Peter Schiff on Bitcoin: ‘The smart move is to sell today’

Euro Pacific Capital CEO and economist Peter Schiff suggested investors sell their Bitcoin “today”, saying that it was “the smart move” as, currently, the token’s downside risk outweighed its upside potential.

He posted the recommendation on Twitter on Sunday, explaining that Bitcoin’s standing was closer to its upper line than its bottom line. He added that Bitcoin’s support point had become its resistance.

While some reacted positively to Schiff’s message, others criticized the economist for inciting fears among Bitcoin investors that might trigger selloffs and eventually lead to price drops. Critics also argued that Schiff had a limited understanding of Bitcoin and the blockchain ecosystem.

Schiff is known as a Bitcoin skeptic, regularly sharing his disagreement about the crypto industry and instead promoting gold, an asset that his company Schiffgold dabbles in. The economist has rebuked critics who accuse him of lacking understanding of crypto, saying that he does not own Bitcoin because he understands it better than its investors.

Despite the criticisms against Schiff, some investors chose to purchase Bitcoin because they took Schiff’s words as a sign that Bitcoin had hit its lowest price. In the past, Bitcoin’s price jumped after Schiff suggested people sell their tokens.

Last week, Schiff also warned investors that Bitcoin might not rebound like other financial assets once the bullish trend started. He even predicted that the token would hit the $10,000 mark.

In addition to sharing his opinion about crypto, Schiff commented on the macro-financial system. He said that the U.S. greenback would crash after strengthening significantly this year. Schiff also argued that the Federal Reserve’s monetary tightening cycle would tip the U.S. economy into a “massive” financial crisis.

The Fed, like several other central banks, implements interest rate hikes to combat fast-paced inflation. So far, the U.S. economic data displayed mixed results on the central bank’s success in bringing down the inflation rate to two percent. Fed officials even indicated that the tightening cycle might continue well into 2023. Analysts have expressed concerns that the Fed’s actions might tip the economy into a recession.

The macroeconomic crisis has affected various industries, including crypto and stock markets around the globe. Investors are likely to avoid riskier assets like digital currencies and stocks and instead choose to invest in funds, which explains the greenback’s sudden growth this year.

Bitcoin volatility, outlook

Since Bitcoin reached its all-time high last year, the token has lost most of its value in 2022. Due to several factors, it kept losing and regaining its support lines in the past few months. Recently, however, data suggests that Bitcoin has reached its lowest volatility. Analysts pointed out that historically, low volatilities had been followed by rallies — except for October 2018.

In late 2018, Bitcoin's volatility reached a level comparable to the current level. At that time, the market was bearish for the entire year, just like today. BTC's price eventually hit $3,200 per unit by mid-December. The price rallied after hitting that bottom line and reaching new highs in the coming months.

Although not necessarily linked with price volatility, the hash rate for Bitcoin slumped to 229 TH/s on Christmas. It was a 16 percent decline compared to its all-time high at the beginning of November. The slump was caused by severe weather conditions in mining facilities in Texas as well as demands for energy grids. Miners are also wary that more Bitcoin miners would announce selloffs.

Over the last weekend, Bitcoin generally traded on a flat line, remaining around the $16,800 mark. However, on Monday morning in Asia, the token hit its five-day high at $16,895 per unit.

The market capitalization for the entire crypto industry is currently at $846 billion. Most analysts have said that the market is close to reaching the end of its bear cycle.