How much bitcoin owned by ETFs is too much? \ stacker news ~bitcoin

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How much bitcoin owned by ETFs is too much?

1951 sats \ 43 comments \ @Scoresby 6 Jun bitcoin

Apparently, global ETF ownership of bitcoin is now over 1 million BTC. I was surprised that it was already so high. Made me wonder at what point it becomes unhealthy?

100k BTC20.9%

1 million BTC18.6%

2 million BTC0.0%

5 million BTC34.9%

Let 'em have it all25.6%

43 votes \ poll ended

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202 sats \ 5 replies \ @DeltaClimbs 6 Jun freebie

There is no "too much"

Ironically, though you think you are pro freedom, you are implicitly suggesting people's freedom to trade is wrong.

You are making a category error. ETF is not bitcoin. Think about it as a totally different thing, like real estate. Is 100x real estate to bitcoin too much in the world? It is a nonsense question. 5 years ago it was 1000x. So all the bitcoin is always owned, it is just a question of who it is owned by.

It is not "wrong" per se that people choose to not own bitcoin and own a different thing called ETF.

You think: oh, but the world will be shitty because XYZ -- wrong, friend, the world is shitty today, it's all fiat. Eventually, it will be all bitcoin. Reframe your thinking: if it's lots of ETF and it's the bitcoin standard and still shitty, it wasn't actually full hyperbitcoinization -- keep waiting.

Better to ask how much is too much for an individual. I would say 20% is very high, and can be much lower with higher net worth. Going from US to Canada I have been questioned about how much money I have and having nearly empty bank accounts and brokerage is not a good look, which is why now I own a bit of MSTR. Also was helpful to show landlords I'm not broke. If you drive a Porsche though you wouldn't have this issue and could easily GetOnZero.

0 sats \ 4 replies \ @Scoresby OP 6 Jun

Good points. Perhaps I should have phrased the question this way:

How much bitcoin owned by a single entity could cause problems for Bitcoin?

(I didn't put it like that because it is not as snappy and I wanted to put it in the context of the etfs)

Keeping in mind that bitcoin exists in the freest market there is (anyone can buy it who finds a seller), my question is do you think there is an existential threat to bitcoin if one entity were to hold 10 million btc?

17 sats \ 3 replies \ @DeltaClimbs 6 Jun

Nope. Bitcoin is not a democracy.

Might cause problems for the world, but generally, the more inequality there is in bitcoin, the better, because long term superwhales inevitably must hodl. https://heaviside.substack.com/p/210-years-of-darkness-on-bitcoin

0 sats \ 2 replies \ @Scoresby OP 6 Jun

Economic nodes play a big role in bitcoin. A node that has the private keys to 10 million btc can say that it will run a particular hard fork and can produce 10 million btc worth of sell pressure on the legacy chain. While I understand that bitcoin is not a democracy, this sort of sell pressure does have an influence on how these things play out.

0 sats \ 1 reply \ @Scoresby OP 6 Jun

Think about it this way; if there was a single entity that held 10 million btc and they supported a fork that most bitcoiners didn't, a miner would have to think very carefully about which fork they mined on. Miners have real costs (energy). Faced with an entity that could depress the price of the legacy fork to such a great degree, it is unlikely any miner could weather that economic storm. Many would mine the new fork.

17 sats \ 0 replies \ @DeltaClimbs 6 Jun

But back to my point, even in the worst case, this is just another shitcoin. Even if it is dominant for 1000 years, eventually it would collapse.

134 sats \ 1 reply \ @Johnny21 6 Jun

Good question, been thinking about this issue as well. But there are even more questions:

How much bitcoin held by a single custodian is too much? (Looking at you Coinbase)
How much bitcoin held by several custodians in a single country is too much?
Can a single country gain control of the network by seizing coins and mining hardware from central entities?

31 sats \ 0 replies \ @Scoresby OP 6 Jun

It's true that this statistic is global, and sounds more dramatic than the reality probably is. But if the trend continues, it is not unreasonable to expect a custodian like Coinbase to end up with several million btc.

I had the coinbase situation in the back of my mind when I wrote the poll. Clearly, if a single custodian had a very large percentage of the total supply, it would make things like forks much more difficult.

I also imagine if one entity controlled something like 20% or more of the supply and had a chain analysis business, it would make on chain privacy significantly more difficult.

