A financial commentator warned that Bitcoin could potentially weaken the US dollar if the federal government would intervene within the cryptocurrency.
Economist Peter Schiff believes that if the American government decided to adopt the firstborn crypto, it might have an adversarial effect on the greenback by inflating the cash supply.
Unexpected Consequences
Schiff, who’s a known Bitcoin critic, said that there will likely be unexpected consequences on the worth of the US dollar once the US government continues its plan of intervening within the Bitcoin markets, which may lead to an unsustainable economic bubble.
The financial commentator believes that the surge in Bitcoin price is essentially fueled by government intervention, saying that it may need a negative effect in the long term that would eventually result in the collapse of the worldwide currency.
In a post, Schiff argued that the cryptocurrency could destroy the US dollar because the federal government adopted it.
Paradoxically, #Bitcoin may find yourself destroying the dollar in any case—not since it replaces the dollar as a world reserve currency, but since the U.S. government embraces Bitcoin, prints trillions of dollars to purchase it, and fuels a bigger bubble that squanders the nation’s wealth.
— Peter Schiff (@PeterSchiff) December 5, 2024
“Paradoxically, #Bitcoin may find yourself destroying the dollar in any case—not since it replaces the dollar as a world reserve currency, but since the US government embraces Bitcoin, prints trillions of dollars to purchase it, and fuels a bigger bubble that squanders the nation’s wealth,” Schiff remarked.
In response to him, a large-scale crypto adoption by the US government would mean buying Bitcoin with newly printed currency which could potentially inflate the cash supply, adding that the US might find yourself in a large-scale economic bubble.
He added that such crypto intervention could also diminish the arrogance of investors within the US currency.
BTCUSD trading at $99,325 on the day by day chart: TradingView.com
Political Lobbying
Schiff argued that the exponential growth of Bitcoin which allowed it to transcend the $100,000 mark isn’t driven by organic market demand, saying that the crypto reached that milestone due to political lobbying and government support.
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 federal government,” Schiff said.
As an economist, Schiff worries that a government-backed momentum on the alpha crypto might be leading the US to the trail toward an economic bubble.
He said that Bitcoin may not have reached $100,000 per coin without the federal government’s influence.
“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 explained.
Criticizing The Proposed Bitcoin Reserve
Schiff lambasted the proposal to ascertain a national Bitcoin reserve, arguing that purchasing large amounts of BTC might destabilize the dollar.
US President-elect Donald Trump has been proposing the creation of a Bitcoin reserve which Schiff said is a proposal that can require the US government to purchase large amounts of the crypto every yr. He predicted that the US might find yourself holding 1 million Bitcoins.
The financial commentator said that the US could be pushed to sell its gold reserves to finance its purchases of Bitcoin to accumulate its reserves.
He warned that it may lead to a financial crisis because it’d give an impression that BTC is more viable than the US dollar, adding that it’s going to diminish the worldwide dominance of the US dollar because investors will lose their confidence within the currency.
Featured image from Pexels, chart from TradingView