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.
563 sats \ 1 reply \ @freetx 28 Jan
The threat of ETFs bribing their way into developer influence is very real. But, I have hope.
  • The current crop of devs are fairly principled and have already proven that they passed the time preference / marshmallow test. To be frank I think the last 10+ years of BTC has changed lots of peoples attitudes towards consumption. We have literally been training ourselves to 'consume less / save more'. Once you break the spell that a lambo is suddenly something you need to have, it sort of loses its power of you forever. The next gen of developers, however will be less principled and probably have less self-control....
  • Lets hope the ETH ETF gets approved. This is tailor made for Wall Street / Fed Reserve control. This can be their shitcoin / CBDC casino platform. There will be less 'need' to subvert BTC is they can inflate DOGE the thus control X (Elon's wechat)
  • Fedimints and Cashu are available for them. These developments are 100% made for Wall Street. I mean its Fractional Reserve with cute graphics and positive bitcoin vibes. This will keep them busy as well.....they can setup the "biggest and most trusted" mints and they can milk their cattle for the next 50 years via slow debasement. Although this may sound negative, its not meant to be. It keeps them out of core code. Gives them a shitcoin playground to play in.
I really like your take on eth ETFs. I hope you're right about everything.
yuppies (young urban professionals)
Is that where it came from? I had no idea!
Yeah. If you're interested in learning about those times, you should read Tom Wolfe's novel Bonfire Of The Vanities. It's long, but very enjoyable.
Thank you, sig. Bookmarked!
So culturally huge There were books back in the 80s.
The Preppy Handbook and The Yuppie Handbook
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.
I feel like this describes me. I definitely got interested in bitcoin due to NGU and the potential profits. I have since learned a lot about the underlying technology, and also about the economics behind it (albeit less than the tech, economics doesn't interest me as much). I'm still hodling and growing my stack on a regular basis. I still try to provide value to the open source bitcoin community. But I certainly do still make note of the fiat price. It is undeniably interesting, even though I don't really discuss it with anyone.
472 sats \ 0 replies \ @TomK 28 Jan
Thank You, Siggy. I caught myself ignoring the ETF hype actively because I simply can't stand these types that represent Wall Street. What I see is, as BR is the US gov's investment arm, as You described so well, a collateralization of BTC like Gold or USTs. It's like finding a way to coexist with it and use Wall Street to dominate it by binding it to US investors. But we'll see
Interesting point about self custodied bitcoin being viewed as the bad bitcoin by the powers that be. As bitcoiners we always look at it the other way around. I do think that could be a sales pitch used by wall street and the government. I don't think they will ban self custody but they will try to scare you out of it. PSA: "We are the government and we are here to help. Only drug dealers, hackers, terrorists and crazy people hold bitcoin in self custody. You are going to get hacked, and lose all your money. Our friends at blackrock will take care of the difficult, confusing, dangerous part of custodying your bitcoin and give you these really cool shares in return that you can hold in your KYC AML compliant brokerage account like honest, good citizens do."
I am not as negative on the etfs as you are but they are a co-opting risk. It is really important that bitcoiners don't get complacent as wall street feeds the number go up. The next crash is going to be epic. Cramer will be losing his mind on CNBC after it crashes 30 percent in a few days after he just told everyone to go all in at the top tick.
That would be a silver lining to watch Cramer get humiliated
we get another heart stopping, gut wrenching fiat price crash that flows into a nice long bear market
yes please.
Thank you for this insider peek into Wall Street and its machinations and for trusting us Stackers to hold space for your depth of complex emotions
I don't think it's particularly helpful to focus on Wall Street as inherently evil. I view them as the culmination of a set of incentives. They're playing the game as it's designed, and if you talk to many of the players behind closed doors, they'll tell you the game is broken and will eventually end.
If firms have done the homework to build and sell bitcoin products after years of belittling bitcoin, I view it as a sign that, at the very least, they understand the incentives that made them rich in the past are changing. Their consensus is breaking. They benefit a lot more by playing both sides of fiat and bitcoin until a new reality is clear.
There's a clear split going on in Wall Street right now, and that split is playing out in the marketplace as it should. I don't worry about any of them changing bitcoin because owning more bitcoin doesn't give you any more ability to change consensus.
The most they might do IMO is push some dumb fork if an ETF gets drained, like the DAO hack on ETH, but I don't think even that would be successful. BTC is too widely distributed at this point. Wall Street was always going to notice.
For most things you are damn right except the one you said that Bitcoin only have one more 4 year cycle left. Bitcoin, as it's being adopted, the growth should inline with adoption. Adoption which isn't limited to the U.S.. Bitcoin will surely stretch to every corner of the globe and then it will become rationally stable. Even then, the price would go up, albeit not the way it moves currently. Adoption is happening and it's a reality.
Mike Noregretz is such a scamming POS.
I hope getting rid of Wall Street is easier than getting rid of alt coins. I have been hoping for end alt coins since 2016. No luck yet.
I don't think it takes much of a dip to scare off the speculating short term fiat minds. Probably doesn't need to be as deep as the last one. Also I hope these ETF's go bust sooner rather than latter. Maybe they will double down on there own book in this coming cycle, ie leverage long degen style. Then is a game of chicken till someone starts naked short selling, Ie issuing fake btc. They will probably switch strategies when they see real bitcoiners getting in their way.
Clap clap clap!!!
  • 70% of bitcoin mined have not moved for the last one year. They are all HODLers who know not to sell bitcoin cheap
  • GBTC holding 500,000 Bitcoin will be gulped in within 50 days if New coming ETFs are buying 10000 bitcoin daily
  • Once these Centralised bitcoins are gulped in by the ETF players there is no bitcoin left - demand shoots and supply is scarce resulting in sharp spike up of price
  • This leads to spike in Gold and Silver price also
  • Massive Movement of money out of banks into Gold, Silver and Bitcoin
  • Treasury interest rate spikes as there are no buyers
  • Collapse of Dollar
  • Bitcoin headed for infinity
"They can afford to make your typical core developer wealthy beyond their wildest dreams."
I think after enough "4-year cycles" these devs know enough to avoid being conned.
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