Bitcoin ETFs: Institutional Adoption, Market Dynamics, and Theories of Manipulation

Spot Bitcoin ETFs in the U.S. saw $1.8 billion in inflows last week, marking a record 18 consecutive days of positive inflows. Bitcoin ETFs now hold approximately 1 million BTC, which is nearly 5% of the total Bitcoin supply. This includes holdings from ETFs in the US, Europe, and other regions– And the price went down instead of up. I think it's a positive sign, in a bad way and in this article I'll explain why.

Bitcoin is on its path towards world-reserve currency status, and those in power understand this.

Several Public Companies Have Recently Added Bitcoin To Their Balance Sheets, Reflecting Growing Institutional Acceptance

• Semler Scientific (SMLR): A publicly traded company with a market cap of $216 million, holding $40 million in Bitcoin (581 BTC).
• Defi Technologies, Semler Scientific, and Metaplanet: These are the newest public companies to announce Bitcoin holdings, and their stock prices have surged 30-50% over the past five days.
• MicroStrategy (MSTR): Known for aggressively adding Bitcoin to its balance sheet, MicroStrategy holds $20.9 billion in BTC, setting a precedent for other companies.
• Block (formerly Square): Under Jack Dorsey's leadership, Block continues to add Bitcoin to its balance sheet and has released a blueprint for corporate Bitcoin adoption.
• PayPal: Expanded its crypto services by acquiring significant Bitcoin holdings to support its growing crypto payment and transfer services.
• Marathon Digital Holdings: A Bitcoin mining company with 12,000 BTC, worth approximately $1.2 billion, accelerating growth post-2024 Bitcoin halving.
• GoldenTree Asset Management: A hedge fund with $41 billion in assets under management, recently diversified into Bitcoin.
• Ault Alliance: A Nasdaq-listed coal miner, Ault Alliance, announced in January 2024 that it would begin holding Bitcoin on its balance sheet as part of a new financial strategy. This decision reflects the company's shift towards integrating digital assets into its portfolio​

Institutional interest extends beyond corporate treasuries. The Wisconsin State Investment Board (SWIB) made headlines by incorporating Bitcoin ETFs into its portfolio, valued at $164 million as of March 31, 2024. This move signifies a substantial step for institutional investments in Bitcoin.

The Political Landscape Around Bitcoin Is Evolving

The political landscape around Bitcoin is evolving. In 2024, Trump's campaign began accepting Bitcoin donations, a significant shift from his earlier stance. Trump has positioned himself as the "Bitcoin candidate," advocating for Bitcoin as a defense against central bank digital currencies (CBDCs) and suggesting that all Bitcoin should be "made in the USA."

Additionally, the House of Representatives passed the Financial Innovation and Technology for the 21st Century Act (FIT21) with a 279-136 vote. This bill aims to regulate US crypto markets, set consumer protections, and establish the Commodity Futures Trading Commission (CFTC) as the leading regulator of digital assets. The bill received bipartisan support, marking a significant policy shift for the bitcoin industry. – This was later vetod by the democrat's president, but that's besides the point.

The US Is Becoming More Pro-Bitcoin With Growing Acceptance And Recognition Of Bitcoin As An Investment

Governor Greg Abbott of Texas and the head of Ecot Energy are advocating for Bitcoin mining as a means to boost the local economy and stabilize the energy grid. By integrating mining operations with renewable energy sources, excess energy can be absorbed during peak production and consumption reduced during high demand, enhancing grid efficiency. This approach aligns with environmental goals and supports economic development through job creation and infrastructure investment, positioning Texas as a leading hub for cryptocurrency innovation.

The US is leading in terms of holding Bitcoin, with 70% of US states having enacted laws addressing bitcoin or blockchain technology. These developments suggest that the US is becoming more pro-Bitcoin, with growing acceptance and recognition of Bitcoin as an investment asset and a potential shift in regulatory and political attitudes towards the cryptocurrency.

Several Countries Have Approved Bitcoin ETFs In The Past Year

Several countries have approved Bitcoin ETFs in the past year, including: United States, United Kingdom, Hong Kong, Australia, Thailand, Canada, Germany (Deutschland), Brazil, and South Korea.

These approvals reflect a growing acceptance of Bitcoin as an investment asset, allowing investors to gain exposure to Bitcoin through regulated products.

Theories of Market Manipulation

Despite these positive developments, Bitcoin's price has remained sideways or even declined. This trend, coupled with record ETF inflows, raises questions about potential market manipulation. Here is an unproven theory:

Market Manipulation: ETFs are reportedly buying billions of dollars worth of Bitcoin daily, yet the price has been declining. This suggests possible market manipulation through "paper" or fake Bitcoin.

"Billions of dollars are being bought by the ETFs every day, but the price is going down? The number of days with record inflows to the Bitcoin spot ETF is 18 consecutive trading days, and the price went down instead of up!?"

A lot of people are questioning what's going on. Adoption is happening faster than ever, and the price is ranging from sideways –to slowly declining.

Fractional Reserve Tactics: ETFs Might Not Be Fully Backing Their Bitcoin Holdings With Actual Bitcoin, Similar To Fractional Reserve Banking Practices. This Could Mean That When Demand For Physical Bitcoin Rises, These ETFs Might Not Be Able To Deliver, Leading To A Crisis.

Regulatory and Market Consequences

In such a scenario, ETFs may end up reimbursing investors with fiat currency when Bitcoin's price is much higher, resulting in significant losses for retail investors. The companies might face fines, but the most powerful entities would likely end up holding the majority of Bitcoin, while everyday investors could be left without their promised assets.

A Positive Sign, in a Bad Way: The current price suppression could be a sign that Bitcoin is being taken very seriously as a potential world reserve currency. Those in power are employing illegal tactics to ensure they come out on top. They are trying to manipulate Bitcoin just as they have manipulated the traditional financial system. The importance of holding one's own keys cannot be overstated. When the time comes, and everyone demands their Bitcoin, these entities may claim they don't have it due to "bank failures" or other excuses.

Limited Supply and Price Suppression: Bitcoin's supply is inherently limited, and as demand increases, the disparity between real and paper Bitcoin will become evident. The powerful entities manipulating the market may end up reimbursing people with fiat dollars when Bitcoin's price is exponentially higher. They will likely pay a fine in fiat currency, but everyday investors who trusted these ETFs might find themselves at a loss.

Conclusion

These insights and theories highlight the complex and often opaque nature of the TradFi markets. While institutional adoption and regulatory advancements paint a promising picture, potential manipulative practices underscore the importance of holding one's private keys and understanding the risks involved in ETF investments. The ongoing developments suggest a more pro-Bitcoin stance in the US, with growing acceptance and potential regulatory shifts towards a bitcoin standard. However, the market's current behavior raises important questions about transparency and the integrity of financial practices within the TradFi ecosystem.

As the financial system is being restructured, and there is a good chance that the current power system will use fraud and manipulation tactics to stay in power. Satoshi Nakamoto created Bitcoin as a way for people to exit the corrupted financial system. Holding your own keys is essential to ensure you come out on top in this evolving landscape. If Bitcoin were a country, we would likely be at war already due to its potential to disrupt the status quo. By holding your keys and using Bitcoin as intended, individuals can protect themselves from the manipulations of the existing financial system.

IMO Bitcoin is on its path towards world-reserve currency status, and those in power understand this.