Popular economist and vocal opponent of Bitcoin Peter Schiff has issued a warning to the cryptocurrency community, predicting that BTC Spot Exchange-Traded Funds (ETFs) buyers will soon start bailing out as they become overwhelmed by the volatility in the market.
Bitcoin ETF Buyers Will Soon Bail Out
Being known for holding unconventional opinions, investors are drawn to Peter Schiff‘s cautious approach, which raises the possibility of market instability. According to Schiff, the price of Bitcoin is currently trading below 26 ounces of Gold, which is a 30% drop from its record high witnessed approximately 2 and half years ago.
He further noted that the long-term bear market for Bitcoin is picking up speed again, and all the new investors of BTC ETFs will be riding along for the trip. As a result, he believes that these investors will bail out shortly given the market turmoil’s growth.
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Bitcoin is trading below 26 ounces of gold. That is a 30% decline from its record-high set 2.5 years ago. Bitcoin’s long-term bear market is gathering renewed momentum, just in time to take all the new Bitcoin ETF buyers along for the ride. My guess is soon they will bail out.
Schiff’s prediction may be fueled by the recent shift in interest seen toward BTC ETFs in the past few days. Earlier this week, there was a noticeable drop in interest in the US ETF market, with several ETF issuers recording zero or no net inflows.
Farside revealed that Blackrock’s Bitcoin ETF was the only company to have attracted inflows in days. Blackrock’s IBIT saw net inflows of $73.4 million on Monday, according to Farside data. While Grayscale saw a net outflow of around $110 million, other asset companies reported net inflows of $0.
The development has since triggered a wave of speculations in the cryptocurrency market with several members claiming that Farside must have had a bug because it is too coincidental and too many fund flows cannot be zero. However, Bloomberg Intelligence analyst James Seyffart weighed in on the subject noting the development is perfectly normal.
“On any given day, the vast majority of ETFs will have a flow number of zero, this is very normal,” he stated. Seyffart further pointed out that on Monday, 2,903 of the 3,500 ETFs in the US had a flow of exactly zero.
Creation Of ETF Shares
Seyffart clarified that creation units are used to generate or destroy shares and this only occurs when the supply and demand are out of balance. Specifically, these creation units are where ETF shares are developed and redeemed, and the size of each ETF’s creation unit may vary.
Blocks of shares, ranging in size from 5,000 to 50,000, comprise the BTC ETFs. Thus, there needs to be a significant mismatch that is bigger than a creation unit to warrant tapping the underlying market.
As the crypto sector struggles with fluctuating sentiment, Schiff’s insights highlight the difficulties associated with investing in digital assets. It also serves as a sobering reminder for market players to be cautious given the evolving cryptocurrency landscape.