Economist and long-time Bitcoin veteran (BTC) Critic Peter Schiff felt vindicated last week as his warning that BTC price would fall victim to “selling the news” came to fruition following the recent launch of the first spot Bitcoin ETFs in the US market – looking at the top cryptocurrency, a decline of 21.5% at its low point.
“The #Bitcoin “experts” who mocked me and everyone else who claimed that the new #BitcoinETFs were a “buy the rumor, sell the news” event are now dismissing the significance of the decline and claim it's just a classic “buy this.” “Rumor, sell the expected news event,” Schiff said tweeted on Tuesday.
Despite the launch of the ETFs and the potential inflows that could result, Schiff maintains his position that BTC will ultimately go to zero.
“The new #BitcoinETFs do not create additional demand, they simply shift demand,” he said. “Investors who might have actually bought #Bitcoin, Bitcoin-related stocks like $MSTR or $GBTC are simply buying the new ETFs instead. Rearranging the deck chairs will not prevent the ship from sinking.”
“This is how #Bitcoin works,” he said added. “We create something without value and then artificially limit its supply. Then we all act like it has value and buy it. Other people see the price increase and buy it too. Then all of us [keep] #HODLing it in hopes that everyone keeps acting like it has value.”
“No matter how low the price of #Bitcoin falls, its proponents will always be able to claim the surpassed #Gold,” he said said. “For example, even if Bitcoin falls to $100 in 2031 and gold rises to $10,000, they will claim that Bitcoin has risen 100-fold in the last 20 years while gold has only risen 5-fold.”
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To which he replied“If the US dollar goes the way of the German paper mark, then I think that is possible.”
Schiff was referring to the hyperinflation in Germany between 1921 and 1923, when the German paper mark collapsed at an unprecedented rate, at one point reaching an exchange rate of 4,210,500,000,000:1 against the US dollar.
While Schiff may have responded in jest, hyperinflation actually remains a risk as U.S. debt — along with the debt of many nations around the world — begins to rise exponentially.
Data from usdebtclock.org shows that the U.S. national debt currently stands at $34.1 trillion, an increase of more than $1 trillion since the end of the third quarter of 2023. In January alone, debt rose from $33.990 trillion to $34.1 trillion, an increase of 122 billion in 26 days.
Did no one else notice this in the fourth quarter GDP report? Annual interest on the federal debt now exceeds $1 trillion and is expected to exceed $3 trillion by the fourth quarter of 2030 – INSANE and NOT SUSTAINABLE: pic.twitter.com/7uHEpHk4WA
—EJ Anthony, Ph.D. (@RealEJAntoni) January 25
The federal deficit is currently -6,460% of GDP, meaning government spending significantly exceeds revenue. This means the government has to borrow more to make up the difference, further increasing overall debt.
The issue has become so dire that in the current political climate it is one of the few things that has bipartisan appeal in Congress.
Senators Mitt Romney (R-UT) and Joe Manchin (D-WV) and Representatives Bill Huizenga (R-MI) and Scott Peters (D-CA) wrote An op-ed on The Hill warns that the U.S. national debt is exploding at an unsustainable rate.
“In just 10 years, the national debt has more than doubled. Not only is this level of debt unsustainable, it is growing at the fastest rate ever in the history of this country,” they said. “$34 trillion is a staggering sum. To put this in context, the national debt for every person in the United States has now exceeded $100,000.”
“Interest payments on the debt totaled $659 billion in the last fiscal year, making it the fourth largest expenditure in the budget,” they added. “Over the next few years, interest payments are expected to exceed both defense and non-defense spending, which includes education, transportation and more. And if we maintain this level of fiscal imbalance, interest payments will be our largest expense in the not too distant future.”
“Now more than ever, we must find bipartisan solutions that stabilize our country’s finances for future generations…The national debt is the greatest threat to our country – and we are quickly approaching crisis point,” they warned. “Given the impending nature of this crisis, continuing to turn a blind eye will only push the American dream further out of reach for our children and grandchildren.”
To begin the process of addressing this problem, they proposed “the creation of a bipartisan, bicameral Finance Commission tasked with finding solutions to strengthen our financial health and meaningfully reduce the national debt.”
The 16-member commission would include 12 members of Congress and four outside experts, appointed equally by congressional leaders, they said.
“We were elected to lead and that requires sacrifice and difficult decisions,” they concluded. “There is a growing desire on both sides of the aisle to address our national debt. It is time for Congress to put the country’s interests above political expediency and put us on solid financial footing before it is too late.”
Bitcoin was introduced by Satoshi Nakamoto in January 2009 during the Great Financial Crisis and was intended to combat the problems we are facing now. While Schiff has been criticizing the top crypto for more than a decade, he may have inadvertently highlighted one of the best arguments for keeping Bitcoin in a digital world headed toward currency settlement.
No country has ever made its way to prosperity, yet we just passed $34 trillion in debt and no one in the university party seems to care.
The laws of financial physics apply to everyone. The United States and its currency face a day of reckoning.
— Bob Anderson (@bob24225) January 3, 2024
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