Peter Schiff Views Bitcoin as Unlikely Ally to Central Banks

Highlights

Bitcoin ETFs divert attention from gold, aiding central banks.
Bitcoin as 'digital gold' could weaken fiat counterweight, says Schiff.
Schiff critiques Bitcoin ETFs' stability amid market downturns.

Economist Peter Schiff, a vocal critic of Bitcoin and advocate for gold, has shared insights that position Bitcoin in a unique light amidst the global financial landscape. Schiff also suggests that the rise of Bitcoin and the approval of Bitcoin ETFs may indirectly help central banks and big governments by dragging investors’ attention from gold, a traditional protection against fiat currency inflation.

To the extent that #Bitcoin has distracted attention and buying from #gold, it's the best thing that's happend to big government and central banks. Gold is the primary threat to the fiat based monetary system and U.S. dollar hegemony. That may be why those new ETFs were approved.

— Peter Schiff (@PeterSchiff) March 21, 2024

Bitcoin: A Distraction from Gold?

Peter Schiff, who has consistently championed gold as the ultimate safeguard against the depreciation of fiat currencies, posits that Bitcoin’s emergence and its narrative within the financial ecosystem could be playing into the hands of central banks and governments.

However, from his observation, investors, as well as capital that was supposed to go to gold, are going to Bitcoin. Hence, he believes that BTC could cushion the pressure that gold might subject to a fiat-based monetary system as well as the U.S. dollar dominance.

The perspective that Schiff holds makes an interesting observation that BTC, which is often referred to as ‘digital gold,’ might be virtually replacing gold in the financial system. This diversion, on the other hand, may weaken gold as a principal counterweight of the fiat currency systems and, therefore, indirectly facilitate the central banks to achieve their aims of maintaining the conventional financial systems.

Role of ETFs

The approval of Bitcoin ETFs has fueled the mainstream acceptance of cryptocurrency by the broad investor community. Nevertheless, Schiff implies that this development may have more profound consequences. Through the provision of a simplified approach to Bitcoin acquisition for a wider market of investors, ETFs may be exacerbating the redirection of both attention and funds from gold investments.

Schiff suggests that such a scenario could be particularly beneficial to central banks and the government since it undermines what he sees as the main threat to the fiat currency system – gold. This hype on BTC and the spread of Bitcoin-related ETFs may be decreasing the pressures that mounting interest in gold investments could pose on fiat currencies and the wider monetary system.

Schiff’s Skepticism of Bitcoin ETFs

Nonetheless, per Coingape, Peter Schiff has cast doubts on the strength and steadiness of Bitcoin ETFs in any market downward trend. He stresses the limited trading liquidity of these funds, especially outside of U.S. market hours, which he says puts investors at greater risk during global market volatility.

Continuing his criticism, Schiff has also raised alarms on the likes of MicroStrategy and their aggressive BTC buying behaviors. He doubts the logic of using corporate money to buy BTC in big amounts, especially in times of market highs, and suggests that these actions could lead to the artificial increase of Bitcoin prices. This strategy, as per Schiff, may deceive individual investors when it comes to the underlying risks of Bitcoin investment through ETFs, in particular.

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Kelvin Munene Murithi

Kelvin Munene is a crypto and finance journalist with over 5 years of experience, offering in-depth market analysis and expert commentary . With a Bachelor's degree in Journalism and Actuarial Science from Mount Kenya University, Kelvin is known for his meticulous research and strong writing skills, particularly in cryptocurrency, blockchain, and financial markets. His work has been featured across top industry publications such as Coingape, Cryptobasic, MetaNews, Cryptotimes, Coinedition, TheCoinrepublic, Cryptotale, and Analytics Insight among others, where he consistently provides timely updates and insightful content. Kelvin’s focus lies in uncovering emerging trends in the crypto space, delivering factual and data-driven analyses that help readers make informed decisions. His expertise extends across market cycles, technological innovations, and regulatory shifts that shape the crypto landscape. Beyond his professional achievements, Kelvin has a passion for chess, traveling, and exploring new adventures.

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