Peter Schiff has rejected bitcoin’s move above $72,000 as a genuine breakout, arguing that the cryptocurrency’s rise was driven by investors repositioning liquidity after a surprise announcement from the US Treasury.
Schiff, a long-standing critic of bitcoin and supporter of gold, said the Treasury’s decision to increase the size of its debt buybacks had caught financial markets off guard. In his view, the resulting movement into assets represented a temporary reaction rather than the start of a sustained bitcoin rally.
“Bitcoin’s rally above $72K is a fakeout, not a breakout. The Treasury buyback announcement caught markets by surprise,” Schiff declared.
The announcement saw the Treasury double the size of its buybacks to $4bn per operation. The stated aim was to improve liquidity and indirectly reduce yields.
Bitcoin responded by rising from below $65,000 to more than $71,000 at the time of writing, ending a period in which its price had remained relatively stagnant. The move also returned the cryptocurrency to prominence in international capital markets and prompted renewed scrutiny from some of its most established critics.
Schiff argued that investors who had expected a return to easier monetary conditions to benefit both bitcoin and gold were only partly correct. He said the precious metal, rather than the digital asset, should be the preferred investment.
“Bitcoin investors have long believed a return to easy money would be the catalyst for gold and Bitcoin to soar. They are only half right. Sell Bitcoin, buy gold,”Schiff assessed.
He also questioned whether the Treasury’s intervention had achieved its intended effect. According to Schiff, bond yields had already started to rise again, suggesting that a more substantial response could be required to influence the market.
“Treasury bond yields have already resumed their rise. Treasury is going to need a much bigger boat to stop this train. That means not only a much larger buyback than what has already been announced, but the Fed will have to join the party with an official QE program,”Schiff assessed.
His comments pointed towards a possible return to a wider quantitative easing strategy, in which the Federal Reserve would resume open-market purchases. Schiff presented such a move as necessary alongside a significantly larger Treasury buyback programme.
Although Schiff linked the same developments to a rise in gold, the underlying conditions could also continue to support bitcoin if investors keep treating it as a scarce asset and a store of value. Gold has held that role for hundreds of years, largely because of its relative scarcity, while bitcoin has increasingly been assessed by some investors through a similar lens.
Wednesday’s sharp bitcoin move also produced significant disruption in leveraged markets. More than $1.9bn in total market liquidations were recorded over a 24-hour period, with $1.74bn heavily liquidated, according to the source article’s figures. The scale of those liquidations underlined the volatility surrounding the sudden price surge.
Schiff’s assessment therefore presents the rise above $72,000 as a market reaction to unexpected policy news, rather than proof that bitcoin has entered a new phase of sustained growth.
