The chief global strategist of Euro Pacific Capital, Peter Schiff, a longtime proponent of gold, has reaffirmed his stance on Bitcoin in light of the upcoming halving event in May of 2020, when the rate of new BTC entering the market will be cut in half. Some expect the restricted supply to spark an uptick in price, setting up the next bull market.
However Schiff, in his latest interview on Kitco News, says he believes Bitcoin is still a dud.
He also crystallizes a popular mainstream sentiment: Bitcoin isn’t real.
“Half of nothing is still nothing. The halving doesn’t mean anything. And I don’t hate Bitcoin. There’s nothing there to hate. It’s just an abstraction. Now, a lot of people have confused it for gold. They think it’s digital gold. As I’ve said, it’s simply fool’s gold. It’s not going to $12,000. I mean, it briefly got up to $14,000 earlier this year. As we’re recording, it’s barely holding on to $7,000. I just think that we’re in a bear market.
Bitcoin topped out about two years ago, in fact a little over two years ago, so the price of Bitcoin has been falling for the past two years, and I expect that to continue. But I also expect a lot of propaganda from people who are working in the Bitcoin industry, that have a vested interest in pumping the price higher, who own a lot of Bitcoin, who need more buyers to come into the market – they’re constantly going to come out with these pie-in-the-sky forecasts of $25,000, $50,000, $100,000, a million dollars a Bitcoin, no matter how low the price goes to try to keep the hodlers on board, to try to get this momentum.
I don’t think you’re going to see the institutional money. They’ve been talking about that for years. I don’t think that that’s going to happen… I just don’t see portfolio managers – especially endowments, pension funds – I don’t see them gambling on Bitcoin with other people’s money and then being held responsible for the losses.
That’s just wishful thinking to try to drive this narrative that this is going to be adopted as an alternative to gold. It’s not. The original purpose of Bitcoin was to be an alternative to dollars or euros. It was supposed to be money. It was supposed to be used to buy a cup of coffee. Well, because that isn’t possible – that’s not practical for a number of reasons – and it doesn’t happen, they tried to reinvent it as, ‘Well, it’s a store of value. It’s digital gold.’ But there is no value in Bitcoin, so you can’t store what you don’t have.
Gold is a store of value because it has a lot of value. Gold can also function as a medium of exchange. It’s not functioning as one now but it has in the past, and it could again in the future. But Bitcoin has never really been a medium of exchange. It wasn’t in the past and it won’t be in the future. So they’re trying to put lipstick on the pig and claim it’s a store of value. But there’s nothing to store.”
Crypto investors in 2019 have weathered another wild ride with Bitcoin beginning the year at $3,874 and soaring to a high of $13,438 in June before entering the second half of the year in a downward drift that just sent BTC below $7,000.
To draw a comparison to revolutionary technologies that are slow to gain traction, Bitcoin enthusiasts are highlighting the performance of Amazon and other big tech stocks in their early days when they declined well over 95%.
But since the dot-com era also saw a lot of tech ventures get wiped out with plenty of companies closing their doors, detractors say Bitcoin is just another high-stakes gamble.
Schiff is placing his bet on gold as Bitcoin, he argues, spirals into oblivion.
“I just think it’s going to keep going down, and I feel badly for people who make the mistake of correctly identifying that there is a problem with fiat money and that they need to hedge against inflation, but then they make the mistake of thinking that Bitcoin is going to provide that hedge. It’s not going to do it. It’s gold.
And I know all the young people think – guys like me are just a bunch of old fools who are out of touch and don’t get the technology. What I’m going to say is: all the young people are naive and they don’t have the experience, and they don’t have the wisdom. They’re just falling for basically what amounts to a fraud.”