Arthur Hayes: Bitcoin ETF Opens Doors for Traditional Finance, What Trading Opportunities Will It Create?
Bitcoin spot ETF officially launched last week! The trading volume has exceeded 10 billion US dollars. Arthur Hayes, the founder of BitMex with a background in traditional finance, issued a lengthy article titled “ETF Wif Hat,” which discussed the intersection of traditional finance and Bitcoin and how it will impact the market and create trading opportunities.
Which exchanges will benefit?
More Bitcoin spot arbitrage opportunities
The rise of Bitcoin derivative products
Financing with Bitcoin spot ETF
Turbulent 2024, Bitcoin will reach a new all-time high
Arthur Hayes used BlackRock’s IBIT as an example, stating that the Net Asset Value (NAV) of the fund is based on the BTC/USD price at 4 pm Eastern Standard Time, provided by CF Benchmark between 3 pm and 4 pm. Traders will directly trade on these exchanges to reduce price differences.
Source: CME website
While the exchanges designated by CF Benchmark are concentrated in the West, Bitcoin is a global market, and the largest exchange currently is Binance. Hayes believes that the Bitcoin market will have predictable and lasting arbitrage opportunities for the first time, and he expects there to be lucrative spot arbitrage opportunities.
Hayes believes that after the listing of the ETF for some time, related options products will begin to appear on US exchanges. Grayscale, for example, submitted a filing to the SEC last week for an ETF strategy that combines GBTC spot with options, called The Grayscale Bitcoin Trust Covered Call.
Chainnews also reported that the New York Stock Exchange submitted a 19b-4 document allowing options based on commodity trust stocks to be listed and traded. Bloomberg ETF analyst Eric Balchunas explained that this filing was made to list options for Bitcoin spot ETFs and could potentially be approved within two months. He believes that in the coming months, there may be more than a dozen leveraged Bitcoin ETF products similar to this in the market.
Although the SEC prohibits Bitcoin held by Bitcoin spot ETFs from being used as collateral, it is common in traditional finance to use stocks as collateral for financing. As an ETF issued by a high-quality asset management company, there is no reason why it cannot be used for collateralized loans. Compared to the difficulty of borrowing fiat currency with Bitcoin as collateral in traditional finance, ETFs actually open the door to financing for everyone.
Hayes also mentioned not to be discouraged by the low price of Bitcoin since the start of ETF trading. He chooses to wait until the BTFP update and the Federal Reserve interest rate decision in mid-March before adding cryptocurrency risk to his portfolio.
Hayes emphasized that the bull market has just begun. In terms of price trends, 2024 will be a turbulent year. It is expected that by the end of the year, the market value of Bitcoin and the entire cryptocurrency complex will reach or exceed historical highs.
Arthur Hayes
IBIT
Bitcoin spot ETF
