Arthur Hayes Believes Bitcoin ETFs Could Bring in Billions From TradFi

ETFs could open up a line of trading avenues centred around arbitrage, options and financing, Hayes said.

AccessTimeIconJan 16, 2024 at 7:31 a.m. UTC
Updated Mar 8, 2024 at 7:59 p.m. UTC
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Market inefficiency and the uncorrelated behavior of bitcoin (BTC) to traditional assets could serve as few of the factors that attract billions of dollars in capital from broader financial markets, Arthur Hayes, the chief investment officer of family office Maelstrom and the ex-CEO of BitMEX, said in a Tuesday post.

Hayes, one of the earliest prominent bitcoin traders, said spot bitcoin exchange-traded funds (ETFs) could open up newer trading opportunities for traders as prices for the asset marked at U.S. benchmarks and the rest of the world fluctuate, allowing traders to profit from their difference.

“bitcoin is a global market, and price discovery happens primarily on Binance (I guess based in Abu Dhabi). For the first time in a long time, the bitcoin markets will have a predictable and long-lasting arbitrage opportunity,” Hayes said.

“Hopefully, billions of dollars of flow will be concentrated in an hour-long period on exchanges that are less liquid and price followers of their larger Eastern competitors. I expect there to be juicy spot arbitrage opportunities available,” he added.

Hayes expects spot ETF products to pop up in major Asian markets, such as Hong Kong, which service “China southbound flow.” The presence of these highly regulated bourses and native crypto exchanges can create more market inefficiencies and thus profit opportunities, he said.

ETF-based financing could be another sector poised for growth as bitcoin trading becomes commonplace in the coming years. Banks could open up desks that provide fiat loans against bitcoin ETF holdings, pocketing the spread and influencing bitcoin interest rates, further creating market imbalances.

Meanwhile, Hayes said earlier in January that he is bearish on bitcoin in the short term and expects prices to undergo a 30% correction. It’s a sentiment shared by several other traders, who expect prices to fall as low as $38,000 before the next leg up.

Edited by Parikshit Mishra.


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Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.

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