Peter Schiff, a staunch Bitcoin critic in a recent X post has questioned the idea of the cryptocurrency serving as part of the U.S. strategic reserve. He believes that such a move could be ineffective and problematic given Bitcoin’s volatility and potential impact on market stability.
Schiff Against US Holding Bitcoin
This started off when Tom Lee of Fundstrat in a latest appearance on CNBC’s Sqauwk Box, said that BTC could help solve the U.S. budget deficit. Lee suggested that while tax cuts and spending changes may not effectively address the deficit, Bitcoin could serve as a hedge against it. He mentioned that as Bitcoin’s price rises, it could help offset liabilities associated with the deficit.
He implied that if the cryptocurrency is added to the list of reserve assets, it could help offset some of the nation’s massive $36 trillion debt because of its potential to appreciate in value.
However, Schiff did not think of it as a good idea. He underscored the liquidity risks, noting that if the U.S. held a significant amount of Bitcoin, any attempt to sell could easily trigger a market crash, rendering the reserve immediately ineffective.
Calls It A Ridiculous Plan
“Even if you believe in Bitcoin such a plan is ridiculous. A large Bitcoin reserve would be worthless as a reserve asset, as the government could not sell without crashing the market,” he noted.
Such a scenario in his opinion would defeat the very purpose of a strategic asset intended to stabilize or enhance fiscal resilience. He argued that Bitcoin’s volatility and illiquidity make it unsuitable as a serious reserve asset and cautioned against what he sees as misplaced optimism about its use by governments.
His further posts reflects his disapproval of Trump’s win. He has shared in a futher post that consumer optimism is picking up over what he calls as ‘misplaced confidence in a Trump-inspired economic boom’.
