Renowned American economist Peter Schiff has made a grim prediction about the challenges Bitcoin could face if NASDAQ entered a bear market, suggesting an 85% drop in the digital asset’s value.
According to a post on X by the American stockbroker and string Bitcoin critic, any decline in NASDAQ has always led to a decrease in Bitcoin’s value.
Bourse Down 12%
Peter Schiff noted that the bourse was currently down 12%, and there was every chance that the plunge could easily affect the flagship cryptocurrency. At the time of writing, Bitcoin was trading at 83,235.82, and it had experienced a slight price decrease, according to CoinMarketCap data. The current price is much lower than the January 20, 2025, all-time high of $109,200. There’s growing fear that the ongoing volatility could further affect the broader cryptocurrency market. Writing on his X handle, the economist stated:
“If this correction turns out to be a bear market and the correlation where a 12% decline in the NASDAQ equates to a 24% decline in Bitcoin holds, when the NASDAQ is down 20%, Bitcoin will be about $65K.”
Bitcoin Could Fall Below $20K
Furthering his pessimistic sentiment, Peter Schiff further opined that if the exchange should enter a near market, there was historical evidence that it could become much steeper this time. He cited the Dot-com bubble bust, where the bourse fell over 80%, the 2008 financial crisis, where the fall was 55%, and the COVID-19 pandemic that saw the NASDAQ fall by over 30%. According to Schiff, the average of the three bear markets was a 55% decline. He further wrote that:
“If this bear market bottoms with just a 40 percent decline, which would put Bitcoin at about $20K. However, a drop of that magnitude would accelerate Bitcoin’s collapse to much lower levels.”
Divergence between Gold and Bitcoin
In contrast to the sharp crisis Bitcoin seems to be facing, Peter Schiff observed that gold was currently showing a positive sentiment with an inverse relationship with NASDAQ. Gold has reportedly surged at least 13% since the December 2023 peak. Schiff suggested that if the bourse underwent a 40% correction, gold could reach $3,800 per ounce, further distancing itself from Bitcoin’s volatility.
The economist states that the divergence between gold and Bitcoin challenges the assertion that BTC was “digital gold” and its status as a store of value. He further avers that if Bitcoin’s price dropped to $20,000 and the price of gold kept ascending, governments and institutions would rethink the position of Bitcoin as a potential reserve asset. He stated:
“There will be no justification for the US government or any state government to keep any Bitcoin in a Strategic Reserve. There will also be no reason for ETF investors to hold their positions. With all that selling, it will be impossible for $MSTR to sell enough Bitcoin to avoid bankruptcy.”
Conclusion
Schiff is once again evaluating Bitcoin negatively despite its recent successful stint, which saw the asset gain over 121% market value in 2024, compared to gold’s 27.21% increase. Schiff strongly believes the price of BTC will keep falling while that of gold will keep rising. However, there’s overwhelming evidence that despite the negative expectations, the digital asset has always overcome and thrived.
Frequently Asked Questions (FAQs)
What does Peter Schiff believe about Bitcoin’s price?
Schiff believes BTC could experience a severe drop and sink to $20,000 should the stock market difficulties intensify.
Can the price of Bitcoin drop to zero?
Theoretically, BTC can drop to zero. However, factors that give the asset significant stability include its decentralized network, limited supply, and growing institutional adoption.
What do economists think about Bitcoin?
Most economists define money as a store of value, a medium of exchange, and a unit of account and agree that Bitcoin does not currently meet all these criteria.
What do billionaires think of Bitcoin?
Many billionaires seem aware of Bitcoin’s long-term potential but are just as interested in its unique hedging properties. They see it as an asset that can help protect against economic, political, and geopolitical risk, which is what makes it so valuable to them.
Appendix: Glossary to Key Terms
Bitcoin: A cryptocurrency designed to act as money and a form of payment outside the control of any one person, group, or entity.
NASDAQ: This is the National Association of Securities Dealers Automated Quotations, a major stock market exchange in the United States.
Bear Market: A financial market experiencing prolonged price declines of 20% or more.
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