Economist Warns U.S. Bitcoin Reserve Could Harm Dollar and Economy

Peter Schiff, a well-known critic of Bitcoin, has strongly opposed the idea of the United States creating a Bitcoin reserve, a proposal gaining traction with the potential re-election of former President Donald Trump.

While some lawmakers and industry leaders support the plan, Schiff warns that it could have disastrous consequences for the U.S. economy.

Schiff has long argued against Bitcoin’s role as an investment asset, and he believes that the U.S. government’s involvement in Bitcoin could trigger a dangerous cycle. He suggests that acquiring 1 million BTC to establish a reserve would initially drive the cryptocurrency’s price to new heights, making early investors extremely wealthy.

However, as these investors sell off their holdings to realize their profits, the price would likely plummet. To stabilize the value, Schiff contends, the government might print more dollars to purchase additional Bitcoin, which would further devalue the U.S. dollar in the process. He argues that this would not only destabilize the dollar but also cause the value of Bitcoin to collapse in the long term.

While Schiff remains critical of the proposal, other figures in the crypto space, including some legislators, view Bitcoin as a viable store of value. This optimism has been fueled by the growing adoption of Bitcoin by institutions like MicroStrategy.

Meanwhile, countries like Bhutan have seen their Bitcoin holdings grow in value, with the price of Bitcoin recently reaching an all-time high of over $85,495. Despite Schiff’s skepticism, Bitcoin’s popularity continues to rise, and the debate about its potential role in government reserves remains a contentious topic.