Peter Schiff, an economist and a famous Bitcoin (BTC) critic, has taken to social media to express his persistent skepticism and deliver scathing criticism about the dizzying price rise of this pioneering cryptocurrency.
This long-time gold advocate has called the recent price surge a "bubble" and warned about the devastating consequences for retail investors and the economy.
Schiff Calls Bitcoin an Illusion
Schiff's criticism of Bitcoin has been long-standing. His latest remarks reiterate previous claims that cryptocurrencies and blockchain are "widespread delusions" driven by speculative frenzy.
"Crypto and blockchain may well be recognized as the greatest examples of widespread delusions and crowd madness in the history of the world. The total damage when the final bubble bursts will be massive,"
Schiff wrote on X (formerly Twitter).
He continued to warn that not only new speculators will suffer. According to him, the infrastructure and investments around Bitcoin will also collapse. This, Schiff says, will be "the most misguided resource allocation in human history." Schiff also suggests that the collapse of Bitcoin could undermine the reputation of free-market capitalism and the concept of sound money.
These comments have sparked a new debate between his critics and Bitcoin enthusiasts, some of whom have accused him of secretly owning Bitcoin. Many believe that Schiff's harsh criticism is a tactic to keep Bitcoin prices low so he can buy in at a lower price.
"I find it amusing that Bitcoin fanatics accuse me of secretly owning Bitcoin but refusing to admit it publicly. They are just too drunk on the Kool-Aid to accept that I genuinely disagree with their views,"
Schiff responded to the accusations.
Schiff dismisses the speculation and asserts that he fundamentally disagrees with the value of Bitcoin. He sees it as a bubble that is bound to burst. The feud between Schiff and Bitcoin supporters is not new. He has consistently rejected this cryptocurrency since its early days.
A user pointed out this fact, accusing Schiff of failing to predict Bitcoin's demise when it was $1. Schiff responded, saying, "No, when it was $1, I didn't think the bubble would get that big. If I knew that, I would have bought Bitcoin." This admission acknowledges the scale of Bitcoin's price appreciation, although the economist still claims that this growth is unsustainable.
Schiff Dampens Hopes of a U.S. Bitcoin Reserve
Furthermore, Schiff has recently commented on the possibility of the U.S. government establishing a Bitcoin reserve, as Donald Trump had pledged. However, the Bitcoin critic believes that such a move would be disastrous. He notes that this would lead to a series of inflationary shocks that could destabilize the economy.
Peter Schiff's hypothetical scenario describes the U.S. government buying one million BTC, driving up the price and causing long-term holders to sell. According to Schiff, this would trigger a crisis, forcing the government to print more money to stabilize the Bitcoin price. This, in turn, would devalue the U.S. dollar. Schiff warns that this cycle could lead to hyperinflation, rendering the dollar worthless. Ultimately, he believes this would also cause Bitcoin to collapse.
"That would cause the market to crash, forcing the U.S. government to print more dollars to buy more Bitcoin to prevent the price from collapsing, thereby further devaluing the dollar. Of course, a reserve of something you can never sell and must continually buy is worthless as a reserve. To maintain the pretense that its Bitcoin reserve has real value, the U.S. government would be forced to keep buying, destroying the value of the dollar in the process,"
Schiff explained.
Schiff's gloomy vision of a potential Bitcoin reserve is based on his belief that Bitcoin lacks intrinsic value and is not a sustainable investment. According to Schiff, a Bitcoin reserve would only increase market volatility and lead to economic collapse. His doomsday predictions have been mocked by prominent Bitcoin supporters, including MicroStrategy's Michael Saylor.
"You finally made me laugh, Peter,"
Saylor joked.
The MicroStrategy CEO's jest reflects the ongoing tension between Bitcoin advocates, who see it as a revolutionary asset, and skeptics who view it as an imminent bubble.
Also Read: MicroStrategy Buys 27,200 BTC Worth $2.03 Billion
Despite the skepticism from critics like Schiff, Bitcoin's trajectory has exceeded expectations in recent years. It has evolved from a fringe digital asset to a multi-trillion-dollar market. Many investors and institutions like BlackRock now see it as a hedge against inflation and a decentralized alternative to traditional finance (TradFi).
However, Peter Schiff maintains the view that Bitcoin's appeal is based on hype rather than fundamental value. He warns that the consequences of its ultimate collapse will have long-lasting effects on retail investors and society.
BTC price performance chart. Source: BeInCryptoMeanwhile, the value of Bitcoin shows no signs of slowing down. Since the Monday trading session began, it has increased by more than 8%. At the time of writing, BTC is trading at $88,244.
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