Are Spot ETFs a threat to Bitcoin Long Term?
In short, is plausible, read on and find out why and what countermeasures can be implemented
What is a Bitcoin spot ETF?
Is an asset that can be acquired as a stock by investors that tracks the price of Bitcoin.
Why is it considered a game changer?
Institutional investors and wealthy individuals, using large investment firms like Blackrock, Fidelity or Ark among others, will be able to acquire the asset with low risk, since these investment firms are highly regulated. These investors have above 15 trillion dollars invested in these large firms and therefore, it is expected that these firms will allocate at least 1% of their portfolios to it. That will be mean a minimum of $150 billions into Bitcoin, which is remarkable considering the market cap of the asset before the ETF approval was around $570 billion and as of this moment, few months after the approval is $2T.
An injection of minimum $150 billions translates in a huge demand for Bitcoin with massive potential for price appreciation.
Current mayor players
Until now, very few large institutions have acquired Bitcoin, examples are Tesla Inc (Nasdaq: TSLA) and MicroStrategy (Nasdaq: MSTR), which wrote a document labeled "A summary of some of the key considerations for corporations to keep in mind when investing in bitcoin". The link to the document:
Recently MSTR is coaching MSFT to add Bitcoin to their portfolio. This, would make MSFT another big player in the ecosystem.
Long term impact?
We can divide the long term impact into two arenas:
Asset appreciation
Attempts to control the asset
Long terms asset appreciation
As explained before, the more capital is deployed into the asset, and the more time passes, the more valuable and scarce it becomes (one halving every 4 years) and therefore, Bitcoin will continue to appreciate over time by "a lot".
Extrapolate the financial institutions portfolio investment to 5% of 15 trillion dollars, then to 10% and so on. Considering that Bitcoin is the best asset in terms of appreciation of the last 10 years, it is plausible that institutional investors will be eager to put more than 1% of their portfolios into Bitcoin, I would assume that 5% for the most conservative and 20% for the most aggressive will be logical.
You do the math, you will get numbers that will explain why so many financial analyst come with such a high numbers in their predictions of the future price of Bitcoin.
Attempts to control the asset in the long term
Recently I read a post from Chris Blec in X, his post was quite interesting, it reads "Pfizer convinced billions of people to inject a mysterious chemical into their body multiple times but you don't think Blackrock can convince normies that their fork is the real Bitcoin?"
A provocative post which opens the door for debate, one that I am certain is being discussed for years already close doors among the Bitcoin community.
Potential Attack vectors
Forking Bitcoin into POS: Blackrock or a union of Investment corporations could influence, with their resources, some key developers and miners to fork Bitcoin into a PoS (Proof of Stake) chain, basically centralizing and controlling Bitcoin. A fork creates a new chain and the Bitcoin users and Bitcoin Miners will decide which chain is the real Bitcoin, users decide by changing (software used) their Node into the new chain or not, one Node, one Vote.
Forking Bitcoin to reduce the block time to 1 minute: With the excuse to reduce the validation transaction time. This will imply many changes that will lead to mining 4500 Bitcoin per day instead of the 450 as of today, reducing the short terms scarcity by increasing the offer and therefore reducing the price dramatically.
Forking Bitcoin to increase the block size: This was attempted before, Jonathan Bier in his book “The Blocksize War: The battle over who controls Bitcoin’s protocol rules” does a decent job explaining the depths of the attack. But in summary leads to centralization and control of the network
Countermeasures
Education: In my opinion, education is key, those investment funds manage money from wealthy investors, if those investors understand the ethos of Bitcoin and why the asset is so scarce and valuable, they will fight back together with the individual investors for those changes not to be pedaled into the chain. At the end, greed is a very strong motivator and Satoshi understood that perfectly and therefore it is accounted for in the design.
Awareness: A considerable percentage of the Bitcoin investors are well informed and therefore, fear can't be use as a trigger, as it was the case of the pharmaceuticals and their experimental drugs, the investment companies could use their resources to create campaigns pushing their narrative, but the community will see through that and counter it in the social networks quite fast, in my opinion, in the age of information, the legacy MSM (Main Stream Media) can't easily steer the Bitcoin ecosystem opinion as they could have done with the population up to the 90s, now is a real challenge for them. Proof of that is that they have been fighting Bitcoin with everything they got until now. They short it, talk trash it as much as they could in the legacy MSM, call it rat poison, stated that it will go to zero (while secretly buying it...) and after all that, now they are lining up to buy it and speaking highly of the asset.
Run your own Node: Bitcoin has endured 14 years of attacks and survived thanks to the community and investors, we need to stay vigilant and protect it, run at least one Node at home, remember, one Node, one Vote.
Can you think of additional countermeasures?
Let us know!
You liked the article? Make my day brighter!
Like, subscribe and share!
Last but not least, the following link is an unstoppable domain, it will open a page in which you can perform an anonymous contribution to support my work:
https://rodswallet.unstoppable/
The link didn’t open?
To open the link you need to use a best in class browser that supports web3, two are recommended: Brave Browser and Opera Browser
Are you a member of the decentralized #Nostr ecosystem, consider zapping me anonymously:
rod@npub.cash
