Topic: How the Bitcoin ETF could actually tank Bitcoin's market value (Read 319 times)

Yes, and names can be very valuable. Ask Gucci or Nike or any major sports team. Bitcoin has a brand that's worth hundreds of billions. I never said nor meant to imply that Bitcoin is "worthless".



The limited supply trait is extremely important, I agree. And yes, people see value in something that cannot inflate.



I completely agree that "legal" and "moral" are two different things, and I tried to caveat that in my post.

That said, if you are relying on cryptocurrencies to get you out of the thrall of a government that really wants to get you, you are in a precarious state regardless. An evil dictator could make using crypto a crime, and then send out thousands of honey pots all over the Internet to catch his prey, and effectively outlaw Bitcoin because people would be rightfully terrified to try using it (to take just one example off the top of my head). You might be able to stay safe if its some small government somewhere, but if its the USA, well, forget it. We're in big big trouble if it's the US government that falls to tyranny, and neither Bitcoin nor any other technology would keep anybody safe...

Then I'm not sure in what context you meant:
That sounds an awful lot like you saying it's not useful and it doesn't have value.  Perhaps you could clarify?  



As long as we're drawing a clear distinction between "price" and "value", then that's fine.  But again, you did say "value" in the quoted text above.  Only speculators see price and value as the same thing.  



People are absolutely free to do that, as many still seem to do with centralised exchanges, but they are somewhat missing both the point and the protections that were built into the design of the protocol.  I won't pretend that isn't a serious issue.  But I would suggest that most of them are speculators and, as such, they care far more about the price than I do.  If them using Bitcoin in a way it wasn't designed to be used results in some event that rattles confidence the market and the price drops, so be it.  I'm not particularly worried about that, personally.  That still doesn't have any impact on what I recognise to be the real "value" here.  

I don't think anyone here wants to "kick them out", but I do sincerely hope that some of them reconsider their choices before something happens to their chosen custodian and they lose everything.  It's inevitable that another big exchange or webwallet is going to suffer a breach before long.  And it'll keep happening while people continue placing trust in them.  That's just how it is.  All I can do is offer warnings and encourage personal responsibility.  Granted, that carries its own risks too, but it's still widely considered to be safer than trusting total strangers you've never met.

These new ETF investors have greater protections, but are still missing the point and most of the main benefits of actually using Bitcoin, but each to their own.  And custodial risk is still present.



I make no promises on how the market will behave.  It's going to do what it does with or without my comments.  Trying to merely predict what the market does is often a fool's errand, let alone making promises about it.  But I'm quite confident I'm not wrong to state, unequivocally, that Bitcoin won't change its rules regarding monetary supply and that's an incredibly desirable property in a climate where people are becoming tired of quantitative easing and helicopter money.  Even if you don't want to accept it as a "solution" to what's generally happening in fiat, you can't deny some people see value in that.



And I hope your government remains as democratic as it purports to be.  But things change.  Political ideologies shift.  Governments can become more authoritarian over time.  Sometimes an entire populace can be duped into voting against their own self interests and they don't even realise until it's too late.  Coups happen.  Dictators rise.  There are so many times in history when incredibly vile and repugnant people have gained positions of influence or control and committed unspeakable acts.  So let's be clear that "illegal" doesn't always equal "immoral".  

I never claimed either of those things. Obviously Bitcoin solves a strong consumer need, which is why it has been bid up to the value it has.

I also never made any claim that institutional investors would particularly care one way or another about blockchain technology.

I did claim--and I stand by this--that the ETF and the resultant interest by consumers, and therefore the resultant interest by institutional investors, could affect the price, and I made an argument here that the result could be downward pressure on the price for the reasons I listed.


I'll take these one at a time.

First, bank bailouts. There has already been several instances of the government intervening in crypto concerns in order to protect consumers, e.g. FTX. You might say, "but you technically don't need to use an institution to invest in Bitcoin", but most consumers don't invest that way nor do they want to.

This has been my thesis here all along: most consumers do not want to hide their life savings under a mattress, or in their iPhone. They want an institutional account that is protected based on their personal identity. Hence most average consumer investors in Bitcoin and other cryptos don't pay attention to the "decentralized" mythos of Bitcoin at all and instead just see it as a meme to invest in.