90 sats \ 1 reply \ @JesseJames 6 Jun

0,000001 is too much. Get the real deal...:-) You will sleep better

102 sats \ 0 replies \ @SpaceHodler 6 Jun

Get the real deal.

The concern expressed here is not for the individual owning ETFs, but for the long-term viability of Bitcoin itself. If something blows up due to too much concentration, your corn in self-custody may blow up too.

100 sats \ 0 replies \ @BoJack 6 Jun

Before this year I would have thought that if they got too much it would reflect in the price, now I am not so sure. I think this is just the beginning of the next bull run and with all the institutions now on board who knows how the game theory will play out. It certainly looks like we can only go up from here but only time will tell. Always stay on your toes and hold for dear life through this run because it’s shaping up to be a bumpy ride!

100 sats \ 0 replies \ @TheBTCManual 6 Jun

Collective custody of Bitcoin has never worked out well, thats a lot of supply and the market would never be able to absorb it without a serious discount, so possible cheap sats in the future if its rugged, or possible super expensive sats if they lose access to it

Lol it's never enough if they end up losing their keys!

177 sats \ 1 reply \ @ssaurel 6 Jun

The real problem is that even when it's too much, there's nothing we can do about it.

Even more worrying is that, for these financial giants, Bitcoin as a medium of exchange is a distraction. They are reinforced in this by Michael J. Saylor, who has also been promoting the same idea for some time.

However, if Bitcoin is not adopted as a medium of exchange, the Bitcoin revolution will not be able to express its full potential.

All the Bitcoin held by these financial giants will no longer be usable. These financial giants aim to integrate Bitcoin as a store of value only within the current system.

This is unfortunate when you realize that Bitcoin is first and foremost a superior monetary system. Bitcoin aims to replace the current system by offering you a superior alternative, not to be integrated as part of a flawed system.

0 sats \ 0 replies \ @memeverse 6 Jun

I feel exactly the same way! Bitcoin was supposed to disrupt the current centralized and obsolete monetary system. Instead they are incorporating it into their sick system. I don't know how we will get out of it, certainly there is still room for a revolution, maybe a slow one, but I am beginning to wonder if this is how it was supposed to go?

78 sats \ 1 reply \ @nullama 6 Jun

Wouldn't that just make self custodial BTC worth even more?

I'm sure at some point there will be a difference in price between those 2.

100 sats \ 0 replies \ @Scoresby OP 6 Jun

In the long run, I don't think so. If we get to a situation where there is one or two entities in easy-for-governments-to-reach places and they hold some very large amount of bitcoin, it becomes much easier for that government to push for changes in the protocol.

If Coinbase had 10 million btc and they announce that their node is going to run hard fork x, and they are going to dump the side that is real btc, it would put a lot of pressure on the people who hold real btc. Could it weather that kind of pressure? During this time we will all have built bitcoin into our lives with a certain concept of the price. Massive dumping by such a custodian could lead to a lot of woe. How many people in this example would go along with coinbase's fork because they can't survive the dumping?

72 sats \ 1 reply \ @SatsMate 6 Jun

Anything more than 30% of the supply can become worrying from my view. But honestly, I think people in this space are working hard to keep things distributed and decentralized on all layers.

Education is key to ETF and exchange holders.

118 sats \ 0 replies \ @DiedOnTitan 6 Jun

Bitmain's 90% ASIC marketshare is deeply concerning, given their underhanded deception selling crippled miners to everyone but themselves.

27 sats \ 0 replies \ @BitSapien 7 Jun

Probably when they claim to own more than 21mil bitcoin.

110 sats \ 0 replies \ @0xIlmari 6 Jun

Bitcoin is not Proof of Shit. Concentration of ownership is of little consequence to those who self-custody. They're not getting mine anyway.

210 sats \ 0 replies \ @TNStacker 6 Jun

They can own bitcoin. Just don't let them own your bitcoin!

192 sats \ 0 replies \ @harrr 6 Jun

Doesn't concern me, they can't have mine.

81 sats \ 11 replies \ @DiedOnTitan 6 Jun

Satoshi himself mined over 1 million Bitcoin. Was that too much?

