Bitcoin ETF Exodus Incoming at $38k, Schiff Predicts

Bitcoin nosedives as Schiff forecasts ETF investor stampede at $38k. Is this the tipping point for a crypto market meltdown?

Peter Schiff talks about bitcoin.
Created by Kornelija Poderskytė from DailyCoin
  • Crypto markets suffered a brutal sell-off on Friday.
  • Peter Schiff adds to the gloom, warning that ETF investors are set to abandon ship.
  • Bitcoin ETF flows appear steady.

Bitcoin is often hailed as a beacon of decentralization, financial freedom, and anti-establishment ideals. However, it is also associated with significant price volatility. This volatility was evident on Friday when the total crypto market cap plunged below $2 trillion for the first time since late February, driven by a perfect storm of macroeconomic uncertainty, developments related to Mt. Gox, and selling by the German government.

Seizing the moment, long-time Bitcoin critic Peter Schiff reiterated his prior warning that the bear market is here. Adding to the misery for Bitcoin investors, Schiff suggested that ETF buyers will flee en masse as prices deteriorate further, leading to an even deeper cascade.

Schiff Predicts Further Bitcoin Decline

Friday’s market-wide sell-off saw Bitcoin drop 7.5%, finding tenuous support at $53,700. This sharp decline ignited panic across markets, leaving traders scrambling to reassess their positions. As the dust settled, many were left wondering if this was a bump, or only the beginning of a more prolonged downturn.

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Seizing upon the market turmoil, notorious Bitcoin skeptic Peter Schiff wasted no time in sharing his pessimistic outlook. Schiff estimated that more than 70% of spot Bitcoin ETF investors are underwater on their investments at the current price level.

However, Schiff predicted that “the real selling” will begin once Bitcoin drops below $38,000. This scenario, he warned, will trigger panic selling from ETF buyers seeking to stem their losses and exit en masse, leading to a cascading sell-off and more misery for BTC investors.

Bitcoin began breaking down in early June after reaching a local top of $72,000. The decline started when the Federal Reserve decided to maintain interest rates at 5.25%-5.5%, hinting at a “higher for longer” approach. Since the local top, Bitcoin has shed a staggering 24% of its value, plummeting to a 19-week low on Friday.

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The market sentiment has soured considerably, with the Fear & Greed Index, a key indicator of crypto market sentiment, sinking to a reading of 29 for the third time in ten days, firmly placing it in “fear” territory.

ETF Buyers Remain Steady

Regardless of short-term price fluctuations, Bitcoin continues to offer several fundamental benefits, including serving as a diversification tool and an apolitical financial instrument. For many investors, the primary allure of Bitcoin remains its potential for exponential growth, which does lend some weight to Schiff’s argument.

However, analysis of ETF flows has suggested the total amount of Bitcoin held by U.S. ETF funds experienced only a marginal decrease. From July 4 to July 5, total holdings fell from 901,630 to 900,750 BTC, representing an outflow of just 880 BTC or 0.098%.

This slight reduction in total holdings suggests that, contrary to expectations, ETF investors have not rushed to sell, despite the recent price dip.

On the Flipside

  • The U.S. market is asleep at the time of writing.
  • Gold is up 0.4% to $2,365 and on track to re-test $2,370 resistance.

Why This Matters

Whether Schiff’s forecast proves accurate or not, it underscores the ongoing debate about Bitcoin’s resilience. The coming weeks will provide a prime opportunity to reveal if ETF investors have the stomach for crypto’s notorious volatility.

Bitcoin woes compounded by German government selling:
German Govt Moves Biggest Bitcoin Bag Amid Sell-Off Fears

Nexo users report being banned after confusing FCA-mandated testing:
U.K. Crypto Users Slam FCA’s Arbitrary Account ‘Tests’

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Samuel Wan

Samuel Wan is a finance professional turned crypto journalist, known for his insightful reporting on market trends, regulatory changes, and technological developments within the digital asset industry. His ability to simplify complex concepts and report the facts has made him a trusted source in the crypto community. Beyond his writing, Samuel is an active mountain biker and gamer.