Economist and long-time Bitcoin skeptic Peter Schiff has strongly advised against the U.S. government creating a Bitcoin reserve, stating that it would be an “unmitigated disaster” that could result in hyperinflation and financial collapse for the country.
Schiff’s comments were made in response to recent discussions, led by pro-crypto figures like RFK Jr., regarding the possibility of the U.S. government acquiring a significant amount of Bitcoin.
In his latest statement, Schiff theorized that if the U.S. were to purchase 1 million Bitcoins, such a large purchase would cause Bitcoin prices to reach unprecedented highs. According to Schiff, this would prompt current Bitcoin holders, who are currently worth “millions or billions,” to sell their holdings, triggering a destabilizing cycle in which Bitcoin prices would plummet. In order to stabilize the market, the U.S. government would be forced to buy more Bitcoins.
“To prevent the price from falling, the U.S. will have to print more dollars to continue buying Bitcoin,” Schiff explained. He predicted that this constant buying would devalue the dollar and lead to an inflationary spiral that would erode the purchasing power of the currency. Schiff warned that a reserve of something that cannot be sold and requires constant buying is essentially worthless. He further cautioned that such a policy would likely cause hyperinflation and render the dollar “completely worthless.”
Schiff also noted that the collapse of the dollar would eventually force the government to sell its Bitcoin holdings in order to cover national spending. He warned that this mass sell-off could result in the collapse of Bitcoin itself, causing complete financial losses for those who hold their savings in Bitcoin or dollars.
While some proponents, including prominent crypto advocates, view a U.S. Bitcoin reserve as a step towards modernizing the financial system, Schiff’s analysis presents a drastically different scenario. Schiff believes that the U.S. government is unlikely to adopt such a policy due to its potentially devastating economic consequences.
*This is not investment advice.
