Is Bitcoin Losing Its Soul?

Roughly a month after the United States Securities and Exchange Commission (SEC) approved the first spot Bitcoin exchange-traded funds (ETFs), a curious trend is emerging: Retail investors are selling, while institutions are gobbling up the supply.

Wall Street Emerging As Bitcoin Whales, Centralization Concerns Raised

This development raises critical questions, with HODL15Capital on X saying that Bitcoin could be on the verge of losing its decentralized spirit to Wall Street whales. This is considering how ferocious they have been buying tens of thousands of the scarce and fixed supply of the coin every trading day.

Sharing data on X, HODL15Capital observes that small Bitcoin holders controlling less than 100 BTC have been offloading in recent weeks, selling over 25,000 BTC in the last month alone. Meanwhile, spot Bitcoin ETF issuers like Blackrock, Fidelity, and Ark have been on a buying spree, accumulating over 53,000 BTC during the same period.

Some analysts attribute this rapid shift in coin buying to issuers’ attempts to accumulate when their management fees are still lower. As of mid-February, spot Bitcoin ETF issuers in the United States are charging among the lowest fees in the world, forcing investors in other parts of Europe and Canada to dump their local spot Bitcoin ETFs and buy those by Bitwise, BlackRock, and the rest.  

Beyond the low management fees, Gabor Gurbacs, while responding, said the accelerated accumulation among spot Bitcoin ETF issuers could be because of other factors. Specifically, the founder of PointsVille thinks more whales with coins held at various exchanges like Binance, Kraken, and even Coinbase now prefer regulated ETFs, riding them the task of controlling private keys. 

BTC Price Is Rising, Small Holders Should Not Sell

While the rising institutional interest has been bullish for BTC prices, reading from the current performance in the daily chart, HODL15Capital believes the cost is higher. The investor argues that it is dangerous for a handful of institutions to control a significant portion of the circulating supply.

In the analyst’s view, this will undermine the decentralized vision of Bitcoin, a network designed to serve as a layer for enabling electronic money.

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Instead of the recent accumulation, HODL15Capital believes it would have been better for small BTC owners to hold on to their coin than allow whales to buy more. The more Wall Street dominates, controlling more circulating BTC supply, the democratic nature of Bitcoin would likely be stifled.  

Feature image from Canva, chart from TradingView