Peter Schiff Warns Bitcoin Rallies Are Traps Before Bear Market Crash

Bitcoin’s price has surged more than 11% in a single day but longtime critic Peter Schiff cautions that such rallies represent false optimism and delay deeper corrections. The economist, known for his skepticism of cryptocurrencies, argues that the market remains in a bear phase masked by short-term price spikes. He attributes this to psychological dynamics where investors cling to hope instead of exiting.

Schiff’s concerns align with broader macroeconomic shifts. Bitcoin’s performance in relation to gold has deteriorated significantly, with BTC trading at about 15 ounces of gold compared to over 40 ounces at its 2021 peak. He argues that this decline underscores the digital gold narrative's failure and highlights the speculative nature of the asset.

Meanwhile, gold prices have rebounded sharply, climbing above $5,000 per ounce. This has intensified the debate over whether gold remains a better store of value compared to Bitcoin. Schiff has repeatedly emphasized that gold’s tangible utility and historical role as a safe haven provide it with advantages over cryptocurrencies.

Why Did This Happen?

Bitcoin’s recent rallies have not convinced Schiff that the bear market has ended. He argues that the market has yet to see a decisive capitulation move, where prices plummet sharply over a short period. Such a move, he believes, is necessary to mark the conclusion of the current bear phase.

The economist has also criticized the growing corporate exposure to Bitcoin. MicroStrategy’s losses from its Bitcoin holdings are mounting, and Schiff warns that such exposure is only the beginning. He advises investors to avoid what he describes as a "Greater Fool" wealth transfer.