Peter Schiff Questions the Rationale Behind the U.S. Government Holding Bitcoin as a Reserve Asset

On Monday, economist Peter Schiff questioned the U.S. government's decision to hold Bitcoin BTC/USD as a reserve asset

On Monday, economist Peter Schiff took aim at the U.S. government’s decision to hold Bitcoin (BTC/USD) as a reserve asset amid the apex cryptocurrency’s ongoing slump.

What Happened: Schiff took to X, formerly known as Twitter, to highlight that Bitcoin’s market value has plunged approximately 30% from its January record high, dropping below $77,000.

“It’s hard to see the rationale for the U.S. government holding Bitcoin as a reserve asset when it can lose that much market value so quickly,” Schiff remarked. “The rationale will be even harder to see when it’s down 50%.”

However, backers of Bitcoin’s safe haven narrative swung into action, with award-winning investment manager Michael A. Gayed, known for his book "The Value Factor: The Empirical Foundations of Anomalies in Capital Markets," inserting “Store of value” in response to Schiff’s post.

Over the past five years, Bitcoin has reportedly gained 1,408%, and 243% in the last two years.

Yet, Schiff was quick to clap back. “If the price can drop over 30% in less than two months without anything really happening, how can that be a store of anything. What if the government needed to sell the Bitcoin?”

Now that Bitcoin fell below $77K, it's down 30% from its January record high. It's hard to see the rationale for the U.S. government holding Bitcoin as a reserve asset when it can lose that much market value so quickly. The rationale will be even harder to see when it's down 50%.

Additionally, Schiff pondered the fate of the Bitcoin Strategic Reserve and the Digital Asset Stockpile, both established by President Joe Biden’s executive order last week, without congressional approval. He asked what would happen if Donald Trump’s successor president decided that the U.S. didn’t need such a Bitcoin Strategic Reserve or Crypto stockpile and decided to “sell it all.”

Since both the Bitcoin Strategic Reserve and the Crypto Stockpile were established by an executive order and not an act of Congress, what happens if the next president decides that the U.S. doesn't need a Bitcoin Strategic Reserve or Crypto stockpile and decides to sell it all?

See Also: Microsoft May Have Given Bitcoin Investments A Miss But A Large MSFT Stock Holder Is A Strong Crypto, Blockchain Advocate

Why It Matters: Schiff’s comments come in the context of his ongoing criticism of the government’s decision to create a Bitcoin strategic reserve. He previously predicted that this move could damage the U.S. dollar.

He has also branded such investments as a “waste of resources,” arguing that they divert capital from real wealth creation.

The cryptocurrency market extended losses Monday as Bitcoin slumped below $77,000 to hit a four-month low

Price Action: At the time of writing, Bitcoin was exchanging hands at $79,434.23, down 3.47% in the last 24 hours, according to Benzinga Pro.