If Amazon bought Etsy it would be like Michael Bloomberg signing on as Bernie Sanders' campaign manager. I have great admiration for both of these men in different ways, but it's a complete cultural disconnect that wouldn't serve either of them well. This is not to say that Amazon shouldn't do their artisanal marketplace Handmade, because it's good for people to have the opportunity to sell in both shops if they want to.
If Amazon buys Etsy with an eye to merge it into Handmade I fear they will discover that Etsy's buyers and sellers will flee to the many niche artisinal online marketplaces. A lose-lose-lose-lose. A lose for Amazon, a lose for Etsy, a lose for the sellers, and a lose for the buyers. It will just be one of those things in life--something that was wonderful that is no longer with us.
As a lover of Amazon, I hope they don't waste their money on this. There are an infinite number of marketplaces that a brilliant guy like Bezos can go into and hit an A++++ I am absolutely sure he will and look forward to finding out what he does.
By the way, as a stockholder in Etsy, I imagine I would make money off of a deal like this.