As Bitcoin enthusiasts question why the digital asset hasn’t yet hit the $150,000 milestone despite massive ETF inflows, Jeff Park, Head of Alpha Strategies at Bitwise, has provided a sobering look at the plumbing of the financial system.

Bitwise’s Jeff Park says Bitcoin ETFs, not Wall Street, are capping BTC price

In a detailed post on X, Park argues that the “villain” isn’t a single firm like Jane Street, but rather the structural architecture of the Bitcoin (BTC) ETF itself.

According to Park, Authorized Participants (APs) operate within a “grey window” of Regulation SHO. While standard traders must locate shares before shorting, APs are exempt due to their role in creating and redeeming ETF shares.

This allows them to maintain positions with a level of capital efficiency and duration that is “indistinguishable from a regulatory arbitrage.”

The most critical revelation involves how these institutions hedge. Typically, an arbitrageur would buy spot Bitcoin to close a price gap.

However, if an AP chooses to hedge using Bitcoin futures instead of the underlying asset, the “spot was never bought.” This breaks the link between ETF demand and spot price appreciation.

Furthermore, the recent transition to “in-kind” redemptions has removed the “structural governor” that previously forced spot buying. APs can now source Bitcoin through private OTC desks with minimal market impact, effectively bypassing the public exchanges where price discovery happens.

Park concludes that while no firm is explicitly “manipulating” the market, the current regulatory framework, designed for traditional assets, is fundamentally at odds with Bitcoin’s mission.

The result is a system where the “middle” of the trade escapes categorization, potentially muffling the explosive price growth investors expected.