Yesterday we examined the history of Bitcoin’s public narrative… and I suggested that the new ETFs are a misdirection play. That is to say, there is a hidden agenda underlying the Bitcoin ETFs.
This agenda is why the Securities and Exchange Commission (SEC) was openly hostile towards Bitcoin for years… but suddenly changed its tune. The power structure behind the SEC has two primary goals here.
The first goal is simply to funnel people into the Bitcoin ETFs so that they don’t buy and self-custody any bitcoins themselves.
It’s important to understand that these Bitcoin ETFs are cash-settled. That means investors have no ownership interest in the underlying asset.
And that’s an important point.
Bitcoin is critically important as a reserve asset in and of itself. These ETFs are just vehicles that provide dollar-based price exposure to Bitcoin.
So the more people who buy the ETFs, the more bitcoins the power structure will be able to aggregate into their own custodianship and effectively take out of circulation. They don’t want us building resilient circular economies at the local level, as we discussed yesterday.
The second goal is to gain more influence over the price of Bitcoin.
That’s another reason why the SEC required the ETFs to be cash-settled – so no bitcoins actually trade hands when an investor buys or sells ETF units. Then the Bitcoin ETFs can pass on all the transaction costs and exchange fees to all investors.
This creates a dynamic where institutions can execute large buy or sell orders for Bitcoin without being on the hook for the associated fees they would otherwise incur.
Here’s what I mean…
Let’s say an institution buys 100,000 units in a Bitcoin ETF. Had they bought those bitcoins directly from an exchange, they would have to pay large transaction and exchange-related fees for doing so.
But by purchasing units in the ETF, it’s the ETF operators who are responsible for buying the bitcoins directly – not the institution. And the ETF operator then spreads out those transaction expenses across all ETF investors as part of the fund’s expense structure. This negatively impacts the performance of every ETF unit in circulation.
So with the Bitcoin ETFs, institutions can pass on their transaction expenses to smaller investors. It’s a sleight-of-hand play.
This removes the costs associated with outsized Bitcoin purchases, which creates a situation where a motivated institution like, say, the European Central Bank (ECB) could engage in massive Bitcoin ETF transactions specifically to create artificial volatility and move the price.
Needless to say, I’m not a fan of the Bitcoin ETFs. They are not an invitation to adoption… they are a tool for misdirection.
The good news is that the ETFs have little impact on the Bitcoin network itself. It’s still uncontrollable.
So my suggestion is that we not play their game.
If you’re interested in Bitcoin, buy it directly and hold it in a self-custody wallet where you retain full control. And then don’t worry about the price.
Bitcoin isn’t an investment where we put dollars in hoping to get more dollars out later. That’s what our stocks, real estate, and private investments are for.
With Bitcoin, the goal is to exchange our dollars for sound money… so that we always have plenty of economic energy available to us within the new system.
-Joe Withrow
P.S. We cover the ins-and-outs of how to integrate Bitcoin into a comprehensive asset portfolio inside of our Finance for Freedom Masterclass program. You can learn more about it right here.