The Dark Side of Bitcoin ETFs (and the resulting benefits)

TL;DR

• The demand for the Bitcoin ETFs are pushing BTC’s price up (hoooray!), but also concentrating BTC ownership, allowing for greater price manipulation (boooo!).

Full Story

“Everyone has a price.”

That’s pretty much the driving factor of Bitcoin’s price.

If there’re more buyers than sellers, the price goes up in an attempt to convince holders to sell.

…and if that isn’t successful? The price goes up even further.

As of this writing, the US Bitcoin Exchange Traded Funds (aka: ETFs, aka: funds that buy Bitcoin every time someone buys a share in their fund) own a whopping 5% of the 21,000,000 Bitcoin supply.

And if US stock investors’ appetite for BTC continues, that’s probably going to increase — leading to a supply crunch, where the price shoots up in an attempt to sway long-term holders into selling their BTC.

Those are the benefits of the Bitcoin ETFs…

The dark side of it all?

These ETFs aren’t being bought up by a large swath of retail investors as much as they are a select few ‘big dog’ investment firms.

That kind of concentration puts a lot of power in the hands of a few.

Meaning they can:

Sell off a small portion of their holdings → dump the BTC price → only to buy it all back (and then some), giving them an even greater share of BTC’s supply.

Good news/bad news?

This sort of manipulation was going on long before the ETFs were around…

So in many ways, it’s business as usual — just with higher prices.

(Hooray? ¯\_(ツ)_/¯)