Key Takeaways:
Economist and renowned gold bug Peter Schiff has reiterated his critical stance on Bitcoin, claiming that the apex cryptocurrency stands in contrast to gold. His comments came as Bitcoin surged to an all-time high of $75,392 amid market optimism following the re-election of Donald Trump as the US President, while the price of gold declined.
Peter Schiff Says Bitcoin’s Price Surge Reflects Speculation Rather Than Economic Fundamentals
Schiff argued that this divergence further highlighted Bitcoin’s speculative nature, which positions it as an “anti-gold” asset. In a recent X post, the economist criticized the BTC rally for contrasting with the role of gold as a store of value. He said that, unlike gold, Bitcoin is a speculative asset where traders bet on promises rather than use it as a store of value. Schiff warned that these price increases reflect speculation rather than economic fundamentals.
Schiff has long argued that Bitcoin cannot be considered a stable store of value, especially when compared to precious metals like gold silver, and platinum, which have been proving their value for thousands of years. He expressed concerns over Trump’s pro-crypto stance, claiming that it may not translate into long-term stability.
He also criticized Trump’s economic policies, especially his proposed tax cuts. Schiff warned that these measures, without spending cuts would increase annual deficits. He forecasts that without including the defense, entitlements, and interest expenses, US government deficits could surpass $1 trillion, creating extreme pressure on the economy.
Schiff also predicted that a deficit-driven economic environment will negatively impact the financial markets, especially if the US Federal Reserve resorts to quantitive easing (QE). He noted that this fiscal strategy could push inflation much higher, creating additional risks for traditional investments.
Trump’s Tax Exemptions Will Contribute to Unsustainable Growth, Argues Schiff
Among his many campaign promises, Trump proposed removing the capital gains tax on Bitcoin. This move, aimed at encouraging more Americans to invest in digital assets, has been celebrated among pro-crypto advocates, who believe it will drive broader adoption of crypto assets.
On the contrary, Peter Schiff views this tax exemption from the lens of a skeptic, suggesting it could contribute to unsustainable growth. In an X post, he wrote that all of those promises “can’t possibly” be kept, and in trying to keep some, “the biggest sacrifice will be soaring debt and inflation”.
In a separate post, Schiff said cutting tax is an easy task, but cutting expenses is a “very difficult thing to do”.
He warned that a high deficit, coupled with a low-interest rate policy from the Federal Reserve, could lead to higher inflation. Schiff believes that in such a scenario, gold will be a safer store of value than the extremely volatile Bitcoin.
Senator Cynthia Lummis Proposes Strategic Bitcoin Reserve to Bolster the US Economy
Despite Schiff’s continued criticism, Bitcoin managed to cross the $75,000 market and set a new all-time high following Trump’s victory. The latest rally has boosted optimism among cryptocurrency investors, with many speculating that the Trump cabinet’s economic policies will be an added boost to the crypto market.
Moreover, Senator Cynthia Lummis proposed the idea of the Federal Reserve establishing a strategic Bitcoin reserve to bolster the US economy. In her so-called “Bitcoin Bill”, she has set a target for the US government to acquire up to 5% of the flagship cryptocurrency’s total supply over the next four years, with an annual target of 1 million BTC, worth $75 billion at current rates.
At the time of writing, Bitcoin (BTC) is changing hands at $74,995 – up 2.05% in the last 24 hours.
Read More: BlackRock’s IBIT Bitcoin ETF Records $1 Billion In Volume Minutes After Trump’s Re-election
