Peter Schiff Warns Bitcoin Reserve Could Collapse US Dollar Value
Following Donald Trump's recent victory, there is increased demand for a Bitcoin Reserve in the US as industry veterans anticipate investor-friendly policies. Economist Peter Schiff warns that such a move could lead to the collapse of the US dollar and hyperinflation.
Schiff argues that acquiring a substantial Bitcoin reserve, such as 1 million BTC, could trigger an economic cycle detrimental to the dollar. He claims that this large purchase would cause immediate price surges, allowing long-term holders to cash out, which could prompt a market crash and necessitate government intervention to stabilize prices. This cycle of purchasing would diminish the reserve's real value and result in excessive dollar printing, potentially driving the dollar toward hyperinflation.
If the U.S. government actually established a #Bitcoin reserve and bought 1 million Bitcoin, it might end up buying millions more. Since the U.S. government’s purchase of 1 million Bitcoin would drive the price so high, many HODLers, then worth millions or billions, would finally…
— Peter Schiff (@PeterSchiff) November 11, 2024
Schiff posits that continuous government purchases would erode the dollar's worth, leading to a potential collapse of both the dollar and Bitcoin, which he deems catastrophic for the US economy.
Why Is Peter Schiff Wrong on His Bitcoin Reserve Prediction?
Contrary to Schiff's predictions, the US government is unlikely to acquire 1 million BTC in one transaction. Therefore, it would not result in an immediate price spike. Wyoming Senator Cynthia Lummis previously suggested accumulating 1 million BTC over five years. In a message on the X platform, she stated:
“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!”
Despite this, Schiff persists in his pessimistic outlook on Bitcoin, crypto, and blockchain. He claims they will be remembered as significant examples of mass delusion, predicting staggering losses when the bubble bursts, affecting not only speculators but also investors who funded related infrastructure and businesses.