Key Takeaways:
Economist and long-term Bitcoin skeptic Peter Schiff has come out criticizing the idea of establishing a strategic Bitcoin reserve under the coming Trump administration. While many industry leaders cheered the proposal, Schiff has elaborated why the move, if achieved, could be catastrophic for the United States.
Anti-BTC Advocate Peter Schiff Says Bitcoin Strategic Reserve Would Be Catastrophic For The US Economy
His criticism revolves around the U.S. government’s plan to acquire 1 million BTC, worth approximately $85.6 billion at current prices, as a treasury asset. In an X post, Schiff argued that the move would only lead to the government buying even more Bitcoin.
According to his analysis, the initial purchase will push the price of Bitcoin to a new all-time high, which Schiff says will be profitable to early investors who will turn into millionaires and billionaires. However, in the process, investors may begin to sell their holdings to cash the profits accrued over the years, which the crypto critic claims will cause the Bitcoin stash of the U.S. government to lose its value.
Schiff noted that the government may have to print more dollars to buy more BTC in light of this decline to keep the price afloat. He said this cycle would be unsustainable as Bitcoin in this instance will find it hard to remain as a proper hedge for the dollar, only serving to devalue the greenback. Schiff also stated that Bitcoin’s price will tank eventually as the cryptocurrency is still failing to sustain its growth, which would be an “unmitigated disaster” for the country.
Despite Schiff’s warnings, the plan for a strategic Bitcoin reserve is in full steam as it recently gained traction in Congress. Last month, Senator Cynthia Lummis introduced a bill that could turn the concept into reality. Pro-crypto advocates claim that Bitcoin is powerful enough to contribute to further strengthening the world’s largest economy.
Recently, Schiff responded to Fundstrat founder Tom Lee’s comments that Bitcoin could aid the US in addressing its debt issue, which currently stands at $36 trillion, suggesting that the cryptocurrency may appreciate and help pay off some of the debt. Schiff pointed out that Bitcoin is highly volatile and has liquidity risks, which he believes would compromise any attempt at establishing economic stability.
While Schiff continues to hold extremely negative views about a strategic Bitcoin reserve, other industry leads are more optimistic about the prospect. Demand for the apex cryptocurrency has risen sharply in recent years, sparked in part by business intelligence firm MicroStrategy’s Bitcoin accumulation strategy.
Bhutan Government’s Bitcoin Holdings Surpass $1 Billion Valuation
The Government of Bhutan recently announced that its Bitcoin reserve crossed the $1 billion valuation milestone. The Asian country decided to use its excess energy resources for Bitcoin mining following the COVID-19 pandemic, which severely affected one of its biggest industries – Tourism.
As per data from Arkham Intelligence, Druk Holdings, the entity that is in charge of administrating Bitcoin trades for the Bhutanese government, currently holds 12,568 BTC, valued at approximately $1.03 billion. The government has not necessarily bought additional BTC or announced new mining activities, which means the value of its holdings increased as a result of the ongoing crypto bull rally.
Bhutan also holds other crypto assets in the Druk Holdings wallet, which includes $2 million worth of Ether (ETH), $126.98 million in KIBSHI, and $69 million worth of BOBO tokens. Despite its positive attitude towards Bitcoin, the country is not focused on HODLing the asset. The government occasionally sells its BTC stash.
The establishment of a strategic Bitcoin reserve in the U.S. will be a milestone in the history of cryptocurrencies. However, the government can expect tough competition in the market as corporate firms are also busy scooping up significant shares of the remaining Bitcoin in supply.
MicroStrategy, the largest corporate holder of Bitcoin, just announced that it acquired an additional 27,200 BTC, worth a little over $2 billion, to take its total holdings to 279,420 BTC, valued at $25.6 billion.
At the time of writing, Bitcoin (BTC) is trading at $87,813 – up 6.94% in the last 24 hours.
Read More: Bitcoin Ever Closer To $90K! MicroStrategy Adds $2B Worth BTC To Balance Sheet
