Renowned gold advocate and economist Peter Schiff has brought attention to a potential issue with owning spot bitcoin exchange-traded funds (ETFs), prompting a resurgence in discussions surrounding self-custody among cryptocurrency enthusiasts. Peter Schiff highlights the problem with owning Bitcoin ETF due to limited liquidity during non-trading hours. Schiff took to social media platform X to express his concerns, stating that one drawback of holding bitcoin in an ETF is the limited liquidity during U.S. market hours. He highlighted the frustration of being unable to sell in the event of an overnight market crash until the U.S. market resumes trading in the morning.
Schiff further cautioned that as more bitcoin flows into ETFs, the cryptocurrency becomes increasingly vulnerable to catastrophic crashes. He attributed this vulnerability to ETF buyers being more likely traders than true believers in the asset, suggesting they would bail out once a bear market ensues.
In response to queries about the stability of physical gold compared to bitcoin, Schiff confidently stated that gold doesn’t experience overnight crashes like bitcoin, thus alleviating concerns about its liquidity.
Analyst Weighs In
Bloomberg ETF analyst James Seyffart countered Schiff’s assertions, noting that the liquidity issue Schiff raised with spot bitcoin ETFs isn’t unique to bitcoin but applies to other ETFs as well, including those for gold and other commodities. Seyffart emphasized that this challenge extends to various asset classes, including international equity ETFs and stocks affected by market-moving events outside of trading hours.
Peter Schiff highlights the problem with owning Bitcoin ETF, as traders may quickly exit their positions. Schiff’s remarks sparked a wave of responses from bitcoin proponents advocating for self-custody of cryptocurrencies. Simon Dixon, CEO and co-founder of Bank To The Future, echoed Schiff’s sentiments, emphasizing the importance of owning actual Bitcoin rather than relying on ETFs. Entrepreneur Bryce Clark endorsed Schiff’s suggestion, urging individuals to take control of their crypto assets and avoid relying on third-party custodians.
Advocating for Digital Assets
Dave Weisberger, a vocal advocate of digital assets for economic freedom, seized on Schiff’s remarks to highlight the advantages of digital asset markets over traditional analogue markets. He suggested that digital asset markets, operating 24/7 with multi-currency options and on-demand settlement using on-chain value stores, offer superior functionality and will likely see increased adoption in the future.
The discussion ignited by Schiff’s warning underscores the ongoing debate surrounding the best approach to owning and managing cryptocurrencies, with proponents of self-custody arguing for direct ownership to mitigate risks associated with ETFs and third-party custodians.
Understanding the Concerns about Bitcoin ETFs
Peter Schiff, a well-known advocate for gold, recently voiced his concerns about owning spot bitcoin exchange-traded funds (ETFs). He pointed out that if you own Bitcoin through an ETF, you might face a problem with liquidity, especially during non-trading hours. This means if something bad happens to the market overnight, you won’t be able to sell your bitcoin until the next morning when the market opens again. Schiff worries that as more people invest in bitcoin ETFs, the cryptocurrency could become more prone to big crashes, as these investors might not stick around during tough times.
Putting Things into Perspective
Peter Schiff highlights the problem with owning Bitcoin ETF, citing limited liquidity during non-trading hours as a major concern. However, it’s important to look at both sides of the coin. While Schiff’s concerns are valid to some extent, it’s not just bitcoin ETFs that face this issue. Other types of ETFs, like those for gold or commodities, also have similar liquidity problems. So, it’s not something unique to Bitcoin.
Schiff’s warnings have reignited discussions about self-custody among crypto enthusiasts. Self-custody means holding onto your cryptocurrency instead of relying on ETFs or third-party custodians. Some people argue that this is a safer way to own Bitcoin because one has full control over their assets.
Also Read: Bitcoin Spot ETFs Break Records: Hits $150 Billion in Trading Volume!
