Just saw an interesting analysis about something many people overlook — the hidden issues within the Bitcoin ETF system.

In simple terms, Reg SHO and the design of ETFs have created a "gap" that prevents Bitcoin's price from rising as it should. Authorized participants (AP) can create ETF shares without actually buying Bitcoin on the market. Instead of spending money to purchase real assets, they turn to futures and other derivatives to hedge risk.

This is the interesting part — normally, if an ETF sells well, demand for Bitcoin should increase, and the price should go up. But Reg SHO and this structure allow them to avoid that. They meet investor demand without putting real upward pressure on the price. As a result, ETFs grow, but Bitcoin's price seems unaffected.

The real villain isn't Jane Street or any particular firm, but the system itself that allows this to happen. Reg SHO, because of its design, enables intermediaries to play this game. This causes the natural arbitrage that should drive Bitcoin's price upward to disappear.

If we think about Bitcoin in theory, its price should be determined by supply and demand. But this system prevents increased demand from actually pushing the price higher. It's more about gaming the system than playing the market.