Financial commentator Peter Schiff has never been shy about sharing his thoughts on Bitcoin (BTC). Now, he’s warning that if the U.S. government doesn’t start buying Bitcoin, it could trigger a massive sell-off by investors who have been betting on a government-backed Bitcoin Reserve.
According to Schiff, once investors realize that the government isn’t buying Bitcoin, they will begin to panic and sell their holdings en masse. This would flood the market with BTC, causing the price to crash.
Schiff predicts that in response to the crashing price, MicroStrategy will attempt to prop up the price by increasing its already-leveraged position in the asset.
As reported by Finbold, MicroStrategy has allocated a total of $4.08 billion in company funds to BTC purchases, with an average entry price of approximately $24,505. The firm’s latest BTC purchase was made on December 21, when it acquired an additional 2,395 BTC for roughly $242.9 million at an average price of about $101,455.
However, Schiff believes that even this strategy will only stabilize the BTC price temporarily, as it is ultimately unsustainable and could lead to a larger crash in the long term, starting with MicroStrategy’s stock (MSTR).
He adds that due to MSTR’s heavy dependence on Bitcoin, it will crash first, which will trigger the sell-off in BTC as the market reacts.
Schiff has been a long-standing critic of Bitcoin, calling it a bubble and a scam on multiple occasions. He also predicted that the BTC price would crash to zero in 2021. However, the cryptocurrency has continued to defy his expectations, reaching a new all-time high of over $100,000 in November.
Now, Schiff is warning that the government needs to start buying Bitcoin in order to prevent a crash. However, it seems unlikely that the government will take his advice.
