I brought this up last year when I saw some odd stuff with ETFs and synthetic positions on IBIT.
After all the buzz about Jane Street messing with prices since that date in October, Jeff Park has a solid take on how ETFs can generate an unlimited amount of synthetic BTC, which kinda weakens the whole fixed supply argument.
If ETF sponsors could print infinite synthetic Bitcoin to capture fees, they'd do it non-stop. They can't.
Their license depends on proving reserves.
The real impact is on price action and liquidity, not the fixed supply. What youre seeing is the tradfi plumbing-market makers and hedge funds using derivatives to arbitrage between the ETF share price and the underlying BTC.
That activity creates weird short-term dislocations, like the stuff around Jane Street. But it doesn't create more coins; it just moves existing liquidity around faster. If anything, massive redemptions force issuers to sell BTC, adding sell pressure.
thats the practical risk now, not some phantom supply. So the narrative is irrelevant because the mechanics prevent it.
They have not created any infinite supply of Bitcoin
It still remains approximately 21 million (way lesser in supply if we accounting for lost coins)
ETF gives shares equivalent to the amount of Bitcoin you bought
So it's around same range.
Because someone posted a picture of a dog doesn't mean the dog is now two.
I bought in Cardano ETN. Not ETF.
You guessed right. It's so much down it's not worth stealing while we talk about.
Exchange traded notes or something. From a swiss exchange.. listen man. you can't sell your bitcoin you get a side bet. Something less incriminating that reports tax.
Tax that repairs holes in the road. Tax that pays for wider roads so you don't have to park on the side walk.
Tax that pays the dictators bunker. You have to get them out before they go mental.
So tax'ed it is.
I would like to believe that options as popular and 'native' as ETFs are well regulated and do not allow this to happen. On the other hand. There are other less regulated options and I do not know how well their reserves are being checked every now and then. One such worry was a while ago about Tether and 'Wrapped Bitcoin'. Most of them are audited but I doubt there has not been at least one case before where the real reserve was different from the amount shown to the public.
Anyway. Holding these ETFs is incomparable to holding Bitcoin in your own Non Custodial Wallet so to me they are nothing. So is any Wrapped Bitcoin or similar B S.
I don't know how he concluded that an ETF would make the supply of Bitcoin infinite, but we shouldn't equate ETFs with Bitcoin because they're not the same thing. ETFs are simply products created by financial institutions that claim to represent the price of Bitcoin ---- it's not Bitcoin at all.
So when someone buys an ETF, they're simply buying a piece of paper that claims to be equivalent to Bitcoin, but it's just a gimmick to deceive people into thinking they're investing in "Bitcoin" when they're not.
By right, if things are not being manipulated by the law governing those things, each $B ETF that is being purchased is supposed to be backed up by some real bitcoin somewhere, not just purchasing some notes that the companies give out without any backup. It could be a note that shows on your balance, but it should have a real bitcoin backing it up in reserve. That's why the value should be equivalent to the real bitcoin.
People should familiarize themselves on what ETF is really about. So they are not being deceived by other parties about their claim. With the internet that we have today, I believe someone can just do their due diligence to understand what's going on with the market.
And no, ETFs is not creating the unlimited supply of btc because we have fixed supply of it. So if a company is selling you like they are giving the notion that they are not running out of btc, more than likely, they are just selling fake promises. Need to pause and back out before you invest your life's savings.