If the "OG" Bitcoin community here wants to kick these people out, then do that--but guess what will happen to the price of Bitcoin et. al. when all of those consumers are kicked out? That's my thesis here.

As for inflation, both USD and BTC are investment instruments, as is gold, land, bonds, soybean futures and so on. To say that your new investment instrument "solves" inflation is circular reasoning: you are essentially promising the price of Bitcoin will go up in value compared to the value of USD, which is a promise nobody can make.

And let's get real here: no investment advisor in the world would tell somebody to put their life savings in Bitcoin--instead of, say, land--in order to hedge against the US Dollar. Bitcoin and other cryptos are speculative, volatile investment instruments which may or may not go up in value.

As for "censorship", what you are actually talking about here is allowing citizens to engage in illegal activity. I am quite sympathetic to those living under terrible governments who need protection from corruption, and I'd wish them every tool at their disposal to save themselves. But if you are saying it's really "terrible" that American citizens can't trade with Russia right now, suffice it to say that the majority of our elected representatives don't agree with you right now, and the solution is to go through the democratic process, not go against your own government.

And for what it's worth, Bitcoin is a public ledger so Bitcoin itself (as opposed to say Monero) is not a good example of that use case. Based on the difference in market cap between Bitcoin and Monero, I would surmise that most consumers don't care about that level of anonymity--they mostly want to keep their purchases from marketers, their friends and spouse, or from incompetent storefronts who would leak their personal data to criminals. That level of anonymity is given to you by Monero (or other cryptos if you engage in complicated tradecraft), but it's also given to you by non-blockchain digital currencies ala Haypenny, which is far easier for consumers to work with.

We aren't here to discuss non-cryptocurrency use cases, so let's not move the goalposts in an unreasonable fashion.  You're claiming you don't see any value in Bitcoin and it doesn't solve any real world problems.  You're also attempting to assert that institutional investors getting involved somehow has a bearing on the value proposition, which is not the case.

Bank bail-outs/bail-ins are a real world problem.  When a bank becomes insolvent, despoitors need to claim back their money back via government schemes.  Or, worse still, the government choose to simply take money from the depositors to keep that bank afloat.  Bitcoin solves this problem.  It cannot become insolvent.  If a miner goes under, users don't lose their money.

Inflation is a real world problem.  The public have to place trust in their governments, treasuries, mints and central banks to carefully manage their economies and to avoid debasing the currency.  No one can make guarantees about the supply because more money can be blinked into existence from nothing.  Bitcoin solves this problem.  It makes credible and predictable guarantees about supply and inflation.

Censorship is a real world problem.  Governments can order banks and card companies to block payments to organisations they don't approve of.  Bitcoin solves this problem.  No third party can challenge, block or reverse a payment once it has been made.

If you can't see the benefit in any of that, I'd suggest that after 30+ years, it might be time to invest in some new glasses.  I'm also far from convinced that institutional investors care about any of this and are just happy that they now get to play in such a volatile market.  Traders don't see price plummets as a "bad impression".  They see it as an opportunity to buy cheap.  

Yes, but here's the thing: these are the people Bitcoin needs in order to be accepted as a mainstream investment option. This is the whole point of my OP. You can deride the "dumb dumbs" all you want, but if you scare their money away, the price of Bitcoin will likely go down.

In other words, if most people's first impression of Bitcoin is that you have to believe in a bunch of technical concepts that don't apply to their everyday lives in any way in order to see the value, then that's going to leave them with a negative impression.


Well, if you ask most mainstream people, I think it would be the exact opposite: they don't want their entire life savings held in some iPhone they could accidentally drop into a landfill. They like the idea that their life savings is secured in a financial institution that is based on their identity as a person.

Most people only keep a tiny faction of their total wealth in their physical wallet on their own person.


I am talking here of using blockchain as a technology architecture to solve real problems, e.g. the way technologies like RDBMS's solve problems, or cloud computing solves problems, or other new architectures solve problems.

And the point about the Fed inflating the US dollar is circular reasoning: you are saying that Bitcoin will outperform the US dollar because... Bitcoin will outperform the US dollar. Maybe it will, or maybe it won't. Maybe it will lose half of its value in the next six months (like it did 24 months ago for instance), and maybe it will double in price. But in that context, bringing up the inflation of the US dollar--which peaked at something like 10% annually in the worst part of the pandemic recovery--seems pretty paltry in comparison.

