BTC to Bitcoin ETFs - The ownership are shifting to centralized ownership

[franky1]

right now ETF are not gobbling up much new coin
most of the coin that go into things like fidelity/blackrock/ark came from... wait for it.. [drum roll] grayscale
so basically its one institution shuffling to another institution

However, the warning signs are there for what might occur in the future of bitcoin. If enough of these high networth individuals buy the bitcoin spot ETF, I reckon Blackrock and the others can own much of the supply and have a gated market where people can only invest in bitcoin through their ETFs. This will not be right for the real purpose of bitcoin as peer to peer cash. However, this is not the fault of the people. Similar to what has been argued before, this might be the fault of bitcoin's monetary policy.

my view, and from whats already happening. is as such

looking at the institutions.. we have things like DCG and river financial
looking at their funders we can see kingway capital
all of which have invested in core devs and many bitcoin services.

they have invested ALOT of money into things that incentivise making bitcoin network annoying whilst promoting subnetworks for middlemen hoarding/routing.

so yes the path being set is to make bitcoiners lives more burdensome and making a path to ETF easier..

its not a new game
back in the days of creating the commodity markets of things like wheat.
the commodity offering institutions got regulators to help them kill off the family farms and replace it with commercial farms. whereby they begun to control the wheat markets.

we should not be stroked and hugged and kissed with loving whispers into accepting the only way forward is to abandon the bitcoin network and move to commercialised subnetworks. we should not be ego stroked into accepting bitcoin should only be the reserve currency rail for the elites, while having our funds syphoned in commercial services of middlemen, via fees, account renting and wallet premium subscriptions of on offchain services

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[adaseb]

This isn’t necessarily true because you need to realize that the billions of bitcoins which are AUM for all these etfs are owned by thousands of smaller investors. The etfs don’t own these bitcoins.

Sure there are some institutions buying the etfs but many are regular investors who just want it on their 401K. So there is no proof that these etfs will lead to centralization by rich banks and other large institutions.

[wxa7115]

Let's not forget that more and more coins are going from individuals to centralized platforms. Private ownership and equal distribution of coins are being reduced.

Now for many people this is not a problem, because they are making good profits from the coins that are being gobbled up by the ETFs. I have no problem with that, because ownership of coins should not be restricted, but it is sad to see our coins going into centralized platforms, where people do not have control over the private keys. (The private key are controlled by the trading platform)

It feels to me, like we are selling the keys to our soul and the legacy of Satoshi Nakamoto.  

There is not really anything we can do, in a free market as long as a person thinks the price is right, they can sell their assets to anyone that can legally buy them.

So while I can understand your concern, we knew this was coming and if anything this was something many people were looking forward to, since this will most likely bring an increase on the price of bitcoin, and while this means huge companies will have control of most of the coins which have been mined, I think this was a change that was coming sooner or later anyway.

[avikz]

I do agree with you OP. I was never in favor of ETF at the first place. The amount of money these corporates control, it's very easy for them to position themselves as a dominant player of the market and can control the market as per their wish. Most importantly, the decentralized nature of Bitcoin will be gone with all these centralized invasions.

We are just seeing the beginning of this shift and we really don't know what the future holds. ETF has been approved by the US only. Think what will happen if every major economies start introducing Bitcoin ETF.

If we look at the situation that was even surrounding the approval of this ETF bitcoin one could actually see manipulation cards been anticipated. My first thought was why did the government that has actually rejected it before simply turned its ears to it, maybe they seemed to see that it is the only chance to have this big institutions trying to get into bitcoin at one place and then probably kill off not just privacy of the investors but also to try and manipulate the market.

Although I still stand that the manipulation wouldn’t be easy as they would hardly control one-third of the coins, but one thing that will definitely help them is the spread of FOMO, it happened when Garyscale started selling there coins off, many follow suit and it affected the market. Personally I am not bothered because this kind of panic are definitely for short term holders, as the market change will affect them.

Just one country has approved Bitcoin ETF. Now imagine, if all other major and progressive economies of the world starts introducing Bitcoin ETF. Can you think what would happen? These big corporate will stay buying Bitcoins like crazy. They will definitely have the power to control a majority stake of this asset class.

Another thing you have rightly pointed out, the FOMO and false information. They can spend on advertisements to spread false information about the Bitcoin at their whim. Bitcoin should really stayed as a common man's currency system. They shouldn't have gone to the corporates at the first place. Tough time awaits for us!

