Earlier this month, strategist and gold aficionado Peter Schiff made his assessment of bitcoin (BTC-USD) crystal clear in a social-media post. It was an audacious and, to a certain extent, contrarian pronouncement during a time when the bitcoin price and related press coverage were on the rise.
Now that the bitcoin-halving event has occurred, it’s an opportune time to revisit Schiff’s post and some of the responses to it. More importantly, it’s a chance for investors to consider why they own bitcoin — or gold, for that matter — in the first place.
Schiff on bitcoin: Maybe $100K, but definitely zero
Before discussing the controversial post in question, let’s back up a few years to a time when borrowing costs were low, inflation wasn’t in the headlines, and risk-on assets were in favor on Wall Street. It was back in February 2021 when Schiff published this post on the social network known at that time as Twitter (of course, Twitter has since been rebranded to X):
At first, it seemed as if Schiff was hedging his bets and avoiding controversy by acknowledging that bitcoin, worth $50,000 at that time, could double in the short term. Then Schiff hinted that bitcoin holders were gamblers while declaring that the token’s price will inevitably “move down to zero.”
Schiff may have felt vindicated when bitcoin dropped to $16,000 in November 2022 without having first reached $100,000 or anything even close to that. That was an unusual time though. With inflation elevated and interest rates ratcheting up, the financial markets just weren’t in the mood to favor risk-on assets like bitcoin.
Fast-forward to April 2024, and it’s quite a different scenario. Sure, interest rates are still elevated, but many risk-on assets are significantly higher in price than they were in 2022. Furthermore, the Securities and Exchange Commission’s (SEC’s) approval of spot bitcoin exchange-traded funds (ETFs) has sparked a fresh wave of interest in cryptocurrency.
There’s also the bitcoin-halving event, which occurred on Friday and is designed to reduce the circulating supply of bitcoins. Press coverage of this event and bitcoin’s historical tendency to gain value in the months following halving events could elicit even more interest in the cryptocurrency.
With these positive catalysts at play, it’s certainly easier to find bitcoin bulls than bears. A notable example is ARK Investment Management CEO Cathie Wood, who forecast that bitcoin could get to $1.5 million by 2030.
The bitcoin price is currently between $60,000 and $70,000, so $1.5 million is too far away to consider right now. On the other hand, $100,000 is a distinct possibility by the end of this year, so Schiff’s admission that the cryptocurrency could reach $100,000 was probably a good idea.
The bitcoin-versus-gold debate heats up
On April 3, bitcoin traded at around $68,000 after having touched $70,000 a couple of times. Meanwhile, gold hovered at approximately $2,100 per ounce.
Then, Schiff dropped this bombshell on X:
A couple of notes are necessary at this point. First, “HODL” is commonly used cryptocurrency-trader jargon meaning “hold on for dear life.” Thus, “HODLers” are, by extension, investors who choose to hold on to their bitcoin throughout the roller-coaster ups and downs of the price. Second, I’m going to take the liberty of assuming that Schiff meant to write “last chance” instead of “last change.”
While I certainly can’t write on behalf of Schiff, I’m fairly certain that he didn’t mean that current bitcoin owners were “poor.” After all, the token was within spitting distance of its all-time high.
Rather, I feel that Schiff meant to suggest that bitcoin holders are unwittingly impoverished because the cryptocurrency has no real value. Hence, “staying poor” would be a consequence of foolishly continuing to HODL bitcoin.
Were gold and silver trading at “favorable prices” at that time? Gold rallied from $2,100 to $2,400 since that X post, so score one point for Schiff. As for gold’s companion metal, silver ran from $24.50 to nearly $29.
In contrast, bitcoin has pulled back to $65,000 since Schiff’s early-April post. Nonetheless, not everyone was evidently ready to side with Schiff in the bitcoin-versus-gold debate:
In a way, the bitcoin-versus-gold debate is actually a Zoomer-versus-Boomer battle of investment philosophies. While Bitcoin represents a risk-on, tech-focused gambit on the future, gold is ancient, tangible and decidedly risk-off.
Yet, there is common ground. Holding gold and HODL-ing bitcoin are really just two different approaches to sidestepping the wealth-deteriorating impact of relentless dollar inflation.
Only time will tell whether bitcoin will make people “poor” or not. Either way, knowing what you own should, at least for the foreseeable future, keep investors on the right side of the trade.
