Recently, there has been an interesting discussion about why the spot Bitcoin ETF doesn't exert as much buying pressure as expected. Initially, many blamed certain trading companies, but the real issue is deeper than that.

The key lies in the structure of the ETF itself and the loophole created by Reg SHO. Here's how it works: when investors buy Bitcoin ETF shares, Authorized Participants (AP) responsible for fulfilling that demand don't need to buy spot Bitcoin directly in the market. They can leverage certain regulatory exemptions from Reg SHO to create ETF shares while hedging their positions using futures and other derivatives.

This is the problem. With this Reg SHO mechanism, they can "bypass" the natural arbitrage that should drive demand for spot Bitcoin. Ideally, the more people buy the ETF, the more APs have to buy actual Bitcoin, which means upward price pressure. But because Reg SHO provides a loophole, they can meet demand without actually buying real Bitcoin.

So, the "villain" isn't a specific company, but the traditional financial system that allows institutional intermediaries to operate outside the mechanisms that should be in place. Reg SHO, intended for protection, instead becomes a loophole that disconnects the direct link between ETF flows and the actual Bitcoin price.

It's interesting from a market structure perspective. It's not about conspiracy, but about how existing regulations create inefficiencies in price discovery.