Bitcoin's rise could challenge the US dollar

Economist Peter Schiff has expressed serious concerns regarding the impact of Bitcoin (CRYPTO:BTC) on the U.S. economy as the cryptocurrency recently surpassed $100,000 in value.

“Ironically, bitcoin may end up destroying the dollar after all—not because it replaces the dollar as a global reserve currency, but because the U.S. government embraces bitcoin, prints trillions of dollars to buy it, and fuels a larger bubble that squanders the nation’s wealth,” Schiff stated in a post on the social media platform X.

Schiff has been a vocal critic of government fiscal policies, arguing that such actions could worsen economic instability.

His concerns have intensified in light of recent proposals from political leaders.

President-elect Donald Trump has suggested establishing a strategic bitcoin reserve to diversify U.S. financial assets.

This proposal aligns with Senator Cynthia Lummis’ BITCOIN Act of 2024, which aims to mandate the U.S. Treasury to acquire one million bitcoins over five years.

“If the U.S. creates a bitcoin reserve, wasting billions of taxpayer dollars buying bitcoin, it will also misdirect capital away from the very industries the U.S. must develop in order to grow the economy, reduce its trade imbalance, shrink fiscal deficits, and lower inflation,” Schiff cautioned against these moves.

The status of the U.S. dollar as the world’s primary reserve currency is increasingly under scrutiny amid shifting global economic dynamics and geopolitical tensions. 

Trump has threatened to impose 100% tariffs on BRICS nations if they pursue alternatives to the dollar, aiming to counteract efforts to move away from dollar reliance.

Countries like China and Russia are actively seeking to reduce their dependence on the dollar by increasing gold reserves and exploring alternative currencies.

Wharton School finance professor Jeremy Siegel has also voiced concerns about bitcoin’s potential challenge to the dollar’s dominance as the primary reserve currency, emphasizing the need to “defend the dollar” against decentralized digital assets.

At the time of reporting, the Bitcoin price was $99,359.51.