Copy-pasting the entire post from his twitter:
Kevin
you’re conflating custody with price discovery.
Yes, spot ETFs hold real BTC in custody. That’s not the question.
The question is whether those coins are removed from the price-setting float.
They are not.
Why:
• ETFs custody BTC via prime brokers
• Authorized Participants hedge ETF exposure with futures, options, and swaps
• Market makers short derivatives against ETF inventory
• The same BTC supports multiple paper claims
Result:
One coin → multiple price claims
That is textbook rehypothecation — even if the underlying asset is “physically held.”
This is identical to gold ETFs:
They hold real bars and yet paper gold trades 50–100× physical supply because price is set in derivatives, not vaults.
Bitcoin now works the same way:
– Futures
– Perpetuals
– Options
– ETFs
– Swaps
All referencing the same underlying BTC.
So scarcity still exists on-chain …
but it no longer exists where price is discovered.
That’s the entire point!
quotingVery interesting post from a guy named Bob Kendall on twitter.
nevent1q…em8m
( https://x.com/PortfolioXpert/status/2019180840958529601 )
First the TL;DR of his tweet:
* Bitcoin price discovery shifted from onchain supply to synthetic float
* Financial derivatives created a theoretically infinite supply of Bitcoin
* Synthetic manufacturing of supply eliminated asset scarcity
* Institutions use paper inventory to manipulate price movements
* Bitcoin now functions as a fractional reserve price system
And here is Bob Kendall's original tweet:
So here’s the issue you get influencers like this guy have a quarter million followers and they claim they don’t know why it is declining… it’s because they don’t understand basic mechanics of price discovery.
They don’t understand that the marginal buyers or the float determines price they think the onchain bitcoin is that is the price discovery
Well, it was once upon a time but now..
Once you can synthetically manufacture the supply, the asset is no longer scarce and once scarcity is gone, price becomes a derivatives game, not a supply-and-demand market.
This is exactly what has happened to Bitcoin.
This is the same structural break that occurred in gold, silver, oil, and eventually equities once they became derivatives-dominated.
The original premise that no longer exists
Bitcoin’s entire valuation logic was built on finite supply (21M) and inability to be rehypothecated.
That died the moment:
•Cash-settled futures
•Perpetual swaps
•Options
•ETFs
•Prime broker lending
•Wrapped BTC
•Total return swaps
were layered on top of the chain.
From that moment forward:
Bitcoin supply became theoretically infinite.
Not on-chain in price discovery.
The metric that explains the collapse
Synthetic Float Ratio (SFR)
Once you can synthetically manufacture the supply, the asset is no longer scarce — and once scarcity is gone, price becomes a derivatives game, not a supply-and-demand market.
That is exactly what has happened to Bitcoin.
This is the same structural break that occurred in gold, silver, oil, and eventually equities once they became derivatives-dominated.
Why Wall Street can now “trade against” Bitcoin
They do exactly what they’ve done in every commodity market:
1.Create unlimited paper BTC
2.Short into rallies
3.Force liquidations
4.Cover lower
5.Repeat
They are not “betting” — they are manufacturing inventory.
The same 1 BTC can now support:
•An ETF unit
•A futures contract
•A perpetual swap
•An options delta
•A broker loan
•A structured note
All at once.
That is six claims on one coin.
That is not a market.
That is a fractional reserve price system.
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I have written about this in my "Why Bitcoin's 21M cap is not guaranteed (Paper Bitcoin)" article:
- https://controlplanecapital.com/p/why-bitcoins-21m-cap-is-not-guaranteed
Even though I'm not very bullish on Bitcoin's fiat price short-term, I am starting to DCA into self-custody at these prices because something with the financial system seems very off. I'd rather take a drawdown on an asset I own than get bailed-in and get wrecked.