[Luzin]

I read in the local media that ETFs already hold 3.3% of the total supply at the moment. There are currently 11 institutions listed in the rayscale ETF trade, BlackRock, Fidelity, Franklin Templeton, Invesco, VanEck, WisdomTree, Hashdex, Bitwise, Valkyrie, and BZX. There are about 650,000 BTC in total. If you look at this information, it is too early to assume that BTC has entered 1 owner (centered). They only control about 5% of the total supply in circulation. It is still quite a while because this is an accumulation, not from one company alone. I hope this will not happen, because the Bitcoin system was created not to be centralized.  In fact, if I'm not mistaken, people have to own 51% of bitcoin to be able to destroy Bitcoin. CMIIW

1]https://www.coindesk.com/learn/what-is-a-51-attack/

[Kakmakr]

I read in the local media that ETFs already hold 3.3% of the total supply at the moment. There are currently 11 institutions listed in the rayscale ETF trade, BlackRock, Fidelity, Franklin Templeton, Invesco, VanEck, WisdomTree, Hashdex, Bitwise, Valkyrie, and BZX. There are about 650,000 BTC in total. If you look at this information, it is too early to assume that BTC has entered 1 owner (centered). They only control about 5% of the total supply in circulation. It is still quite a while because this is an accumulation, not from one company alone. I hope this will not happen, because the Bitcoin system was created not to be centralized.  In fact, if I'm not mistaken, people have to own 51% of bitcoin to be able to destroy Bitcoin. CMIIW

1]https://www.coindesk.com/learn/what-is-a-51-attack/

No, it is 51% of the hash rate that are needed to mine bitcoins. When you achieve that, you would in theory be able to double spend for a short while, but the cost of doing that... out weigh the benefit of doing that.

Also, after you have done that and it gets known... believe in Bitcoin will drop and people might start dumping coins, which will increase supply and cause a huge price drop, if the demand is not there to buy it.

This is more about centralized trading platforms buying up the availlable coins in the long run and placing it on centralized trading platforms. (Taking bitcoins out of circulation and out of the hands of individuals that wants to buy it)

[Zlantann]

I shared this before many times but it was ignored because much of the people in bitcointalk.org did not want to address this. I reckon this might become more recognized at present because more people have begun to understand that there might be a problem.

https://docs.grin.mw/wiki/extra-documents/monetary-policy/

There is nothing anyone in Bitcointalk can do to stop these institutions from acquiring Bitcoin. Everyone who owns Bitcoin is free to sell his coins to anybody or institution without restrictions. The decentralized nature of Bitcoin will make it very difficult to have a consensus that people shouldn't sell to these ETF operators. There are some events we don't have control over we just have to relax and see how things will turn out.
Bitcoin is designed to be a decentralized currency anything outside this is an aberration and when you misuse anything there is every tendency that there will be a problem. I don't wish that these investors should experience any problem but I think there will definitely be one in the future. The fall of FTX and other exchanges made people embrace decentralization, I suspect such an event might happen in the future that will make many people embrace Bitcoin in its traditional form.

[davis196]

Let's not forget that more and more coins are going from individuals to centralized platforms. Private ownership and equal distribution of coins are being reduced.

Now for many people this is not a problem, because they are making good profits from the coins that are being gobbled up by the ETFs. I have no problem with that, because ownership of coins should not be restricted, but it is sad to see our coins going into centralized platforms, where people do not have control over the private keys. (The private key are controlled by the trading platform)

It feels to me, like we are selling the keys to our soul and the legacy of Satoshi Nakamoto.  Sad

Everyone is free to do whatever he(or she) wants with his coins. If someone wants to leave his coins in a centralized platform, let him do so.
If you want to keep your BTC in a cold wallet, just keep them. Nobody is forcing you to use centralized platforms and hot wallets.
Equal distribution? No financial asset in the world is equally distributed among all the people. Why would Bitcoin be equally distributed?
Concentration of capital is a natural process for capitalism. Mass adoption and having more institutional investors in the crypto markets would lead to the natural process of concentrating more crypto in the hands of several big corporations. We can't stop this process, but we could make some money along the way.

[Apocollapse]

Before Bitcoin ETFs exist, Bitcoin was already centralized because most people choose to hold their coins in centralized exchanges over non custodial wallet because they don't want to spend for transaction fees and holding in a wallet can't make them able to generate more coins e.g. staking. I know centralized exchanges do charge high fees, but they don't have to use that because they only pay for trading fees, holding in CEX or cash out their coins.

This problem was happen since few years ago, but ETFs just increase people to invest in centralized platforms.

[franky1]

No, it is 51% of the hash rate that are needed to mine bitcoins. When you achieve that, you would in theory be able to double spend for a short while, but the cost of doing that... out weigh the benefit of doing that.

