Economist Peter Schiff warns that large-scale Bitcoin purchases could drive the dollar into hyperinflation, potentially causing a market collapse.
Following the victory of Donald Trump last week, there’s been a growing demand for having Bitcoin Reserve for the US as crypto industry veterans expect investor-friendly policies in the Trump administration. However, economist and Bitcoin critic Peter Schiff has warned that such a move could potentially lead to the collapse of the US dollar and hyperinflation.
According to Schiff, if the US were to acquire a substantial Bitcoin reserve, such as 1 million BTC BTC $82 993 24h volatility: 1.4% Market cap: $1.65 T Vol. 24h: $56.34 B , it could set off a disastrous economic cycle. He also argued that such a large purchase would trigger an immediate price surge thereby allowing long-term Bitcoin holders to cash out their investments.
Schiff believes that this sell-off could prompt a market crash, potentially forcing the government to intervene with even larger purchases to stabilize the price. The economist added that the cycle of government spending to prop up Bitcoin’s price would diminish the reserve’s real value and lead to excessive dollar printing, ultimately 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
As a result, Peter Schiff argued that the government would end up in a position where it needed to buy BTC continuously to maintain the reserves. This will ultimately erode the US dollar’s worth, he thinks.
Schiff said that this would result in a total collapse of both the dollar and Bitcoin. He warns that this scenario would be catastrophic for the U.S. economy.
Why Is Peter Schiff Wrong on His Bitcoin Reserve Prediction?
Despite Schiff prediction, 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 thrust in the BTC price as Schiff expects. Previously, Wyoming Senator Cynthia Lummis proposed to have 1 million BTC accumulated over a span of 5 years. In her recent message on the X platform, Lummis wrote:
“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 also continued with his rant predicting death for Bitcoin, crypto, and blockchain alike. “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,” he explained.
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