17 sats \ 10 replies \ @Catcher 6 Jun

Well, if ETFs are going to disappear and never touch this bitcoin again I suppose it should be fine then

129 sats \ 9 replies \ @DiedOnTitan 6 Jun

It is not inconceivable that several things may happen with ETFs:

Some people who invest in Bitcoin ETFs will, over time, learn the importance of NYKNYC and take action - take the tax/penalty hit, sell their ETF, buy Bitcoin and put their keys into cold storage. It may take two or three cycles for ETF holdings to peak and then begin to drain. At some point, I do expect that this reversal will happen and ETF holdings will drain to self custody.
Financial engineers may devise a way to transfer ETF holdings and allow for sovereign custody while maintaining the asset within a retirement/401k/IRA account or some other vehicle and altogether avoid the tax penalty hit that comes from exchanging to cash.
The law and policies will change that allow ETF investors to exit their ETF position directly in kind. Instead of selling for cash, they take possession of their Bitcoin keys.
The government issues some new form of EO 6102 and seizes ETF custodial Bitcoin because it will be lowest hanging fruit. The fear of this scenario may incline some towards point #1.

Additionally, no one knew that Satoshi would disappear and never touch his bitcoin again...and quite frankly, there is still a non-zero chance that this could happen. 0.00000001% is still non-zero.

24 sats \ 8 replies \ @Catcher 6 Jun

I was always thinking it's gonna be number 4 without number 1:) Especially if Jason Lowery is right about warfare.

0 sats \ 3 replies \ @zx 6 Jun

What does JL say about warfare?

7 sats \ 2 replies \ @Catcher 6 Jun

Check this podcast https://fountain.fm/episode/voIRqcWXBbIzFLAC4biK

0 sats \ 1 reply \ @zx 6 Jun

Thanks for that. one of the best 2hr+ podcasts I listened to in a while. Learned a few things.

0 sats \ 0 replies \ @Catcher 7 Jun

You are welcome:) he gets a lot of criticism for this but I think there is definitely something to think about:)

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0 sats \ 3 replies \ @DiedOnTitan 6 Jun

Things will have to get pretty bad for #4 to happen. Blackrock now would have a lot to lose. They have deep ties (lobby dollars) into the government and they are massively increasing AUM, and I don't think they want to have to explain to all of their clients why they got rugged on their watch.

It is much safer to have your keys in cold storage than an IOU on an ETF. I don't understand these "I don't trust myself" plebs who don't want self custody. It's weak.

I do however understand people who have a retirement fund and want exposure to Bitcoin without taking the tax and penalty hit for withdrawing their funds.

0 sats \ 2 replies \ @Catcher 6 Jun

Well, you cannot rug the ETF holders as they don't have any bitcoin to rug to, So in my head it plays like that - companies are hoarding BTC using the customer's money and when the customer sells they don't. So they end up with a lot of BTC that nobody can withdraw. I'm just wondering if they can somehow hide it in the reports.

10 sats \ 1 reply \ @DiedOnTitan 6 Jun

when the customer sells they don't

That's not how it played out with GBTC. So much cash left when the ETFs opened, that they had to sell 300,000 Bitcoin to cover.

https://m.stacker.news/34235

0 sats \ 0 replies \ @Catcher 6 Jun

Right, I agree, but I won't be surprised if in the future blackrock will come up with the solution that will allow them to keep all the BTC fromn the ETF. At the end of the day, if you understand the game then you will try to get as much BTC as possible.

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41 sats \ 0 replies \ @EverythingSatsoshi 6 Jun

The ETFs are an attack on bitcoin and further put a nail in the coffin, burying price discovery

10 sats \ 0 replies \ @zx 6 Jun

I'm getting the knack of intuitively gauging the group averages. Proud of myself. Institutional investment below 25% seems to make sense.

31 sats \ 1 reply \ @Coinsreporter 6 Jun

They can't have them all as long as I'm there

0 sats \ 0 replies \ @SpaceHodler 6 Jun

Yep, and perhaps the ETFs are set to hit a brick wall of devoted maxi hodlers soon, who won't give up their coins.

42 sats \ 1 reply \ @Catcher 6 Jun

I was also thinking about it, what happens with bitcoin when someone sells ETF? As you cannot withdraw bitcoin, will BLACKROCK and others go and sell it on the market when you sell or they just give you fiat and keep sats to themselves? ;)