Peter Schiff Argues Bitcoin Is 'Fool's Gold,' Not the Real Thing

Peter Schiff, a known gold bug, argued that because of the behavior that bitcoin and gold registered yesterday in response to the rate cut announced by the Federal Reserve, the former cannot be taken as a digital form of the latter.

Peter Schiff Blasts Bitcoin Performance After Rate Cuts, Calls It ‘Fool’s Gold’

The Facts

While mainstream media and some actors have referred traditionally to bitcoin as “digital gold” because of its store of value and scarcity properties, some analysts, like known gold bug Peter Schiff, oppose this denomination.

In social media, Schiff referred to the recent performance of bitcoin and gold, and how the two reacted very differently to the recent rate cuts announced by the Federal Reserve.

On social media, Schiff stated:

Yesterday, the Fed cut interest rates and ended QT. As a result of this mistake, today gold rose over $90, closing above $4K. In sharp contrast, Bitcoin tanked over 3%, falling below $107K.

“That’s the difference between fool’s gold and the real thing,” he concluded.

As Schiff stated, gold prices bounced 2% after the rate cut, soaring over the $4,000 mark after losing this critical level in a huge selloff earlier this month.

Why It Is Relevant

The reaction of bitcoin and gold to the rate cuts and the end of quantitative tightening (QT) raises questions about the view that market actors have on bitcoin: while it has been promoted as a “safe haven,” Schiff states it has failed to mimic the performance of gold, the original safe haven asset.

He believes that this disconnection means that bitcoin will fail to meet expectations. On October 15, he stressed that “it’s more likely that Bitcoin’s failure to rise with gold means the party is over. Instead of a catch-up boom, expect a belated bust.”

Looking Forward:

While the future performance of financial assets is uncertain, analysts predict bitcoin and gold to keep rising amidst the rise of a weaker dollar and an uncertain panorama regarding future rate cuts. It remains to be seen if this correlation gets reversed.

FAQ

• Why do some refer to Bitcoin as “digital gold”?
  Bitcoin is often called “digital gold” due to its properties of scarcity and perceived value as a store of wealth, similar to gold.
• What are Peter Schiff’s views on Bitcoin compared to gold?
  Peter Schiff criticizes the notion of Bitcoin as a haven, highlighting its recent decline in value after the Federal Reserve’s rate cuts, contrasting it with gold’s price surge.
• How did Bitcoin and gold react to the recent Federal Reserve interest rate cuts?
  Following the rate cuts, gold prices increased by over 2%, surpassing $4,000, while Bitcoin fell over 3%, dropping below $107,000.
• What does Schiff predict for Bitcoin’s future?
  Schiff suggests that Bitcoin’s failure to rise with gold indicates a potential downturn, asserting that a “belated bust” may be on the horizon for the cryptocurrency.