ProCap CIO: Bitcoin ETF's AP mechanism may weaken spot price discovery.

On February 26th, PANews reported that Jeff Park, CIO of Bitcoin treasury firm ProCap and advisor to Bitwise, published an article on X stating that the market's heated discussion about "Jane Street suppressing BTC" is not a conspiracy by a single institution, but rather a structural impact brought about by the Authorized Participant (AP) mechanism of Bitcoin ETFs such as IBIT. Under frameworks like RegSHO, authorized participants (APs) such as Jane Street, JPMorgan, and Macquarie can short sell ETF shares without borrowing, and hedge with BTC futures instead of buying spot, thus creating a "grey window." This prevents capital inflows from translating into spot buying, weakening the mechanism by which the ETF-NAV price spread naturally converges through spot purchases. Park also stated that in-kind creation/redemption increases delivery and cross-market operational flexibility, but the added "dirty basis risk" may distort price discovery. Park believes this contradicts Bitcoin's original intention of "decoupling from traditional finance" and may cap the BTC price below $150,000.

Park also stated that traditional ETFs are suitable for assets whose value originates from external sources, but Bitcoin's value lies in its independence from institutions. In contrast, while the old version of GBTC had its flaws, it did not have this "unlimited funding loophole."