Bitcoin’s
(BTC)
price
action
last
year
(more
than
doubling
in
2023)
was
driven,
in
large
measure,
by
a
rebirth
in
interest
in
spot
bitcoin
exchange-traded
funds
(ETFs).
BlackRock’s
unexpected
filing
with
the
U.S.
Securities
and
Exchange
Commission
(SEC)
in
June
drove
attention
to
the
asset,
which
was
one
of
the
year’s
best
performers
notching
over
100%
gains.
Now,
with
a
bitcoin
ETF
expected
to
be
approved
this
week
(as
early
as
today),
many
are
looking
to
“sell
the
news”
of
BTC’s
good
fortune.
This
is
an
excerpt
from
The
Node
newsletter,
a
daily
roundup
of
the
most
pivotal
crypto
news
on
CoinDesk
and
beyond.
You
can
subscribe
to
get
the
full
newsletter
here.
For
the
bull
case
for
Bitcoin
ETFs,
see
here.
It
remains
an
open
question
whether
the
SEC
will
approve
one
or
many
of
the
dozens
of
open
spot
bitcoin
ETF
applications,
though
a
denial
is
still
in
the
cards.
Bitcoin
ETFs
remaining
in
limbo,
i.e.
the
status
quo,
might
not
even
be
bad
for
crypto.
In
fact,
live
bitcoin
ETFs
may
not
be
everything
market
watchers
are
banking
on;
they
may
even
be
a
net
negative
for
the
industry.
For
full
coverage
of
bitcoin
ETFs,
click
here.
No
doubt,
a
bitcoin
ETF
would
be
a
signal
of
maturity
for
all
of
crypto
(I
covered
the
bull
case
here).
And
that
is
exactly
what
antagonistic
politicians
including
Sen.
Elizabeth
Warren
(D-MA)
and
skeptical
regulators
like
SEC
Chair
Gary
Gensler
are
worried
about.
This
was
exemplified
by
a
last-minute
open
letter
from
Better
Markets,
an
organization
with
ties
to
both,
which
claimed
a
bitcoin
ETF
would
legitimize
an
industry
rife
with
fraud.
Is
crypto
ready
for
that?
Although
a
court
ruling
last
year
is
forcing
the
SEC’s
hand
to
make
a
determination
about
bitcoin
ETFs
by
Jan.
10,
it’s
worth
taking
some
of
the
agency’s
historical
concerns
over
crypto
ETFs
seriously.
Essentially,
the
SEC
has
held
out
approving
a
bitcoin
ETF
ever
since
the
Winklevoss
twins
first
filed
to
launch
one
a
decade
ago,
because
of
concerns
around
market
manipulation.
Manipulation
is
typically
a
concern
for
ETFs
that
track
indexes
(or
baskets
of
different
assets),
because
there
can
be
a
difference
between
the
benchmark
asset
prices
and
the
daily
disclosures
provided
by
ETF
managers
that
can
be
exploited
by
those
with
inside
information
of
the
indexes.
However,
a
similar
problem
could
arise
based
on
how
bitcoin’s
price
is
formulated.
Because
bitcoin
is
decentralized,
there
isn’t
a
single
price
of
bitcoin.
Instead,
its
dollar
value
is
often
calculated
by
averaging
the
current
going
price
of
bitcoin
on
a
few
trusted
exchanges.
However,
even
on
established
exchanges,
it’s
not
unheard
of
for
investors
to
drive
crypto
prices
up
or
down
deliberately
or
accidentally
with
large
trades,
opening
arbitrage
opportunities.
Read
more:
What
Is
a
Bitcoin
ETF?
This
type
of
market
manipulation
presents
not
much
of
a
concern
for
the
vast
majority
of
crypto
traders
today,
and
likely
won’t
be
for
most
potential
bitcoin
ETF
investors.
But
it
could
be
a
bigger
problem
once
The
Quants
get
involved.
BlackRock
was
the
first
to
suggest
a
“surveillance-sharing
agreement”
via
crypto
exchanges
to
assuage
SEC
fears,
but
not
everyone
is
convinced
it
will
work.
Further,
putting
aside
the
privacy
concerns
of
increased
market
surveillance,
there’s
also
the
broad
question
around
who
truly
benefits
from
bitcoin
ETFs.
Exchange-traded
funds
often
raise
the
cost
of
their
underlying
backing
assets.
This
seems
like
a
win-win
for
bitcoin
holders,
until
you
consider
what
this
means
for
commodities
like
gold
and
oil,
which
are
both
investments
and
goods
that
have
a
cost
to
use.
In
other
words,
what
is
the
long
term
impact
on
Bitcoin’s
useability
if
1
BTC
=
$1
million?
What
would
those
fees
look
like?
It’s
true
bitcoin
is
divisible
into
satoshis,
that
1
BTC
will
always
equal
1
BTC.
But
wouldn’t
many
people
eventually,
simply
be
priced
out
—
particularly
those
in
the
developing
world
bitcoiners
want
to
“bank?”
And
that
essentially
is
the
nut
of
the
issue:
Bitcoin,
by
its
sheer
force
of
being,
invites
a
culture
clash
between
the
haves
and
the
have-nots.
Doesn’t
the
possible
success
of
a
bitcoin
ETF
sell
out
the
original
vision
for
a
system
that
stands
outside
of
The
System?
What
is
a
bitcoin
ETF?
It’s
a
share
representing
BTC
that
could
end
up
in
millions
of
peoples’
401(k)s
via
a
product
managed
by
the
world’s
largest
asset
manager
using
coins
custodied
by
an
outside
company
(Coinbase
is
the
leading
custodian
to
U.S.
ETFs).
In
other
words,
it’s
not
a
“gateway
to
adoption”;
it’s
a
corruption
of
the
idea
that,
through
self-custody,
one
can
take
control
over
our
own
money.
There
are
certainly
shades
of
gray
here,
especially
considering
that
open
protocols
by
definition
can
be
used
by
whomever.
In
that
sense,
BlackRock’s
encroachment
doesn’t
make
Bitcoin
any
less
peer-to-peer.
But
there
are
unanswered
questions
about
what
the
growing
influence
of
Wall
Street
in
Bitcoin
means
for
the
protocol,
whether
the
influx
of
money
will
change
the
realities
of
Core
development
or
bitcoin
mining.
There
are
tradeoffs
to
everything.
And
it
remains
to
be
seen
what
it
will
cost
to
bring
Bitcoin
“mainstream.”
