Emily Walker
A financial expert has cautioned that Bitcoin might undermine the value of the US dollar if there’s government involvement in the cryptocurrency market.
Economist Peter Schiff contends that the US government adopting Bitcoin could inflate the money supply, creating negative repercussions for the dollar.
Unexpected Ramifications
Schiff, a well-known critic of Bitcoin, expressed concerns about unexpected effects on the US dollar if the government continues to intervene in Bitcoin trading, possibly leading to an unsustainable economic bubble.
He suggests that Bitcoin’s price increase is largely driven by government actions, and warns that such intervention could have detrimental long-term effects and might contribute to the downfall of global currencies.
In his statements, Schiff claimed that the acceptance of cryptocurrency by the government could ultimately damage the US dollar.
Ironically, #Bitcoin may end up destroying the dollar after all—not because it replaces the dollar as a global reserve currency, but because the U.S. government embraces Bitcoin, prints trillions of dollars to buy it, and fuels a larger bubble that squanders the nation’s wealth.
— Peter Schiff (@PeterSchiff) December 5, 2024
He remarked, “Ironically, #Bitcoin may ultimately lead to the downfall of the dollar—not because it replaces it as a reserve currency, but due to government backing leading to excessive printing of money to purchase it, resulting in a financial bubble that erodes national wealth.”
Schiff explained that substantial government adoption of cryptocurrencies would likely involve buying Bitcoin with newly generated dollars, which could inflate the money supply and create an economic bubble. He also mentioned that this intervention might shake investors’ faith in the US currency.
Influence of Political Lobbying
Schiff pointed out that Bitcoin’s rapid rise beyond the $100,000 mark was not due to market demand, stating that political influence and support from the government were major contributing factors.
It’s ironic that #Bitcoin only hit $100k by buying off politicians and getting in bed with government. Without expected government intervention, this milestone never would have been hit. What couldn’t be done in a free market was achieved through the cohesive power of the state.
— Peter Schiff (@PeterSchiff) December 5, 2024
“It’s ironic that #Bitcoin only hit $100k by buying off politicians and getting in bed with the government,” Schiff stated.
Schiff raised concerns that government support for Bitcoin could lead to an economic bubble. He believes Bitcoin likely wouldn’t have reached the $100,000 mark without government involvement.
“Without expected government intervention, this milestone never would have been hit. What couldn’t be done in a free market was achieved through the cohesive power of the state,” he elaborated.
Rejection of the Bitcoin Reserve Proposal
Schiff criticized the idea of a national Bitcoin reserve, warning that significant acquisitions of BTC could destabilize the dollar.
US President-elect Donald Trump has suggested creating a Bitcoin reserve, which Schiff argues would necessitate substantial annual BTC purchases by the government. He foresees the possibility of the US holding up to 1 million Bitcoins.
Schiff cautioned that this situation could force the US to liquidate its gold reserves to finance Bitcoin purchases, potentially triggering a financial crisis, as it might imply that BTC is a more credible option than the US dollar, leading to a decrease in global confidence in the dollar.
Featured image from Pexels, chart from TradingView