift reflects the direct influence of the current political situation in the United States on Federal Reserve policy. Hayes' analysis suggests that this policy change may be due to pressure from the political leadership, particularly in major election years. In order to gain voter support, political leaders may tend to adopt loose monetary policies to stimulate economic growth and improve the performance of financial markets, even if this may lead to long-term inflation risks.

Hayes is critical of regulated decentralized finance (Permissioned DeFi). He believes that this financial model, which combines centralized and decentralized elements, violates the core principles of decentralization and may simply be another way for traditional financial (TradFi) institutions to exploit retail investors.

Regarding the tokenization of real-world assets (RWA), Hayes believes that while this attempt may sound attractive, it will face many challenges in actual operation. He particularly points out that tokenizing assets such as real estate and bonds may be difficult to succeed due to a lack of standardization and liquidity.

Finally, Hayes is reserved about Bitcoin ETFs. He proposes that if ETFs are held in large quantities and stored by traditional financial institutions without utilizing the Bitcoin blockchain, they may threaten the value and existence of Bitcoin. He emphasizes that Bitcoin is different from other currency assets in history, and its value lies in its liquidity and use, not just holding.