Economist and gold proponent Peter Schiff is stirring up a hornet’s nest on US Bitcoin reserves. In a series of pointed comments on social media, Schiff called on President Joe Biden to sell the government’s stash of Bitcoin before he steps out of office. Schiff’s comments reinforce the growing divide between those who support traditional assets like gold and those who support digital currencies.
As the concept of establishing a Bitcoin reserve gets momentum in Washington, Schiff’s remarks raise larger questions about the place of cryptocurrencies in national strategy. Coinciding with this is the new “Bitcoin Act of 2024”, proposed and expected to influence the scenario on US crypto landscape in the case of a second Trump presidency.
Schiff Stance on Strategic Bitcoin Reserves
The idea of a national Bitcoin reserve has been floated after Senator Cynthia Lummis’s “Bitcoin Act of 2024”; which would use Bitcoin to back the US dollar and US dominance in the global crypto market. However, Schiff has been one of the opponents, calling the idea a disaster for the US economy.
In his latest comments, Schiff told President Biden to sell the government’s Bitcoin. He said:
“The one good thing Biden can do before he leaves office is sell all the Bitcoin the US government has. Not only would the money raised reduce the 2024 budget deficit but it would stop all the nonsense about creating a ‘Strategic’ Bitcoin Reserve.”
Schiff said a Bitcoin reserve would threaten the US dollar’s status as the world’s reserve currency and was sceptical of Bitcoin’s long-term prospects, sticking with gold over the digital asset.
Bitcoin vs Gold Debate
Schiff’s comments sparked a lively discussion on social media. One user said selling Bitcoin now would backfire as the US would end up buying it back at higher prices in the future. They also pointed out that other countries are already building their own Bitcoin reserves, saying that “game theory” favors countries that adopt crypto.
Schiff shot back that Trump, a big Bitcoin supporter, would never commit to buying more of it. He said:
“Biden can do Trump a favor by selling it all before Trump takes office. That way Trump won’t have to break that campaign promise.”
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This highlights the bigger divide between gold and crypto supporters. Gold bugs like Schiff look to the metal’s history; crypto enthusiasts see Bitcoin as the future of finance and an inflation hedge.
US Bitcoin Reserve
The US Bitcoin reserve is a recognition of the growing role digital assets play in global finance. Supporters say holding Bitcoin would make the US more competitive with countries like China and El Salvador that are going all in on crypto.
The Bitcoin Act of 2024 proposed by Senator Lummis would put the US at the head of the cryptocurrency adoption curve. Many say a national Bitcoin reserve would achieve a few simple things: diversify the government’s asset portfolio, strengthen the US dollar in its new digital form or be a symbol of the country’s commitment to technological innovation.
Critics like Schiff, however, say it would destabilize the traditional financial system. They argue that volatile and intrinsically valueless-less Bitcoin is not suitable to be held in reserves.
Liquidating US Bitcoin Reserves
The US government reportedly has about 198,109 BTC worth around $19.33 billion. Most of which are allegedly from seizures related to criminal activity. Selling that could help the 2024 budget but would be a drop in the bucket compared to the national deficit.
Further; such a large sale would create market disruption; bring down prices and antagonize crypto enthusiasts. This is a pointer to the bigger problem policy makers face when trying to fit digital assets into their plans.
Conclusion
The call to liquidate US Bitcoin reserves from Peter Schiff illustrates an increased tension between the traditional and digital systems of finance. With Schiff firmly opposed to a strategic US Bitcoin reserve; a growing interest in cryptocurrency strategies perhaps shows it’s time for a reconsidered approach toward digital assets from the United States.
The choices made in the next few years will determine the U.S. economy whether they choose to go big or go home on Bitcoin.
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