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17 sats \ 10 replies \ @Catcher 6 Jun \ parent \ on: How much bitcoin owned by ETFs is too much? bitcoin
Well, if ETFs are going to disappear and never touch this bitcoin again I suppose it should be fine then
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.
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Check this podcast https://fountain.fm/episode/voIRqcWXBbIzFLAC4biK
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.
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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.
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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.