Gold bug and outspoken Bitcoin critic Peter Schiff has issued a dire warning about the potential consequences of the US government establishing a Bitcoin reserve, particularly in light of Robert F. Kennedy Jr.’s proposal to back the dollar with Bitcoin. Schiff argues that such a move, specifically purchasing 1 million BTC, would trigger a catastrophic chain of events leading to hyperinflation, the destruction of the dollar, and ultimately, the demise of Bitcoin itself.
Schiff’s scenario unfolds as follows: The initial purchase of 1 million Bitcoin by the US government would drive the price significantly higher, prompting long-term holders (HODLers) to cash out their newfound wealth. This massive sell-off would cause a market crash, forcing the government to print more dollars to prop up the Bitcoin price and prevent the devaluation of its own reserve.
This intervention, according to Schiff, creates a vicious cycle. The government would be compelled to continuously buy Bitcoin, a “reserve of something you can never sell,” to maintain the illusion of its value. This relentless printing of dollars would fuel hyperinflation, ultimately rendering the dollar worthless.
Once the dollar loses all value, the US government could no longer sustain its Bitcoin purchases and would be forced to sell its holdings to meet its financial obligations. This massive liquidation would trigger a complete collapse of the Bitcoin market.
“In the end, Bitcoin would have succeeded in destroying the dollar,” Schiff explains. “But the victory would be short-lived, as Bitcoin would be destroyed along with it.”
Schiff concludes that this scenario would be an “unmitigated disaster” for the United States, making the establishment of a Bitcoin reserve highly improbable. He suggests that only those who sell their Bitcoin to the government early on, using the proceeds to acquire tangible assets, would benefit. Those who hold onto their Bitcoin or maintain dollar savings would be “completely wiped out,” according to Schiff’s prediction. He ultimately dismisses the idea as unlikely, stating, “That’s why it’s highly unlikely that a Bitcoin reserve will ever be established, let alone built up to the level suggested by RFK.”
