"Bitcoin spot ETFs were a huge mistake": market analyst sees danger for Bitcoin

A present for Wall Street and Gary Gensler: James Bianco warns Bloomberg that the BTC spot ETFs threaten Bitcoin's independence.

"The Bitcoin spot ETF's were a huge mistake," said Jim Bianco, founder and CEO of Bianco Research, in a interview with Bloomberg.

According to him, they lead to more centralization by Wall Street. And thus they make Bitcoin more susceptible to regular cuts, for example by the SEC.

Bitcoin spot ETFs, according to Bianco, have only caused some large companies to accumulate Bitcoin, such as BlackRock, the world's largest asset manager.

In fact, BlackRock is on its way to becoming one of the largest - if not the largest - hodlers in the world. It has been buying in record quantities for weeks and, along with Coinbase, has already held 120,000 BTC worth more than US$6 billion. In just under five weeks.

The danger: these companies must comply with the rules of U.S. authorities, such as the SEC. You can already see hints of this. Decisions are made about which wallets are possible for custody, which transactions must be monitored, etc.

"The crypto community has to bend to the rules if it wants to continue to have inflows," Bianco said. To many, this fundamentally contradicts the idea of building an alternative financial system: Bitcoin's real mission.

Bitcoin spot ETFs were negotiated for years. Eleven applicants were approved on Jan. 11, 2024. The Bitcoin Spot ETF allows institutional investors in particular to buy the cryptocurrency through asset managers.

After the ETF launched on Jan. 10, 2024, digital gold fell 20 percent in the following weeks. The reason: massive sell-offs, especially at Grayscale.

The situation now seems to be normalizing and the buy side is getting stronger. Overall, the ETF is rated as the best trading start in 30 years.

Charles Hoskinson, the head of Cardano, also expressed concern on Bitcoin spot ETFs: "Legacy is Eating Crypto": The traditional financial sector is eating the crypto sector.