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Renowned economist Peter Schiff has sparked a debate over the value and purpose of owning Bitcoin (CRYPTO: BTC) in ETFs, arguing that the method contradicts some of its core values.
What Happened: On Tuesday, Schiff wrote on X that having exposure to the world’s largest cryptocurrency through ETFs undermines the core principles of the cryptocurrency, including its decentralization and peer-to-peer nature.
“It’s no longer decentralized, [it’s] not peer-to-peer, it’s easily seized by authorities, can’t be used as a currency for payments, or transferred across borders. It’s not your keys, not your coins,” Schiff stated.
The Bitcoin critic added that the bulk of the demand for ETFs was coming from people who don’t value King Crypto’s fundamentals and see them just as a medium to cash out at profits. “This shows the pyramid scheme will soon collapse,” he warned.
It’s worth noting that BTC can also be taken over by government authorities, as seen in the case of the seizure of around 50,000 Bitcoin in late 2022, linked to the infamous Silk Road online marketplace.
Bloomberg ETF analyst Eric Balchunas regarded Schiff’s remarks as fair. However, in a witty rejoinder, he questioned whether the same rationale should apply to ETFs tracking the price of gold – the asset that Schiff strongly supports. “Should the motto be ‘Not sitting in your own safe, not your gold,” inquired Balchunas.
U.S.-based Bitcoin ETFs recorded net outflows of $148.56 million as of August 6, according to data from SoSo Value. Grayscale Bitcoin Trust (NYSE:GBTC) saw redemptions of $32.18 million, while Fidelity Wise Origin Bitcoin Fund (BATS:FBTC) saw a capital exit of $64.48 million.
Why It Matters: Schiff’s criticism comes amid a volatile period for Bitcoin. The cryptocurrency recently sank below $50,000, causing concern among investors.
Schiff has warned of a potential “crypto graveyard” and predicted massive sell-offs in Bitcoin ETFs if the currency fell below its July low. His comments have also sparked debate over the value and stability of Bitcoin as a reserve asset, with some commentators arguing that new money cannot have low volatility before being adopted by nations.
Price Action: At the time of writing, Bitcoin was trading at $56,561.31, rising 1.51% in the last 24 hours, according to data from Benzinga Pro.
Photo courtesy: Gage Skidmore on Flickr
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
