Renowned economist Peter Schiff has issued a stark warning about the U.S. government establishing a Bitcoin BTC/USD reserve, predicting that such a move would end in economic catastrophe.
What Happened: Schiff suggested on Monday on X that if the U.S. government began buying Bitcoin, it would have to continuously increase its holdings, driving the price so high that investors would cash out, triggering a market crash.
"If the U.S. government actually established a Bitcoin reserve and bought 1 million BTC, it might end up buying millions more," Schiff tweeted.
The economist warned that to keep up appearances, the government would have to print more dollars to buy additional Bitcoin, which could spiral into hyperinflation and severely devalue the dollar.
Schiff further asserted that such a scenario would ultimately destroy both the dollar and Bitcoin. He argued that it's “highly unlikely” a Bitcoin reserve will ever be established, especially as Bitcoin's performance continues to trail that of gold, whose market cap has surged.
Also Read: Bitcoin Blasts Past $82,000: ‘Buy Everything You Can,’ Says Bernstein
Why It Matters: Schiff's criticism adds fuel to the ongoing debate about Bitcoin's viability as an institutional asset. His comparison of Bitcoin's struggles with gold's growth challenges the notion of Bitcoin overtaking gold as a stable store of value.
Schiff believes that with this process of dollar becoming worthless, U.S. can no longer keep buying Bitcoin and this would lead to Bitcoin destroying the dollar. However, the victory would be short-lived, as Bitcoin would be destroyed along with it.
Schiff argued that the narrative of Bitcoin overtaking gold seems even more unlikely now, given the significant growth in gold's market cap compared to Bitcoin.
What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.
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