Peter Schiff, President of Euro Pacific Capital, explained on Patrick Bet-David’s podcast how Bitcoin will face “the biggest crash in history,” leading MicroStrategy to bankruptcy.
A well-known critic of the leading cryptocurrency, Schiff described it as a Ponzi scheme lacking intrinsic value. According to him, Bitcoin’s price rises solely due to hype and the greater fool theory. However, the introduction of spot ETFs in the US will ultimately lead the asset to collapse, Schiff believes.
He noted that investors in the growing exchange-traded Bitcoin funds view the cryptocurrency as a speculative asset rather than being its proponents. The Euro Pacific Capital founder previously likened these proponents to cultists.
At some point, short-term ETF shareholders will decide to close their positions, Schiff suggested. Issuers like BlackRock and others will have to sell Bitcoin on the spot market.
They will need US dollars, not the widely used USDT in the crypto industry, and there will not be enough liquidity “to absorb these sales,” he emphasized.
Schiff pointed out that the long-running largest Bitcoin fund, Grayscale, did not provide an exit for investors, resulting in the GBTC shares’ discount periodically reaching 50%.
The head of Euro Pacific Capital did not directly answer whether MicroStrategy’s founder, Michael Saylor, is a “greater fool.” The company continues its strategy of accumulating Bitcoin reserves, initiated in August 2020. As of March, the firm held 214,246 BTC on its balance sheet.
Schiff admitted he does not understand Saylor’s motives. In his view, MicroStrategy will inevitably go bankrupt if Bitcoin collapses, as it uses debt financing to purchase the cryptocurrency.
Back in July 2023, Schiff stated that he underestimated the “potential of the Bitcoin bubble,” which will still fall to zero.