And absolutely any investment instrument from stocks to bonds to pork bellies can be used to hedge against the US dollar, so Bitcoin is not exactly unique in that regard.

Yes, that's true. But lots of technologies were made for one reason only to be used for another reason.

Bitcoin is simply not viable as a mainstream means of payment. There's no chance it can scale to even 1/10,000 of the price-performance necessary to take on worldwide credit card volume for instance.

Today, in actual fact, Bitcoin is used mostly as an investment asset, and it offers no advantages over other technologies for any other purpose.

I feel like this is good advice. I don't know a single bitcoin investor who does not hold his private keys, although most of these people are the ones that I have talked to about bitcoin and directly or indirectly pushed towards it. You need to broaden your horizons, OP. How many bitcoiners do you really know in person? Who are these people and how much do they own? Don't take this as an insult, but if they hold a few hundred dollars worth of bitcoin, they aren't serious about their investment, so I wouldn't expect them to be serious about concepts like self-custody, decentralization and security.


I've encountered people who have a lot to say about these things and who wanted to tell me how I should secure my bitcoin and then I ask them how much they have and they happen to own 0.01BTC and my response to them is that I wouldn't care where my private keys are if my whole investment was worth less an average mobile phone, or a set of car tires.


What real problems would you like it to solve? Poverty? Wars? How about dilution of money supply by the Federal Reserve and inflation?

In the whitepaper, Bitcoin is not an investment asset. Bitcoin is a peer-to-peer electronic cash system. I think that is very clear before reading the entire contents of the Bitcoin whitepaper which consists of introduction, transactions and conclusions. Or simply by reading the abstract, we will know that Bitcoin is not an investment asset. Investment assets are uses made by users because Bitcoin can and is proven to be a hedge.

The price fluctuates, it's true. If you are afraid that Bitcoin will drop in price, I don't have an answer because when it first appeared on the market, Bitcoin did not have a price like now which is almost $44K. I didn't mention the previous ATH price that Bitcoin has ever reached.

There is no real need to be afraid of the Bitcoin price because 1 BTC = 1 BTC.
If cashed in with fiat then 1 BTC = different currency prices for each country.
Regarding political agendas, that is not my expertise because I am not interested in politics.

I know a lot of smart people, thank you very much.

The fact is that if these "stupid" people you are talking about--the ones who don't hold their private keys in their own physical possession--all dumped their Bitcoin holdings, then the price of Bitcoin would plummet.

You seem to want it both ways: you want the "stupid" people to buy positions in the meme that is "Bitcoin" so the value of your holdings will go up, but you don't consider them "real" unless they are experts like yourself, which almost none of them are.

And for the record, I've asked for hard, documented, non-cryptocurrency design wins for the blockchain architecture, and nobody either here on Bitcointalk nor anywhere else can show me one. My own 30+ years of experience in computer architecture tells me that the technology has no other viable uses because it will never scale and doesn't solve any real-world problems, but I'm willing to be proven wrong. So far I haven't been.

The fact that ETFs exist doesn't change anything.  Outsiders choosing to make bets on Bitcoin doesn't suddenly change what it is.  It's exactly the same thing as it has always been.  



Markets don't need a "story".  



Somehow I find it hard to believe you don't already know the answer to that.  



Meet smarter people, then.  I would say maybe you'll learn something, but you seem to enjoy performing a routine where you pretend not to understand these things.

Logically the price of bitcoin move up and down due to the demand and supply of bitcoin however keep in mind that ETF is not a thing that bitcoin will start to fly away. Keep an eye on blockchain data, the price isn't moving because of the OTC deal, Keep in mind, its a long term game and it will pay off eventually to the investors in bitcoin.

Um, you understand that if Bitcoin is "left alone" by investors, it goes... down in price, not up, right? 

In a sense, you just made my point for me: that the ETF will introduce Bitcoin to millions of mainstream investors, who will just view it as another instrument whose job is solely to go up in price, and they aren't going to find any meaning behind it when except that it is not any more "private" or "decentralized" than any other ETF they buy from their licensed brokerage.

