U.Today

Peter Schiff, a vocal critic of Bitcoin (BTC), recently questioned the notion of incorporating the cryptocurrency into the U.S. strategic reserve, deeming it a "ridiculous" plan. In his view, such a move would be ineffective and problematic, largely due to Bitcoin's volatile nature and its potential adverse effects on market stability.

This statement was prompted by Tom Lee of Fundstrat, who proposed that BTC could help alleviate the U.S. budget deficit. During a recent CNBC live session, Lee suggested that if Bitcoin were added to the list of reserve assets, it could help mitigate some of the nation's enormous $36 trillion debt, given its potential for value appreciation.

Lee also emphasized that traditional measures to reduce the deficit, such as modifying tax policies or reducing spending, might not suffice in the current economic landscape. Hence, he argued that Bitcoin could be a valuable asset for the U.S. Treasury in managing the national debt.

Why not? Peter Schiff explains

It comes as no surprise that Schiff disagreed with this idea. He underscored the liquidity risks associated with holding substantial amounts of Bitcoin. According to Schiff, any attempt to liquidate a significant Bitcoin reserve could easily trigger a market crash, thereby rendering the reserve ineffective.

He pointed out that such a scenario would undermine the very purpose of a strategic asset designed to stabilize or bolster fiscal resilience. Schiff argued that Bitcoin's volatility and illiquidity render it unsuitable as a serious reserve asset and cautioned against what he perceives as misplaced optimism regarding government adoption of the cryptocurrency.

This article was originally published on U.Today