Pub Key
The first time I went to Pub Key in New York City I was a little surprised to see the place filled with what we used to describe as yuppies (young urban professionals) back in the 1980s. I found out that most of them worked for Galaxy Digital Holdings, whose offices are located right near the bar. I posted about my visit here. That night Pub Key was hosting a mining presentation that included Marty Bent. I remember being struck by how different the crowd was from what I had anticipated. My next visit to Pub Key, to hear Alex Gladstein, was much more aligned to what I was expecting. It was more my crowd.
As the months passed and the bitcoin ETF frenzy grew, I learned that Galaxy was partnering with Invesco to put out a spot bitcoin ETF, which now trades under the symbol BTCO. I didn’t pay a lot of attention to this, since I was and am very opposed to the whole idea of a spot bitcoin ETF. I’m not going to bore everyone with my opinions. They are not unique. I had my discussions and arguments with fellow bitcoiners. Talking about it was pointless anyway, since we couldn’t stop the approvals regardless.
Before I embraced bitcoin I invested in stocks. I was fascinated with the subject since high school. When I got my first job as a lawyer in the mid 1980s I would deposit part of each paycheck into my brokerage account. I read lots of books on the subject. I made and lost money along the way. I got destroyed in the 1987 stock market crash (Black Monday), and only dumb luck prevented me from taking a major loss when the dot com bubble burst. My wife and I needed the money for a down payment on our first house, so I sold my high flying internet stocks right before they crashed.
As time passed I got better at it. I grew more conservative and took less chances. Among the many admonitions I picked up was the old “buy the rumor, sell the news” saying. I am now a retired bitcoin hodler. We all just witnessed the classic frenzy leading up to the approval of a spot bitcoin ETF, and we watched the post approval dip. It was meaningless to me not because of any wisdom I had picked up buying and selling stocks, but because I just hodl and dollar cost average my bitcoin buys the same as I have been doing for years. The whole thing made me angry, though, because I see bitcoin as a revolutionary force to change the world, not as another thing that can be co-opted and financialized by the powerful wall street players, backed up by the government. I was also angry because I knew that last year’s price run had brought many people to bitcoin. Yeah, I know most of the interest was to get rich quick, cash out for fiat, and buy expensive shit. Still, there’s always a certain percentage of each bunch of NGU newbies who stick around, learn, and help make bitcoin the force for good it will be. That’s why I was angry. Maybe there will be fewer of them this time.
SBF Won’t Go Away
Getting back to Galaxy, it turns out that they are not only issuing the new BTCO ETF with their partners at Invesco, but they are also the court appointed advisors on FTX’s assets during the bankruptcy proceedings. So, at the same time that Galaxy employees were talking up the ETFs on bitcoin podcasts, Galaxy was planning on liquidating FTX’s bitcoin at the best price they could get. They were also shorting bitcoin as a hedge. For those who don’t know what that means, shorting means betting that the price goes down. Is this illegal? I’m not a securities lawyer. I’m sure Mike Novogratz knows what he’s doing and knows more about this stuff than me. When CNBC needs a talking head to talk about crypto, Mike is their go to guy. Might there be a conflict of interest here? That’s for the SEC and the courts to decide.
The Real Power
When I was whining and arguing with my fellow plebs about the ETFs, I wasn’t thinking much about Galaxy, to be honest. My big concern was BlackRock and its well connected leader, Larry Fink. It is expected that when the dust settles, BlackRock’s ETF will own the most bitcoin of these funds. Some of the smaller players have already begun donating to bitcoin core developers through established channels. I don’t think BlackRock has yet, but it won’t be long before they will be spreading their wealth around. They can afford to make your typical core developer wealthy beyond their wildest dreams. Does this bother me? Yes. BlackRock will say all the right things at the beginning. They know how to wield influence. Larry Fink was in line to be Hillary Clinton’s treasury secretary. Do you think he’ll have any difficulty conning a few software developers? I know nodes decide whether or not to implement versions of code. I know BlackRock has no incentive to hurt bitcoin. It’s just that for BlackRock, the only thing that matters is the price. Will they allow censorship of transactions? Well, they are practically the investment arm of the U.S. government right now. What do you think? How many of us will stand up for the principles behind bitcoin if untold riches are dangled in front of us? Will our self custodied bitcoin become “bad” bitcoin, not as good as Larry’s good, government approved bitcoin?
A Ray Of Hope
I know I sound pessimistic here. That’s because I am. There is one thing I hope for, which sounds crazy. I hope that bitcoin has one more four year cycle left. I’m hoping that a year after the halving, as all the hype has reached its peak, we get another heart stopping, gut wrenching fiat price crash that flows into a nice long bear market. That would scare the crap out of Wall Street, maybe forever. It would get rid of all the normie get rich quick players too. It might even bankrupt a few of these firms. Maybe they will leave us alone, and we can all get back to work.