51% mining is mitigated mostly by not accepting low confirms as 'settled' for large amount an adversarial pool would attempt a re-org.
(they wont buy/rent billions of dollars of miners to 51% for just a coffee, but to undo a 200,000btc they might)
a 51% attacks most annoying trick would be to purposefully "empty block" to cause congestion
51% attack cant really change the code, protocol of the network. not without also offering people on the network a new node with altered code

..
owning any % 5-20-50-90% does not affect the blocks, or code protocol directly, coin ownership does not cause issues..
however psychologically economic nodes(merchant services) that still want coin, would probably sway to the whims of proposals of such high yielding coin owners desire in exchange for some of that coin IF rich owner(s) did then say they only use a certain node that communicates transactions in a certain way of certain format.. then economic nodes may sway their node branding to follow the majority coin owner(s)
meaning if it changes code protocol by following the different brand, it can mandate mining pools nodes to also follow this brand or have blocks rejected by not processing a format certain high yield coin owners desire

[coolcoinz]

if you look at how many coins GTBC had jan 10th. compared to now. and then look at how many coin all other ETF have now compared to jan 11th.. you will see the shuffling clearer

when you look at this
https://platform.arkhamintelligence.com/explorer/entity/blackrock
https://platform.arkhamintelligence.com/explorer/entity/grayscale
and this


it becomes clearer

Not really. If you look closely, you can see that GBTC held 620k up to Jan 13 and then 605k on Jan 16. The largest dumps took place on Jan 12 and 13. In that time GBTC exchanged only 15k BTC.
At the average price of $45k that's only $675 million.

This is confirmed in a few articles like this one, where the author shows that on Jan 12 GBTC sent coins worth $200m to Coinbase, so sending 600m in 2 days seems to add up.

According to various news sources, including pretty decent ones like Reuters, combined inflows of all ETFs in the first 3 days neared $1.9 billion.
BlackRock was leading the way with 1 billion in volume on its first day of trading, although this number includes GBTC, which according to Yahoo Finance had a volume of 474m on Jan 12 and 399 on Jan 13, but this is both buying and selling, as some of it is people converting from Trust to ETF, which makes sense again if the other  numbers are good. $675 m in outflows and (873-675) $198 m inflows into their ETF
https://www.theblock.co/post/272123/blackrocks-new-spot-bitcoin-etf-tops-1-billion-in-big-first-day-of-trading

The same source shows Ibit at 1B on the first day and FBTC $483 m, so these two alone bought ~1,5 billion dollars of bitcoin on their first day and on that day GBTC sold ~700 million.

right now ETF are not gobbling up much new coin
most of the coin that go into things like fidelity/blackrock/ark came from... wait for it.. [drum roll] grayscale
so basically its one institution shuffling to another institution

I really don't see how less than 50% is "most" and I'm generously assuming that all of the unconverted coins on exchanged by GBTC on the first 2 days of January was sold OTC directly to other ETFs, which might not be the case.

As for miners, Check when the miner supply started dropping. It was exactly before the launch of ETFs, so they were selling into the FOMO, on 10 January and later, yet it did not cause a serious drop in price.
Also, the drop in supply held by miners in January was AFAIK the highest in the last 12 months, so what proof do you have that they did not sell to ETFs? ETFs acquired 50% of their coins in the first few opening days from someone else than GBTC, so who might have that much coin in stock? My guess is miners, which coincides with the supply drop in January.

For those interested, GBTC supply can be found here

[franky1]

gotta love how you skip a few days at the start by talking about the 12th with GBTC

 and then jump over some numbers then jump into dollars

secondly blackrock started with $10m worth of coin(~250btc).. which by the time of the 13th had 11.5kbtc (worth $500m)
so blackrock having only $500m(11.5k btc) where grayscale moved out $600m(15k btc)... more then adds up


first few days of ETF SHARE(not coin) trading of blackrock SHARES. emphasis: trading volume of the SHARES was $1billion

please learn the differences between their coin accumulations vs the share volumes of trading shares

have a nice day

[The Cryptovator]

ETF for those who aren't technically familiar with Bitcoin and don't want to purchase Bitcoin from the market they trade on ETF. They don't have control over Bitcoin. It's something like centralised exchanges where we don't have control over the funds. So even if we want, we can't ignore the centralization of bitcoin trading. Unless we are holding bitcoin in our non-custodial wallet, we aren't the owners of that bitcoin. So using centralised exchanges or an ETF broker is almost the same. The only good thing about ETFs is that we are getting new investors. 

[famososMuertos]

I do agree with you OP. I was never in favor of ETF at the first place. The amount of money these corporates control, it's very easy for them to position themselves as a dominant player of the market and can control the market as per their wish. Most importantly, the decentralized nature of Bitcoin will be gone with all these centralized invasions.