And I don't know how much more I can say to "prove" that Bitcoin is not effectively decentralized for almost all of its users except to say that nobody I've ever known personally who has invested in Bitcoin or other cryptos actually physically hold their own private keys. They all use it through some app or brokerage like CoinBase, which means it's no different than their bank account.

Put it this way, if everybody who currently holds positions in Bitcoin and don't physically hold their private keys "left it alone"--in other words, sold their positions--then the price of Bitcoin would probably drop by a factor of about a thousand...

When they "find out" these things, they have to wake up from their dream because none of the things you said in here are correct in the real world.

Another weird statement you are making here in a topic you start in the name of ETF while instead of discussing about the title of the topic you are just expressing your strange views about Bitcoin like claiming bitcoiners are desperate and want bitcoin to succeed because of geopolitical reasons!!!

In other words you first have to prove all your assumptions (eg. bitcoin's decentralization is a myth) then start discussing about your conclusion (ie. ETF could tank bitcoin market).

Nothing, they leave Bitcoin alone so bitcoin can go back to only going up in price

But all ETFs are necessarily centralized, so what could "decentralized" possibly mean in the context of somebody buying shares of an ETF?

Of course this means that in this case Bitcoin is not like a decentralized system so its value and attractiveness can increase or decrease depending on Bitcoin being converted into investment assets such as gold, houses, land or other types of assets. Because each type of asset has a different function it all depends on the value offered.

A number of companies that submit ETF proposals to the SEC have studied further about the advantages and disadvantages before deciding to submit the application and have it accepted by the SEC.

Bitcoin, a currency with a peer-to-peer system, which is widely used as an investment asset, is indeed very volatile in price on the market, but in long-term investments, investors can get big profits through high price returns.
Large companies are aware of the potential profits of their investments in Bitcoin. When an ETF is approved, it is possible that companies will want a cheaper purchase price.

Do not panic. This is just the beginning. Don't get trapped, stick to the basic principle that Bitcoin is a valuable asset that has a strong foundation, not like a meme coin.

there is a non-zero bottom with bitcoin (unless the technology broke(code bug))

even if hobby miners cant mine. there is a significant amount of mining farms that are not day players but instead already invested 2 years worth of electric contracts and 2 years of hardware lifetime. so they will mine no matter what..
and they want to break even so they wont sell daily or at a loss, they will just accumulate coin as they dont have daily costs. its all prepaid longterm


this means hashrate wont drop to zero. this also means there is a non zero cost of mining even most efficiently. which everyone on the planet sees as a base rate no one can acquire for less and everyone cant afford to sell for less if they acquired.

everyone will then project their own personal/regional higher costs and if the market is cheap they will be happy to buy bitcoin cheap

this will and does cause a non zero market price support.
yes traders can try to sell large lumps of bitcoin to push the price down, but even they will run out of coin.

the amount that the price can tank is not down to zero (unless bitcoins code was broken)

so these corrections back to value levels. are not "tanking to zero" risk.. but instead temporary discount opportunity

---

on the other hand PoS coins dont really have any "work" cost of mining.. so PoS coins can tank to zero
especially coins which do not have their own market sentiment but are instead shadow tracing bitcoins price.

Sure, but assets to hedge against currency losses have been around for hundreds of years (commodities, metals, real estate, equities, etc. etc.).

This is exactly what I was trying to say in the OP: now that Bitcoin is "just another investment", it's going to be evaluated along side all of the others, and it's going to need a story about why it's uniquely positioned to outperform other investment instruments that do the same thing. If Bitcoin doesn't do that, it's going to take on a bad reputation.

I like the challenge of a contrarian debate. Consider this, Bitcoin naturally acts as a hedge against existing currencies and asset classes. As centralised currency systems rise and fall (periods of recessions) which economists agree happens in 8-12 year cycles, hedges become important. Protecting against a loss in financial value is not a view thats constrained to a group of as you put 'enthusiastic anarcho-libertarians', its a bi-partisan or nonpartisan (universal) desire that is not constrained by geographical boundaries.

In this scenario, the outcome is universally bullish for Bitcoin as an alternative asset class.

Well if you used that blockchain to real world application then it might help some task or industry move faster. For example uses the blockchain for tax payment but I doubt that since some Politicians might disagree with this due to ehem you know what I meant.

