Economist Peter Schiff recently addressed the question of whether Bitcoin could replace the U.S. dollar as the global reserve currency, expressing skepticism about the cryptocurrency's ability to fulfill such a role. Speaking on a prominent political commentary show, Schiff elaborated on the limitations Bitcoin faces despite the ongoing erosion of the dollar's purchasing power.
Schiff characterized Bitcoin's value proposition as being driven largely by what he terms the 'greater fool' theory. This principle suggests that investors purchase assets not primarily for their intrinsic worth but rather with the expectation of selling them later to someone willing to pay a higher price. According to Schiff, Bitcoin fits this pattern, lacking underlying qualities that would render it a stable reserve asset.
He elaborated that central banks are unlikely to hold Bitcoin as reserves against their national currencies because the absence of intrinsic value and the asset's volatility would precipitate sharp declines in price if central banks needed to divest their holdings. Schiff asserted, "You have to have real money," underscoring the necessity for reserve assets to possess tangible value and stability.
Both Bitcoin and the U.S. dollar operate as fiat currencies, meaning they derive value not from backing by physical commodities but from government decree and market acceptance. Schiff acknowledged this shared characteristic but highlighted a crucial difference in market behavior. "Most people who are buying Bitcoin are buying it to get more dollars," he stated. This suggests that Bitcoin investors generally seek to profit by converting cryptocurrency gains into dollar holdings rather than viewing Bitcoin purely as a secure store of value.
Contrasting recent market trends, Schiff pointed to 2025 data where Bitcoin and the dollar both experienced declines, while gold appreciated significantly, rising over 60%. Over a medium-term horizon, including the past five years, Bitcoin's returns have outpaced those of gold and the dollar by substantial margins. For instance, Bitcoin posted a five-year gain of 162% and a remarkable ten-year gain exceeding 23,000%, compared to gold’s five-year gain of 175% and the dollar’s more modest 7%. Yet, Schiff's emphasis remains on the stability and reliability of precious metals given recent volatility.
Schiff reiterated his bearish stance on Bitcoin, suggesting that the cryptocurrency’s continued underperformance elevates the risk of a sudden, severe correction rather than a gradual rise to new highs. He indicated that while markets may have had time to incorporate expectations of bullish breakouts, the lack of sustained performance undermines this case.
In anticipation of a potential crisis affecting the U.S. dollar, Schiff previously forecasted a sharp decline in Bitcoin's value, contrasting this outlook with his promotion of precious metals such as gold and silver as safer investment alternatives. His views reflect a conviction in the traditional role of metals as dependable stores of value amid currency instability.
At the time of reporting, Bitcoin was trading around $88,665, marking a modest increase of approximately 1.4% over the prior 24-hour period, according to market data.