We are just seeing the beginning of this shift and we really don't know what the future holds. ETF has been approved by the US only. Think what will happen if every major economies start introducing Bitcoin ETF.

The point is that these "actors" mentioned may have their tax base in the United States, but there are investments there from all over the world, for example Norway has an investment in bitcoin with Greyscale...

In any case, nothing can be done at this point, and that is essentially the reality of the Satoshi, which is perhaps the unit of measurement that will be most decentralized in the future.  (This is obvious, it seems, but think about it carefully, if such a thing is the case in the future, hey! in the correlatives of users or possessors)

Adoption started simply to "Buy" bitcoin, and not understanding decentralization.

[Darker45]

I feel that it is also a bit unfortunate that Bitcoin ends up this way. Bitcoin is fast turning into a mere asset that's being traded on centralized exchanges, kept by third parties, and represented by various financial tools created by the very players of the old system.

Of course, we cannot control how other people would want to use their Bitcoin, but if this the direction that Bitcoin takes, it somehow loses relevance. Of what use is Bitcoin's core philosophy when instead of being a solution it has now become a part of the problematic game?

However, at least those who don't want to get into this game still have the option to stay true to Bitcoin's spirit.

[bbc.reporter]

This isn’t necessarily true because you need to realize that the billions of bitcoins which are AUM for all these etfs are owned by thousands of smaller investors. The etfs don’t own these bitcoins.

Sure there are some institutions buying the etfs but many are regular investors who just want it on their 401K. So there is no proof that these etfs will lead to centralization by rich banks and other large institutions.

We cannot know for certain who and what is the networth of these thousands of smaller investors, however, there are some people in social media who have said that Merril Lynch is only accepting high networth individuals for their bitcoin ETF trading desk. They control where the inflows of fiat should come from and if this comes from someone under a low salary bracket, they will not allow this type of person.

Also, you are correct that the ETF does not own these bitcoins, however, these investors have agreed to the rules of the ETF. The ETF controls and can decide who they want to accept to invest on bitcoin. This market will not be free for everyone anymore.

[Kakmakr]

I feel that it is also a bit unfortunate that Bitcoin ends up this way. Bitcoin is fast turning into a mere asset that's being traded on centralized exchanges, kept by third parties, and represented by various financial tools created by the very players of the old system.

Of course, we cannot control how other people would want to use their Bitcoin, but if this the direction that Bitcoin takes, it somehow loses relevance. Of what use is Bitcoin's core philosophy when instead of being a solution it has now become a part of the problematic game?

However, at least those who don't want to get into this game still have the option to stay true to Bitcoin's spirit.

Yes, you actually get what I am saying and it is not just the centralization... most of the bitcoins going into these centralized trading platforms are also going off-chain, so none of those coins are generating transaction fees for the Miners.

Transaction fees are crucial for the success of Bitcoin in the future, when the Block reward falls away.

[OcTradism]

Yes, you actually get what I am saying and it is not just the centralization... most of the bitcoins going into these centralized trading platforms are also going off-chain, so none of those coins are generating transaction fees for the Miners.

Transaction fees are crucial for the success of Bitcoin in the future, when the Block reward falls away.

Transaction fees will be main income for Bitcoin miners when Block subsidy falls smaller and smaller. I believe that income for miners will be well enough if Bitcoin continue to grow in price.

In past halvings and past cycles, price rises more than 2 times for each cycle so if in future halvings, we only need price to double, it will be enough for Bitcoin miners.

I think not only about impacts of transaction fees on Bitcoin miners but also for Bitcoin users. In 2023, with appearances and hypes of Ordinals, Inscriptions, Bitcoin miners got massive income from on-chain demand. They even don't need to have doubling price of Bitcoin to double their income, not only maintain their income.

But such hypes like Ordinals have very bad impacts on other Bitcoin users. It becomes more expensive to make an on-chain transactions since 2023. Latest weeks, mempools are cooling down and look good but not sure how it will be overloaded in 2024 bull run.

[kryptqnick]

I think there should always be a choice. As long as non-custodial wallets are legal and widely accessible, that's good enough for me. As long as we can discuss the importance of having one's own keys and can convince others to go for non-custodial solutions, it's fine. Centralized platforms are another choice, a choice that some might want to make because they're very used to having an option to restore a password if they lose it, or to rely on a big corporation instead of relying on themselves. If people know the pros and cons of both options, they can make their own decisions. I prefer a non-custodial wallet, but I don't think that everyone must share my preference.

[mm76]

The stock exchange in my country stopped trading gold contracts. One of the justifications was: "If an investor wants to have exposure to gold, they can buy ETFs."

In the same way, the existence of bitcoin ETFs can be used as consolation for investors in the face of potential regulation on the personal custody of bitcoins.