Peter Schiff: the bubble of 2017 was the last one for bitcoin
Peter Schiff, Euro Pacific Capital CEO, once again criticized bitcoin as opposed to gold. He noted that gold shows better profitability, and the idea of long-term retention of bitcoin is crazy. “Since hitting its high in June of last year the price of Bitcoin has fallen by 33%. During that same time period the price of gold has risen by 27%. So, priced in gold Bitcoin has fallen by 53%. The long-term trend has clearly changed in gold’s favor. HODLers remain delusional,” Schiff tweeted. He added that the peak of the BTC bubble occurred in 2017, and now the cryptocurrency price is in a long-term downtrend.
My response to Peter Schiff's "Bitcoin is a bubble"
See Peter Schiff's comments from CNBC on 11/12/13: http://www.cnbc.com/id/101192216 Any scarce asset is vulnerable to bubbles, of course. However, the hallmark of a bubble is when an asset is priced so far above its "true" or "fair" value that it will inevitably crash down. Peter doesn't make a claim regarding bitcoin's fair value, so he seems be saying that bitcoin is a bubble at any value. Speculators buying bitcoin believe that in time, the utility and fixed supply of bitcoin give it the advantages over other currencies that ensure appreciation in its exchange value. Today, bitcoin holders have about $4B in wealth. The money supply of bitcoin will increase only by 75% over the next 30 years (from 12M units to 21M units), so unless it does not continue to appreciate in value, only $7B of wealth can be stored in bitcoin. That's not much, especially when its properties provide mind-blowing advantages in security, verifiability, convertibility. If bitcoin is anything, I believe it's very likely that it will become a store of wealth valued at greater than $100B, on its merits as a payment system alone. As a store of wealth? Due to the anti-inflation properties of the limited supply, bitcoin will be a fierce competitor to fiat and a close ally to precious metals. I expect bitcoin's usefulness as a store of value will far outweigh its value as a payments system, and imply valuation of far greater than $500B, especially as the world money supply inflates and destroys purchasing power. Using this model, a $600B "market cap" representing the sum wealth of bitcoin gives us a future value of ~$28,000 per bitcoin. I'd definitely sell some of mine if the value grows near this figure in the next 5 years.
Peter Schiff is right... Bitcoin (unfortunately) is a bubble!
For those that say... 'We're in it for the long term'... I wish I could see such a rosy picture for Crypto, but I can't. Look at crazy Max Kaiser today predicting Bitcoin to a trillion dollars. C-R-A-Z-Y! As a counterpoint to Crypto as a long-term investement, Peter Schiff is right (isn't he always?) about the long term prospects for crypto 'assets'. He says we're in a manic bubble with this. He hates crypto... the antithesis of crazy Max Kaiser. You can see where he's coming from, being in the business of selling gold, and Crypto is right now, unexpectedly, heavily 'suppressing' the long-awaited rise in gold/silver that he's been predicting and panting after. It's a wrench in his works and so he hates it. BUT... that doesn't mean that he's not 'right' in his intransigent insistence that Crypto is a bubble. It IS. Right now, 'Bitcoin' is king... because for how many years, it was the only act on the crypto stage. But look at the market now!... Last count 1071 cryptocurrencies to choose from!!... And Bitcoin gradually ceding its 'gold standard' place to their collective assault as its relative percentage of market cap steadily decreases. Sure, there are limited numbers of Bitcoins BUT, like Schiff says, there are an unlimited number of 'Bitcoins'. So, just as the man says... give this explosive trend a couple of years and how can it not be the case that this wild Crypto-bubble will collapse... with the 'digital gold' of Bitcoin just being one of the thousands of 'alt-coins' in the rubble. I'd love to hear how you think this destruction-by-dilution of Bitcoin will not play out. After all, already in a few short years there are now over 1000 declared and traded crypto-currencies but there is, always has been and always will be only ONE monetary element that is gold.
Joe Rogan asks Peter Schiff, CEO and chief global strategist of Euro Pacific Capital, about Bitcoin: "I see a lot of similarities in the people who are irrationally defending Bitcoin to what I saw in the dotcom or real estate bubble." [starts at 2:36:14]
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