If some doesnt interested then they are not obligated thats why its called decentralized space. But if a certain Governmemt enforce something with the use of blockchain maybe thats gonna be a different story which also mandate people to learn and understand it cause it might be useful now.

You are making many assumptions about Bitcoin which are not true and then asking us what we think about the eventuality of those false assumptions. A lot of "what if" scenarios. There is absolutely no point in asking such questions because you could claim anything, even something as ludicrous as for example: the entire internet might collapse in a few years due to some mysterious cosmic burst of radiation from some far-away galaxy. What would happen to the value of Bitcoin in such a scenario? Would the Blockhain be lost?

All such questions do is create more FUD. Especially during times when Bitcoin is going down.

So lets stick to what we know to be true. Bitcoin ETFs will not be able to "break" Bitcoin. ETF is a net positive for the value stability of Bitcoin.

huh?? Since when is Bitcoin not a viable currency and has no value and is a meme token and isn't decentralized and is only used by anarcho-libertarians and since when did Bitcoin enter back into only being in the "shadow realm of boutique techie investors" that it fully exited a good 7 years ago?

Literally none of those things are true. So I don't even understand why you're asking the question. I guess you're just asking hypothetically what if history was the same but Bitcoin was just a random altcoin instead of Bitcoin?

You're asking if a bunch of false things were actually true and somehow despite Bitcoin having lots of attention of the public and media for 7 years now nobody had realized all these false things were actually true and for some reason the fact that there are ETFs makes everyone realize these false things are true and so nobody wants Bitcoin anymore....ummm okay. That's not a contrarian view, that's just making up a bunch of stuff and asking what would happen in that imaginary world. You are confusing contrarian with imaginary.

I can almost guarantee that nearly all Institutional investors... don't know what a private key is, nor would they want to.

Bitcoin's goal of creating a decentralized financial system... failed. It doesn't do that in any mainstream way. In actual reality, it's mostly just a meme investment.

Do you think institutional investors don't know what Bitcoin is and how it works? Everyone knows who is involved with Bitcoin; it's a piece of code that exists only virtually. Therefore, they are investing in it. It's true that Bitcoin isn't backed by any centralised organisation; it's backed by the biggest community worldwide. We already consider Bitcoin an investment asset, but the goal was to create a decentralised financial system.

Touché!

But my scenario here wouldn't portend a small drop like it's seen in the past few days, but rather a huge drop like it saw 18 months ago, or maybe much more. My thesis here is that the current price is based on the perception that Bitcoin has mass appeal, and when the market finds that it doesn't, it would correct to a much, much lower level.

I understand very well why it was created, but... that's not how it evolved. Today, almost all Bitcoin transactions have a third party involved because almost no mainstream investors physically hold their own private key. It's certainly possible Bitcoin could be used that way, but it mostly isn't, and the reason for that is that most people don't care about "centralized" and "decentralized" and don't even know what that means. To most investors today, Bitcoin is nothing more than the word, "Bitcoin".

And it doesn't matter what potential investors think... unless you are talking about the market price of Bitcoin. I am not trying to say here that Bitcoin is worthless, or that it's price will go to zero, only that the current price depends on a mass appeal which could evaporate because of the attention the ETF is bringing.

Also, you understand Bitcoin isn't great for anonymity, right?   

Too late. The unexpected dip already means yours is not a contrarian opinion. Can't tell you how many pings I'm seeing now about similar what ifs.

The true contrarian has always disliked any supposed boon for Bitcoin that involves speculation and not owning your keys.

Not sure if you really understand why Bitcoin was created because it was never created as an investment medium or mainstream product, understand one thing that Bitcoin was created as an alternative for P2P transactions without involvement of any third party. It's people who made it investment scheme and that's not the reason why Bitcoin was created. Hence I would like to conclude it doesn't matter of what potential investor thinks because a true Bitcoin enthusiast is more concerned about anonymity rather than investment or returns.

You make good points. Maybe all of the downsides of the ETF I listed here have been priced in already.

I would think that the ETF moves the "serious investor" scrutiny way, way up, but... maybe I'm wrong about that? We'll see.

