Peter Schiff, an economist and well-known Bitcoin critic, recently suggested that the cryptocurrency could destroy the US dollar. However, he did not mean this as praise, but rather as a criticism of the US strategy of creating a strategic BTC reserve.
Her comments focus on the potential for US government intervention in Bitcoin markets, which could have unpredictable consequences for the value of the dollar. Furthermore, one of the promises of Senator-elect Cynthia Lummis is to create a strategic BTC reserve for the US, a project that has already been introduced in the country's Congress.
Schiff, who has long argued that Bitcoin is a speculative asset, points to the possibility of the U.S. government inflating the money supply and creating an unsustainable economic bubble.
Bitcoin will lead to the collapse of the dollar
It all started on Thursday, December 5th, the same day BTC broke its all-time high and hit $103,000. Shortly after this event, Schiff posted a tweet on his X account, commenting that BTC only reached $100,000 due to manipulations by the US government.
The message attracted the attention of the community, but Schiff continued to stick to his stance. The economist claimed that the rise of Bitcoin could eventually lead to the collapse of the US currency.
Schiff's concerns center on the possibility of the U.S. government adopting Bitcoin on a large scale and, in doing so, increasing the supply of dollars. Schiff believes that this strategy could create a massive economic bubble and even generate hyperinflation in the currency.
“Bitcoin could end up destroying the dollar. Not because it replaces it as the global reserve currency, but because the U.S. government would print trillions of dollars to buy it. This could fuel an even bigger bubble that drains the nation of wealth,” Schiff warned.
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However, Federal Reserve (Fed) Chairman Jerome Powell expressed a different opinion, stating that Bitcoin is more comparable to gold than to the US dollar. He emphasized that Bitcoin, like gold, is a speculative asset and not a direct competitor to the dollar.
Furthermore, the federal government is not the only entity in the US that has plans to create a Bitcoin reserve. Shortly after Donald Trump was elected, the state of Pennsylvania introduced a bill establishing a BTC reserve.
Risks of Trump's plan
Trump's idea of building a Bitcoin reserve involves making annual purchases so as not to affect the price abruptly. With this, the US could accumulate a reserve of up to 1 million BTC during the president-elect's term.
It is worth noting that the Bitcoin reserve would be part of the assets held by the US, and not the only reserve. However, Senator Lummis's bill provides for the sale of part of the gold reserves to acquire BTC. And this is what sparked criticism from Schiff, a well-known gold advocate.
If the US were to sell gold reserves to fund the purchase of Bitcoin, Peter Schiff believes this could trigger a financial crisis. This could lead to a loss of confidence in the dollar as the world's reserve currency, diminishing the dollar's global dominance.
Moreover, continued efforts by the BRICS nations (Brazil, Russia, India, China and South Africa) to reduce their dependence on the US dollar could further aggravate Peter Schiff's concerns. In response, Trump has threatened to take harsh measures, such as imposing 100% tariffs on the exports of the countries in the group.
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