Bloomberg Senior ETF Analyst Eric Balchunas has responded to Peter Schiff’s criticism of Bitcoin amidst fund outflows from Grayscale Bitcoin Trust (GBTC).
Known as one of the strongest critics of Bitcoin (BTC) and crypto, Peter Schiff took a major jab at the newly launched spot Bitcoin ETF products, which he noted are not “creating additional demand.” Peter Schiff hinted that the newly listed ETFs are seeing inflows based on shifting demands.
In his explanation, he noted that “investors who might have bought actual Bitcoin, Bitcoin related equities like MSTR, or GBTC are simply buying the new ETFs instead.”
He ended his post by noting that this strategy of redistributing funds will not stop the impending Bitcoin price crash.
The Eric Balchunas Clapback
Responding to Schiff’s claims, Eric Balchunas asked the Economist to give the newly launched products time before making any assumptions.
The ETF analyst said the product has only traded for just about a week, underscoring how early it is to criticize it, as there is no robust historic data yet.
Balchunas, however, agreed with Peter Schiff on grounds of shifting demand and fund redistribution. Balchunas said that ETFs typically “steal” Assets Under Management (AUM) from higher cost and underperforming alternatives.
Give it time.. its been like a week. But to your point its def true that ETFs tend to steal aum from higher cost and/or underperforming alternatives $GDX pic.twitter.com/KNnATft22b
— Eric Balchunas (@EricBalchunas) January 23, 2024
Since ETFs are investment vehicles designed to give investors optimal return on investment with the lowest risk possible, they can typically shift grounds if their preferred issuer is underperforming in relation with its peers.
High fees like those of the Grayscale Bitcoin Trust (GBTC) are factors that can impact this fund redistribution.
As a known Gold proponent, Peter Schiff’s attention was called to his preferred EuroPac Gold Fund that has lost tractions in relation to alternatives like GDX.
Grayscale Subtle Callout
The call out by Peter Schiff on the ongoing market irregularities links directly to the performance of Grayscale Bitcoin Trust.
The GBTC, ranked as the largest Bitcoin trust in the world with enormous BTC in AUM, has recorded massive outflows that weighed down the market sentiment overall.
While the worst might not be over yet, investors can draw solace knowing that the other 9 newborn spot Bitcoin ETF issuers are seeing great traction in the rate at which they are now welcoming new cash inflows.
Bitcoin at the time of writing is changing hands for $40,087.41, up 2.46% in 24 hours. The coin’s trading volume has slumped by 12.73% to $27,441,262,728 within the same period as well.
