As the FTX saga played out, cryptocurrencies have come under significant pressure, lending credence to the voices of several crypto skeptics.
What Happened: Bitcoin BTC/USD mania is over, and the FTX bankruptcy proves the rally seen in cryptocurrencies in late 2021 was a fraud, economist Peter Schiff tweeted.
The main reason that drove the spectacular crypto rally seen a year ago, when Bitcoin hit a high of $69,000 was all the leverage that funded unprecedented crypto advertising and speculative buying, he said.
While noting that Bernie Madoff was regulated by the SEC the entire time he ran his Ponzi scheme, Schiff said regulation by the agency would not have prevented the FTX fraud.
The crypto basher also noted that the reason Mike Novogratz was able to cash out of so much Bitcoin and crypto-related assets was that media outlet CNBC gave him and other crypto insiders a “one-sided platform to constantly pump exactly what he needed to dump.”
“The whales sold as they suckered the minnows to buy and #HODL,” he added.
In reply to Shark Tank investor Kevin O’Leary’s tweet that the crypto bottom is in, Schiff said it is “far from in,” and the only thing that is in is the crypto top.
He also disagreed with O’Leary about government regulation being a solution for averting fraud.
“The lesson of #FTX is for investors to do better due diligence and not just foolishly jump on speculative bandwagons,” Schiff said, adding that “we need sound money with interest rates set by free markets, not central banks.”
Gold A Better Bet: Schiff is an avowed backer of gold, and he touted the investment worthiness of gold yet again. When the Grayscale Bitcoin Trust GBTC launched its “Drop Gold” campaign in May 2019, the ad spend pushed the exchange-traded fund to $17.40 in the same month, he noted.
If you had dropped $10,000 worth of gold and bought GBTC at that time, your investment dollars would have halved to $5,000 now, Schiff said. “Had you kept #gold it would now be worth $13.5K,” he added.
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Photo: Courtesy of Gage Skidmore on flickr