Renowned economist Peter Schiff challenged MicroStrategy Inc.’s MSTR co-founder Michael Saylor’s argument that Bitcoin’s scarce supply would continue to drive its price higher.
What Happened: In an X post on Tuesday, Schiff acknowledged Bitcoin’s deflationary character but argued that it would be beneficial as long as it is supported by robust demand and existing holders don’t sell.
“But when the supply of new buyers runs low and those who own it want or need to sell it, the lack of new demand causes the price to crash,” the staunch Bitcoin critic asserted.
When pointed out by other X users in response that what he stated was obvious, Schiff said it was directed at Saylor’s justification for buying Bitcoin due to scarcity. “But he ignores what happens when demand is scarce,” Schiff added.
On a counter-question to what would happen if gold doesn’t have adequate demand, Schiff said, “There will always be demand for gold. Gold is a metal that will always be needed. There will not always be demand for Bitcoin.”
Why It Matters: Schiff’s remarks provided a counterpoint to Saylor’s bullish stance on Bitcoin. Saylor has been vocal about the success of MicroStrategy’s Bitcoin-focused approach, which he claimed has generated an annual return of 44% on average since August 2020, compared to the S&P 500's 12% annual return.
A longtime critic of Bitcoin’s supposed lack of utility, Schiff said recently that he would reconsider his pessimism about the leading cryptocurrency if it became a mainstream payment medium.
Price Action: At the time of writing, Bitcoin was exchanging hands at $56,726.91, up 0.08% in the last 24 hours, according to data from Benzinga Pro. Shares of MicroStrategy closed 3.86% higher at $129.64 during Tuesday’s regular trading session.
Image via Wikimedia Commons
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