All of the modern ETF's include provisions for paper in lieu of Bitcoin at a small premium until such time as they can be settle onchain. Ostensibly, this is to allow them to sell BTC-ETF shares and then go find coins on the OTC markets (thus not moving the price), which can often take several days. However, this provision can absolutely be abused. Some ETFs also loan out their Bitcoin to other marketplaces in order to leverage their assets. It is definitely possible in the modern marketplace to do a naked short as long as you have sufficient capital.
I don't think it would be as hard to manipulate as you imply. There simply hasn't yet been such an existential threat to the existing order that would make such manipulation attractive.
Anyway, I stand by my skepticism that many investors aren't considering what I wrote above as plausible, and thus I'm not sure the reflexivity is as serious as was implied.
Sure, that's cool. I'm absolutely not denying that you have a good point. You are absolutely right that in commodity markets like gold and silver, naked short selling involves selling contracts for commodities that the seller neither owns nor intends to borrow, leading to an excess of "paper" claims over the actual physical supply. This practice can artificially suppress prices and create market distortions. Similarly, Bitcoin futures-based ETFs, such as the ProShares Bitcoin Strategy ETF (BITO), hold futures contracts rather than actual Bitcoin. This setup can result in discrepancies between the ETF's performance and Bitcoin's spot price, especially during market conditions like contango, where futures prices are higher than the expected spot price at maturity.
My point revolved mainly around BlackRock's iShares Bitcoin Trust, (IBIT) which is structured as a spot Bitcoin ETF, meaning it holds actual Bitcoin to mirror the cryptocurrency's market price. The fund's assets consist primarily of Bitcoin held by a custodian on behalf of the Trust.
Let's hope we see more spot ETFs entering the market, and that this doesn't explode into a unregulated hellhole.
All of the modern ETF's include provisions for paper in lieu of Bitcoin at a small premium until such time as they can be settle onchain. Ostensibly, this is to allow them to sell BTC-ETF shares and then go find coins on the OTC markets (thus not moving the price), which can often take several days. However, this provision can absolutely be abused. Some ETFs also loan out their Bitcoin to other marketplaces in order to leverage their assets. It is definitely possible in the modern marketplace to do a naked short as long as you have sufficient capital.
I don't think it would be as hard to manipulate as you imply. There simply hasn't yet been such an existential threat to the existing order that would make such manipulation attractive.
Anyway, I stand by my skepticism that many investors aren't considering what I wrote above as plausible, and thus I'm not sure the reflexivity is as serious as was implied.
Sure, that's cool. I'm absolutely not denying that you have a good point. You are absolutely right that in commodity markets like gold and silver, naked short selling involves selling contracts for commodities that the seller neither owns nor intends to borrow, leading to an excess of "paper" claims over the actual physical supply. This practice can artificially suppress prices and create market distortions. Similarly, Bitcoin futures-based ETFs, such as the ProShares Bitcoin Strategy ETF (BITO), hold futures contracts rather than actual Bitcoin. This setup can result in discrepancies between the ETF's performance and Bitcoin's spot price, especially during market conditions like contango, where futures prices are higher than the expected spot price at maturity.
My point revolved mainly around BlackRock's iShares Bitcoin Trust, (IBIT) which is structured as a spot Bitcoin ETF, meaning it holds actual Bitcoin to mirror the cryptocurrency's market price. The fund's assets consist primarily of Bitcoin held by a custodian on behalf of the Trust.
Let's hope we see more spot ETFs entering the market, and that this doesn't explode into a unregulated hellhole.