Bitcoin’s Status Challenged as Central Banks Choose Gold

Peter Schiff questioned why central banks favor gold over Bitcoin when preparing for a shift from the U.S. dollar.

Peter Schiff, a renowned economist and staunch critic of Bitcoin, expressed skepticism over the role of the world's leading cryptocurrency as central banks continue to increase their gold reserves.

Central Banks Prefer Gold Over Bitcoin

Schiff questioned why central banks are favoring gold when preparing for a shift from the U.S. dollar. His remarks come amid growing global concerns over economic shifts and weakening confidence in fiat currencies.

Recently, central banks from countries like China and Russia have boosted their gold holdings rather than buying Bitcoin. This decision suggests they are seeking stability through time-tested assets and remain skeptical of Bitcoin's long-term role.

Schiff went on to say that although Bitcoin is touted as a digital alternative, central banks continue to treat it as speculative. With Bitcoin's price reaching new highs, the absence of institutional adoption from central banks is striking.

If gold is the past and #Bitcoin is the future, why are foreign central banks that are preparing for a future where the US dollar is no longer the reserve currency, replacing their dollar reserves with gold and not #Bitcoin?

— Peter Schiff (@PeterSchiff) May 24, 2025

Rising Interest Rates May Test Bitcoin's Resilience

The economist warned that Bitcoin may face a significant test as long-term interest rates continue to rise. He criticized digital asset supporters and tech market participants for neglecting these growing financial pressures.

As yields on 10-year U.S. government bonds rose above 4.5%, financial markets responded with increased caution. Rising interest rates may attract capital away from Bitcoin into safer, yield-generating assets.

Schiff argued that higher borrowing costs could strain Bitcoin's speculative appeal and expose underlying weaknesses. With economic conditions tightening, he believes the breaking point for Bitcoin could be approaching quickly.

While Bitcoin supporters remain optimistic, Schiff emphasized that macroeconomic shifts could trigger market corrections. He said the crypto market remains vulnerable to rate shocks and tightening liquidity. This sentiment reflects broader concerns about Bitcoin's ability to act as a hedge under current conditions.

U.S. Financial Health Concerns: Schiff Blames Spending, Debt Downgrade

Schiff also expressed pessimism over the U.S. government's financial health, criticizing recent events that he views as warnings for future instability. He referred to a large spending bill passed by Congress, which he claimed would expand the national debt without real solutions.

Moreover, Moody's downgraded U.S. government debt by one notch, signaling reduced credit confidence. These developments have hurt confidence in U.S. markets, with stocks, bonds, and the dollar all falling last week.

Meanwhile, gold and silver prices rose, signaling a move toward safer assets as uncertainty grows. Bitcoin rose in value, yet Schiff dismissed the rally as disconnected from underlying economic fundamentals.

Despite Bitcoin's current momentum, Schiff forecasted that continued weakness in U.S. markets could strengthen precious metals. He asserted that gold, silver, and platinum remain safer options for capital preservation amid growing debt and monetary uncertainty.