Jim Bianco Criticises Bitcoin ETFs, Arguing They Undermine Decentralisation Efforts

Oh my, Jim what have you done? Jim Bianco, well-known in the financial world as the President and Macro Strategist at Bianco Research, L.L.C., has just made himself a target for Crypto Twitter. Bianco sent out a series of tweets (or posts rather, as they are now known) criticising the Spot Bitcoin ETFs.

Many of the responses refer back to the 2017 block size wars and how the network is censorship-resistant.

You're assuming I described an attack. I did not.

I framed it as a "suggestion" by large, centralized owners on what they would like, and while the miners are free to…

— Jim Bianco (@biancoresearch) February 22, 2024

Bianco’s Well… Controversial Views

To say he created a stir amongst hardcore enthusiasts is an understatement. One thing first though, it’s worth listening to Jim’s nuanced elaborations—after all he is not speaking out against Bitcoin or crypto, rather against the mixing of the sector with trad-fi (traditional finance) and the ‘number go up narrative.’

Back to the start though—what did Jim Bianco say? Bianco spoke to Bloomberg TV hosts Katie Greifeld and Eric Balchunas, whom you may know from our extensive reporting on the Spot Bitcoin ETFs as the Senior Bloomberg ETF Analyst.

Bianco suggested that large, centralised Bitcoin owners, such as those behind Spot Bitcoin ETFs, have a form of suggestive power over the network’s direction.

Bianco frames the acceptance of centralised ownership through Bitcoin ETFs as a trade-off that risks the core ethos of decentralisation in exchange for broader market access and liquidity. He posits that this is not inherently beneficial for the Bitcoin ecosystem, introducing a risk that may not be worth taking.

An Alternative Financial System

But Bianco has a point here—while miners have the technical ability to accept or reject changes, the financial influence and priorities of these large holders can sway the network indirectly by threatening the value of Bitcoin through potential divestment.

He raises an essential debate on the balance between expanding Bitcoin’s accessibility and preserving its foundational principles.

Balchunas argued that ETFs offer investors an optimal solution by closely tracking the NAV (Net Asset Value) at a low cost, thus providing broad access to Bitcoin for those preferring not to directly hold the asset.

Bianco explained that his quarrel is not with investors but rather with the cheer coming from the industry itself, adding that crypto was supposed to be building an alternative financial system—not becoming a part of the old system.

Number Go Up Narrative

He argues that while the introduction of ETFs might drive up the price of cryptocurrencies, this approach could potentially detract from meaningful investments in development and innovation within the space.

Bianco is concerned that investors might prefer the simplicity of investing in ETFs like IBIT, rather than contributing to ventures that could foster the system’s growth through coding and venture capital.

Essentially, he fears this trend could stifle progress, as the community might shift its focus to merely cheering for price increases rather than building sustainable value. Bianco said he wants price appreciation driven by genuine development and innovation, not just speculative investment in ETFs aiming for short-term gains.