While everyone is waiting for Bitcoin ETF with baited breath, we need to understand how these advanced instruments impact the Bitcoin market. Why is everyone so excited about ETF? Bitcoin futures market was opened up in late 2017 and we saw an amazing bull run along with it. Bitcoin touched $20,000 and a lot of new money came into the market. What happened afterwards is known to all.
Bitcoin exchanges are highly unregulated place and they are spread over geographically with various jurisdictions that makes it almost impossible to regulate. In addition, 24 hour trading and need for technical maintenance create another set of complexity for exchanges.
Today, when BitMex exchange (largest Bitcoin futures market) went down for maintenance at 1300 UTC, some trader(s) was waiting for this moment to create a big price jump in BTC in spot market and reap huge rewards in Futures market due to 100x leverage. For more details, please watch our video below:
Now let me ask you – do you still want Bitcoin ETF? Once ETF door opens up, there will be even more derivative products. Market will get more tools to manipulate the price.
Conclusion: Either we can have a decentralized economy with peer to peer transactions that Bitcoin enabled, or we can have a heavily institutional and weaponized market with regulation. We can not enable big trading weapons without regulation. If you want a non-regulated peer to peer exchange, please stop supporting ETFs, Futures/options market for Bitcoin.