Are you sure about that? If this is the first time it's in the spotlight, how will you describe the opening of bitcoin futures in 2018?
What about acceptance in El Salvador? What about that short time when Musk was promoting it, or the investment that Microstrategy made?


It never was a viable mainstream currency. In fact, bitcoin never was a mainstream investment, which is proven by the amount of people who own it. If you ask around, maybe 1 out of 10 people you know will hold bitcoin, probably even less than that. Is that mainstream?

It's not and the fact that a certain amount, for instance 10% of it will be held by ETFs doesn't make it centralized.

It has already done that long ago. Do you think Wall Street wasn't involved in bitcoin trading in 2019?

Yes, but what actual value does blockchain serve? Technologies like blockchain have come and gone through the years, and blockchain doesn't have any verified technical uses besides cryptocurrencies and NFTs.

And yes, there are a lot of investors who love Bitcoin, blockchain, and so on--obviously, since Bitcoin is worth hundreds of billions. But what if the rest of the world isn't interested in this technology as an end in itself and just looks at Bitcoin and blockchain in purely practical terms?

I agree there's probably a price floor somewhere for Bitcoin, but it could be a lot lower than the current price...


Um, if it's an ETF, it's not an "alternative" anymore, it's actually a mainstream investment. That was the whole point  .

And if your pitch to main street USA investors is that Bitcoin is, "capable of replicating social scalability", well, I'm going to bet that pitch doesn't... persuade a lot of people .

I am not worried about Bitcoin ETF itself, rather more concerned about the company that runs the ETF. Let's keep all these debates around decentralized ecosystem and geo-political situations a side. But unfortunately the world's largest asset holder has got the approval to run Bitcoin ETF. They have so much financial power, they can indeed really manipulate the market.

Just ask a simple question - why the Bitcoin price didn't increase after ETF approval? Who's behind this? BlackRock controls a lot of things. Bitcoin should not be controlled by them.

Companies have been trying to get an ETF approval for many years, so there's been a lot of time to put Bitcoin under scrutiny. I think that this market just opens up new opportunities, makes Bitcoin attractive to investors who deal with traditional investments like those the op mentioned. Bitcoin will remain appealing to all those who were with it before the ETF approval, and it can start being appealing to new people. Some might shy away from it, but that's not a problem.
Decentralization isn't a myth, Bitcoin isn't a meme investment, so the risk of that disenchantment happening seems low to me.

Bitcoin is not an investment, bitcoin is a hedge and is an alternative to the traditional financial system, the traditional financial system will never cease to exist. Everyone who participates in this movement should know this.

Bitcoin has brought countless advantages to those who use it, and fundamentally speaking it is capable of replicating social scalability, something rare these days.


Apparently, the OP completely ignores the solid fundamentals that the currency has and all the revolutionary technology that makes it work.

Well as starter they have technology its called blockchain and thats not just a meme coin like others. If they found it not so attractive they thry could leave right? Even theyre gone theres still a lot of other institutions interested. Even without etf bitcoin manage to go up to level of 60k without them on the ride so this will continue rven without them. Yheres a lot of investors like the design of bitcoin so this wouldnt happened.

I'm just going to throw a contrarian view out here for discussion...

What if, by positioning Bitcoin as a serious investment that is judged along side other investments in companies, real estate, hard commodities, bonds, and so on, that the scrutiny actually diminishes Bitcoin's appeal?

Bitcoin is now having a very strong light shined upon it. In a sense, it's being exposed to daylight for the first time, no longer being in the shadow realm of boutique techie investors like it has been.

What happens when "mainstream" investors find out that Bitcoin isn't really a viable mainstream currency, and that it's really only useful as a meme investment instrument with no inherent value beyond its own name? What happens when they find out that the "decentralized" thing is just a myth, and that, in actual reality, almost nobody uses Bitcoin (or any other cryptos) that way? What if the "serious" investment managers discover that the mythology behind Bitcoin is just... mythology?

What happens, in short, when Bitcoin ventures outside of its tight community of enthusiastic anarcho-libertarians--who desperately want Bitcoin to succeed for geopolitical reasons--and it is instead evaluated, coldly, like any other investment by people who don't have that political agenda?

And what if the first impression of millions of mainstream potential investors in Bitcoin is that it's just a super-volatile asset that only seems to go down in price?