Key Points
- Bitcoin critic Peter Schiff warns that creating a Bitcoin Reserve could lead to the collapse of the US dollar and hyperinflation.
- Peter Schiff’s prediction is challenged, arguing that the US won’t buy a massive amount of Bitcoin in one go, thus avoiding a price surge.
Following Donald Trump’s recent victory, there’s been a surge in demand for a Bitcoin Reserve in the US. Crypto industry experts expect investor-friendly policies from the Trump administration. However, economist and Bitcoin critic Peter Schiff warns that this move could lead to the collapse of the US dollar and trigger hyperinflation.
According to Schiff, if the US were to accumulate a significant Bitcoin reserve, such as 1 million Bitcoin (BTC), it could trigger a disastrous economic cycle. He also believes that such a large purchase would cause an immediate price surge, allowing long-term Bitcoin holders to sell their investments.
The Potential Impact of a Bitcoin Reserve
Schiff argues that this sell-off could cause a market crash, possibly forcing the government to intervene with larger purchases to stabilize the price. He suggests that the cycle of government spending to support Bitcoin’s price would reduce the reserve’s real value and lead to excessive dollar printing, driving the dollar toward hyperinflation.
Schiff further argues that the government would end up needing to buy BTC continuously to maintain the reserves, which he believes would ultimately erode the US dollar’s value.
He concludes that this would result in a total collapse of both the dollar and Bitcoin, warning that this scenario would be disastrous for the U.S. economy.
Countering Schiff’s Prediction
Despite Schiff’s prediction, it’s argued that the US government won’t be buying this massive BTC stash of 1 million in one go. Thus, it won’t lead to an instant rise in the BTC price as Schiff expects. Wyoming Senator Cynthia Lummis proposed to have 1 million BTC accumulated over a span of 5 years, stating, “I believe we can get this done with bipartisan support in the first 100 days IF we have the support of the people. It is a game changer for the solvency of our nation. Let’s put America on sound financial footing and pass the Bitcoin Act!”
However, Schiff continues his critique, predicting the demise of Bitcoin, crypto, and blockchain alike. He states, “Bitcoin, crypto, and blockchain will likely go down as the biggest example of popular delusions and the madness of crowds in world history. The overall losses when the bubble finally pops will be staggering. It’s not just the speculators who will be left holding a bag of worthless Bitcoin, but also the investors who funded all the infrastructure and related businesses.”
