TL; DR
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Demand for the Bitcoin ETFs drives the price of BTC up (hooray!), but also concentrates BTC ownership, allowing for greater price manipulation (boooo!).
Full story
“Everyone has a price.”
That’s pretty much the driving factor behind Bitcoin’s price.
If there are more buyers than sellers, the price goes up in an attempt to convince the holders to sell.
…and if that doesn’t work? The price will go up even further.
At the time of writing, the US Bitcoin Exchange Traded Funds (aka: ETFs, aka: funds that buy Bitcoin every time someone buys a share of their fund) own a whopping 5% of the 21,000,000 Bitcoin supply.
And if U.S. stock investors’ interest in BTC continues, it will likely increase — leading to a supply crunch, with the price skyrocketing in an attempt to get long-term holders to sell their BTC.
These are the advantages of the Bitcoin ETFs…
The dark side of all this?
These ETFs are not so much bought by a large number of retail investors, but by a select number of ‘big dog’ investment firms.
That kind of concentration moves a lot of power in the hands of a few.
This means that they:
Sell a small portion of their assets → dump the BTC price → to buy it all back (and then some), giving them an even larger share of BTC’s supply.
Good news/bad news?
This kind of manipulation happened long before ETFs existed…
So in many ways it’s ‘business as usual’ – only with higher prices.
(Hurrah? ¯\_(ツ)_/¯)
