The history of the gold market may be repeated on the Bitcoin ETF. How can the traditional financial system actually control Bitcoin?
The price of BTC began to rise as long-term US Treasury yields rose, indicating growing skepticism among investors about traditional government bonds and a shift to cryptocurrency assets such as BTC.
By Chloe
BitMEXCo-founder ofArthur HayesRecently, an article in “ETF Wif Hat” was published, which thoroughly explores traditional finance (TradFi) and cryptocurrencies that have returned to a bear market this year (in particularBitcoin) The intricate relationship between them.
Hayes compared the elite group at the top of the financial market pyramid with current global financial strategies and historical events, and put forward an opinion: there will always be some hidden hands manipulating the market in an attempt to maintain the operating mode of traditional financial structures.
How are the world's financial elite trying to control Bitcoin?
Hayes: “The elite groups in charge of America's current financial order and their vassals will do whatever it takes to maintain the current order in which the world operates, because they benefit most from the existence of this order.”
Pax Americana (Pax Americana) emphasizes America's responsibility to maintain world peace. It actually refers to America's domination of the world. This is the main axis of the Bush Administration's first “US National Security Strategy Document” on September 20, 2002.
Until the 2008 global economic crisis caused by US subprime mortgages, the current financial order under what the US government called “American Peace” was already in jeopardy.
The world's major central banks, including the US Federal Reserve System (Fed), the European Central Bank (ECB), the People's Bank of China (PBOC), and the Bank of Japan (BOJ), have adopted large-scale banknote printing strategies to mitigate various symptoms of this crisis.
In November 2008, the US began the first wave of quantitative easing (QE) (a monetary policy implemented by the central bank to inject capital into the market to stimulate the economy). The Federal Reserve used a large number of banknotes, purchased large amounts of bonds from the market, and purchased poor bank backed mortgage security (MBS) to inject more capital into the market. The entire QE1 Federal Reserve spent a total of 1.75 trillion dollars, and finally successfully mitigated the crisis, preventing the market from entering a long-term recession.
Hayes pointed out that at the time, this approach caused the global debt ratio to exceed the share of the total economy, to an unprecedented high, and interest rates to an all-time low. At the time, under those circumstances, the yield on almost $20 trillion of corporate and government bonds was even negative. “This situation is of little benefit to most people because they don't have enough assets to turn losses into profits from these policies.”
At a time when moral, political, and economic problems were all intertwined, Satoshi Nakamoto published the “Bitcoin White Paper,” and Bitcoin appeared. This document proposes an innovative peer-to-peer system through which people can use internet-connected devices and encryption technology to conduct currency transactions without depending on the country. This is the first time in human history.
This system provides an independent financial system for anyone with an internet connection, so that everyone no longer depends on the traditional financial system, and allows people who have experienced financial turmoil to find a way out of an environment where global fiat currencies continue to depreciate.
But is reality progressing as we imagine? Unfortunately, Bitcoin was still immature in 2008 and can't be a credible alternative. Bitcoin and other cryptocurrencies didn't show their resilience until the financial turmoil of 2022, and the collapse of several major banks and Web3 companies in the market. Unlike traditional financial institutions, these digital assets don't require any bailouts, but they can continue to operate because BTC blocks are generated every 10 minutes.
Looking ahead to 2023 last year, the US-led global financial order is clearly still unable to continue tightening monetary policy, such as raising interest rates and reducing market liquidity, because doing so would cause the entire system to go bankrupt due to excessive accumulation of leverage (that is, borrowing) and debt. If monetary policy continues to be tightened, it may lead to the collapse of the entire financial system or a serious crisis, but special phenomena have occurred in this kind of wind and wave:
US long-term Treasury yields are rising: US long-term Treasury yields are beginning to rise gradually. A rise in treasury yields usually means a decline in investors' demand for bonds (because bond prices are inversely related to yield).
Bitcoin and cryptocurrency rebound: In this environment, the price of Bitcoin and other cryptocurrencies begins to rebound or rise. Because investors seek alternative investment channels to traditional assets such as government bonds.
Bond prices fell: At the same time, the price of bonds began to fall, corresponding to a rise in long-term treasury bond yields.
A special shift can be seen, where the price of BTC began to rise as long-term US Treasury yields rose, indicating growing skepticism among investors about traditional government bonds and a shift towards cryptocurrency assets such as BTC.
Will the history of the gold market be rewritten on Bitcoin today?
And to counter this shift and keep capital in traditional financial systems, Hayes pointed out that the elite groups at the top of the pyramid are now turning to financializing Bitcoin by establishing highly liquid exchange-traded funds (ETFs).
The most obvious historical event was the initial gold market. ETFs such as SPDR GLD introduced by the US Securities and Exchange Commission (SEC) in 2004 made it easier to trade gold without physical holding.
In other words, in order to avoid traditional financial markets being liquidated, the elite must financialize Bitcoin by creating a highly liquid exchange-traded fund (ETF). This is the same set of tricks they played in the gold market, so the advent of Bitcoin ETFs will make it easier for the entire traditional finance (TradFi) system to manage Bitcoin investments and keep capital within the system.
As a result, BlackRock officially applied for a Bitcoin ETF in June 2023. Blackrock is one of many companies hoping to get spot Bitcoin ETF approval in the US. However, in 2023, the SEC finally accepted the application. But initially the Winklevoss twins applied for a spot Bitcoin ETF in 2013, and the US Securities and Exchange Commission rejected their application for over a decade. BlackRock submitted an application today, but it was approved within just six months.
Finally, this group of financial elites is integrating Bitcoin into the traditional financial system, that is, today's financial market, at a critical moment. And as fund management companies begin to launch their vast decentralized networks, the overall market trading volume will only increase.
In the future, fund managers are more likely to find a new path out of the low return cycle of bonds by investing in Bitcoin in an environment of continuous global inflation.
