Peter Schiff Highlights Bitcoin ETF Risks

Peter Schiff, President of Euro Pacific Capital, has outlined a potential hedge fund strategy that could lead to the collapse of Bitcoin and MicroStrategy.

I wonder how many #Bitcoin or Bitcoin ETFs were bought by hedge funds shorting MicroStrategy. If $MSTR tanks and funds unwind those trades, they will be big sellers of Bitcoin and Bitcoin ETFs. A Bitcoin crash will put more downward pressure on MSTR, even as shorts cover. @saylor

— Peter Schiff (@PeterSchiff) June 17, 2024

In April, the well-known critic of the leading cryptocurrency stated that the growing volume of spot ETFs would ultimately lead to its downfall. According to Schiff, investors in these exchange-traded structures view digital gold as a speculative asset and will eventually decide to close their positions. This will trigger a sell-off amid a lack of liquidity.

In a new tweet, he noted that Bitcoin has been trading sideways for the third month, 11% below its March peak. Schiff expressed doubt about the market’s positive trend and suggested that investors might lose patience.

“I wonder how many Bitcoin ETFs were bought by hedge funds shorting MicroStrategy,” he pondered.

According to this scheme, by deciding to liquidate shares of exchange-traded funds, institutions hedge the inevitable cryptocurrency collapse with shorts on Michael Saylor’s company.

MicroStrategy continues its strategy of accumulating Bitcoin reserves, initiated in August 2020. In April, the firm acquired 122 BTC, bringing its total cryptocurrency holdings to 214,400 BTC (~$14 billion). According to Bitcoin Treasuries, the value of digital gold exceeds 52% of the company’s capitalization.

In June, MicroStrategy announced the issuance of $700 million in convertible bonds to “acquire additional Bitcoins and fund general corporate purposes.”

On June 17, the outflow from Bitcoin ETFs amounted to $145.8 million, totaling $561.1 million over the last three trading days.