Peter Schiff Issues Stark Warning About US Gov Establishing Bitcoin Reserve, Predicts Economic Catastrophe

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

Renowned economist and cryptocurrency skeptic Peter Schiff has issued a stark warning about the U.S. government establishing a Bitcoin (CRYPTO: BTC) reserve, predicting that such a move would end in economic catastrophe.

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, Schiff suggested on Monday on Fox X.

“If the U.S. government actually established a Bitcoin reserve and bought 1 million BTC, it might end up buying millions more.”

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 warned.

“They would have to keep buying more and more Bitcoin, which means they would have to print more and more dollars, which would destroy 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.

“But the Bitcoin narrative seems even more unlikely now, given the massive increase in the gold market cap relative to Bitcoin.”

The economist’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.

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.