Now that we are passed the circus that is Gary Gensler and the Securities and Exchange Commission (SEC), at least in regards to the Bitcoin ETF, we can begin to take a look at the impact it could have.
Wall Street is suddenly fans of bitcoin. Isn't that interesting?
Years ago I discussed the banker playbook. It certainly revealed itself in this instance.
Step 1: attack the threat
Step 2: use govt (regulators) to gain control
Step 3: use resources to buy it all up
This is unfolding exactly as mentioned. Larry Fink is now talking about cryptocurrency will change the financial system and tokenization is the next big thing. Is he suddenly a crypto maxi?
Of course not. He does now, however, have a financial interest. To a guy like Fink, this is simply another asset class for them to exploit and profit from.
So what does this mean for bitcoin and crypto in general?
The Takeover
Anything that Wall Street can take over, it will.
For bitcoin, that not only means the coin but the network. The first is rather obvious. We are going to see the coins in the hands of custodians (i.e. Wall Street banks) as the ETFs expand. Remember "not your keys, not your coins". This is that concept on steroids. We aren't even pretending to be the holders since the ETFs are selling derivatives.
After this, the network is going to come under attack. Blackrock is already investing in the miners that are publicly traded. How long until these are the controllers of most of the hash? There is a chance this does not happen. With technology, perhaps there is a day where the mining can truly be decentralized if people can run smaller systems and have success.
As of now, it does not look like that.
That said, we are likely to see Wall Street push the price of the coins higher. People are going to want to be involved, especially after the bull kicks off. It is great for wealth accumulation, not so much for the tenets of Satoshi Nakamoto.
The First Step
This opens the door for more to come.
We are most likely going to see an Ethereum ETF based upon the spot price in 2024. There is no reason for the Wall Street institutions to stop. The excuse the SEC had for not approving it is out the window. They could stall but will ultimately give in.
When this happens, we have a rinse and repeat.
With Ethereum, since it is a POS system, that means controlling the coins equates to influence on the network. This will have to be staked, something that I am sure the custodians will do for "security" purposes. After all, it is harder to hack staked coins.
Wall Street does the same thing with all asset classes. It takes them and builds products on top. This is why the world of derivatives is so large. Digital assets are only going to feed into this.
The tokenization that Fink mentioned is also going to emerge. We are going to see financial institutions start to propose the idea of tokenizing different assets. Again, this feeds into the Wall Street banks. They are the ones who make a fortune rolling out IPOs. Can you image the money they could make by doing the same with the tokenization of real estate?
Price Go Up
We can surmise that Wall Street will be behind the next bull. This is simply what it will do.
There will be hundreds of billions of dollars pouring in over the next couple years. Ultimately, we are going to see tens of trillions. This will, of course, be the tokenization of everything. Nevertheless, the numbers will be enormous.
Anyone who is involved in the early days is going to financially benefit. In this instance we are separating the price activity from the value proposition, especially as it is aligned with the tenets of Satoshi.
Wall Street is not concerned about the latter. With the former, when the firms are properly positioned, they will set the bull loose. We are going to see a frenzy like never before in the industry. Not only will crypto people FOMO, but the mainstream investor.
The next couple years are going to be very interesting.
