According to Schiff, with gold trading sideways, frustrated investors ventured into Bitcoin after proponents marketed the cryptocurrency as the new digital version of the precious metal aided by good performance, he said during an interview with Kitco News on December 23.
Schiff noted some institutions that were to venture into gold also opted for Bitcoin, with the asset taking center stage in the mainstream financial media.
“Bitcoin was performing right. It was going up while gold was going sideways, but Bitcoin was marketed as digital gold. That was a whole selling point. <…> I think that the margins took away some demand from gold. I mean, maybe there were some institutions that would have bought gold, but because Bitcoin was there competing with it, they didn’t buy gold, maybe they didn’t buy Bitcoin either,” he said.
Gold’s potential to rise
Interestingly, the investor stated despite Bitcoin recording interest at the expense of gold, the precious metal still has the upper hand while stressing that the flagship cryptocurrency is likely to lose its value completely.
He pointed out that the ‘dump money’ was being sucked into Bitcoin, and investors are likely to lose. Notably, with Bitcoin correcting significantly, Schiff extended his criticism of the asset suggesting the bubble had popped, leaving gold to regain dominance.
“Meanwhile, the smart money was buying gold the whole time that everybody was talking about Bitcoin. It was the dumb money that was that was being suckered into Bitcoin. But, I think that now that the Bitcoin bubble has popped and over the next several years, the air is going to be coming out, I don’t see that problem anymore from a marketing perspective for gold. I mean, nobody is going to be comparing Bitcoin to Gold; nobody is going to be talking about it as digital gold,” he added.
Schiff on crypto regulations
With the cryptocurrency sector recording collapse of different entities like the FTX exchange debacle, Schiff noted that there is no need for regulating the sector. He suggested that incidents like the FTX crisis would still be witnessed even with regulations.
He compared the current situation to the infamous Bernie Madoff Ponzi scheme, which occurred in a regulated environment and lasted longer than FTX. In his view, more regulations are likely to hurt the industry while suggesting that lack of laws was the main selling point of crypto.
In general, Schiff has urged crypto investors to get out of the market whenever an opportunity arises. As reported by Finbold back in August, the economist called investors to take advantage and exit when the general market experienced a relief rally which he termed a ‘sucker rally.’
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