Bitcoin spot ETF officially listed last week! The trading volume has exceeded 10 billion US dollars. Arthur Hayes, the founder of BitMex from a traditional financial background, issued a lengthy article titled “ETF Wif Hat”, mentioning how the intersection of traditional finance and Bitcoin will impact the market and create trading opportunities.
Table of Contents:
Toggle
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 historical high
Arthur Hayes used IBIT from BlackRock as an example. The net asset value (NAV) of the fund is based on the BTC/USD price at 4:00 PM Eastern Standard Time, using CF Benchmark. CF Benchmark receives prices from Bitstamp, Coinbase, itBit, Kraken, Gemini, and LMAX between 3:00 PM and 4:00 PM Eastern Standard Time. To reduce price discrepancies, traders will directly trade on these exchanges.
Source: CME website
The exchanges designated by CF Benchmark are concentrated in the West, but Bitcoin is a global market, and currently the largest exchange is Binance. Hayes believes that the Bitcoin market will have predictable and lasting arbitrage opportunities for the first time. He also 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. For example, Grayscale filed with the SEC last week for an ETF strategy combining GBTC spot with options (The Grayscale Bitcoin Trust Covered Call).
Chain News also reported that the New York Stock Exchange submitted a 19b-4 document, allowing the listing and trading of “commodity-based trust stock” options. Bloomberg ETF analyst Eric Balchunas explained that submitting this document is to be able to list options for Bitcoin spot ETF, and approval can be obtained in as little as two months. He believes that there may be as many as a dozen similar leveraged Bitcoin ETF products on the market in the next few months.
Although the SEC prohibits Bitcoin held by Bitcoin spot ETF as collateral, using stocks as collateral for financing is common in traditional finance. As an ETF issued by a high-quality asset management company, there is no reason why it cannot be used for collateralized borrowing. Compared to the difficulty of borrowing fiat currency using Bitcoin as collateral in traditional finance, ETFs have opened the door to financing for everyone.
Hayes also mentioned not to be discouraged by the low prices of Bitcoin since the start of ETF trading. His choice is still to wait until the BTFP update and the Federal Reserve’s interest rate decision in mid-March before adding cryptocurrency risks to his investment portfolio.
Hayes emphasized:
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