Economist Peter Schiff has been in strong opposition to bitcoin for a long time, and his stance on the digital asset has not changed over time. However, recent forecasts from the economist could actually be in favor of bitcoin if they do come to pass. Just before the end of the year 2022, Schiff shared his thoughts about inflation, the US dollar, and where he believes both of these are headed.
Inflation Will Surge, Dollar Will Suffer
In tweets that were shared by the economist, he talks about the current inflation trend. According to Schiff, the current belief that inflation would slow down in the new year are wrong. Rather, he expects higher inflation numbers in 2023.
The economist told his more than 900,000 Twitter followers that the strong performance of the U.S. dollar index was not any indication of continued strength. He points out that the index had closed out 2022 at a six-month low and this is what he expects to be the theme of 2023. Furthermore, he adds that it is about to be one of the worst years for the U.S. dollar index.
The U.S. dollar Index may have had a strong year, but it ended the year on a six-month low, down 10% from its Nov. high. This weakness will likely continue in 2023, with the dollar having one of its worst years ever. If I’m right the #inflation problem is about to get much worse.
— Peter Schiff (@PeterSchiff) December 30, 2022
As for inflation, he explains that the weakness of the dollar will see inflation “get much worse.” This, he attributes to the rise in consumer prices such as rent, taxes, utilities, insurance, etc. He also expects the stocks which performed badly in 2022 to continue the same trend in 2023.
Why This Might Be Good For Bitcoin
One environment in which bitcoin thrives in is during times of weak dollar values. As the dollar index declines in strength, investors tend to flock to other assets which have proven to be better at holding value over time. Usually, the default to run to was gold but with the performance of bitcoin over the last decade, the digital asset has become one of the top choices for investors.
BTC price trending below $16,700 | Source: BTCUSD on TradingView.com
An example of this was back in 2021 when the dollar index had hit a three-year low. In response to this, bitcoin’s price rallied rapidly and would later hit its current all-time high price of $69,000 in November of the same year.
The same trend was also recorded during the 2017 bull market when the index had also fallen to a three-year low. Both times, the weakening of the dollar had played right in the favor of bitcoin and propelled each bull market forward.
If Schiff’s prediction is correct and there is a further weakening of the dollar in 2023, then a bull rally for bitcoin is possible as investors flock to take refuge in the inflation hedge. However, there are also other factors to take into account such as the correlation with the stock market. If it continues to perform poorly, then it could stifle BTC’s growth – unless there is a decoupling in the coming months.
Featured image from Verdict, chart from TradingView.com