Peter Schiff Highlights Liquidity Risks If US Holds Bitcoin, Says It Could Trigger Market Crash

The post Peter Schiff Highlights Liquidity Risks If US Holds Bitcoin, Says It Could Trigger Market Crash appeared first on Coinpedia Fintech News

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.

Most @CNBC anchors are nothing more than paid #Bitcoin shills. @JoeSquawk said nothing when @fundstrat advocated that the U.S. government buy Bitcoin to drive the price higher so that it would have a valuable reserve asset to offset its soaring $36 trillion national debt.

— Peter Schiff (@PeterSchiff) November 8, 2024

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’. 

Consumer optimism is picking up and will likely continue to rise for a while longer, as misplaced confidence in a Trump-inspired economic boom continues to spread. But the good feelings won't last long, as all the economic problems that people hoped #Trump would solve get worse.

— Peter Schiff (@PeterSchiff) November 8, 2024