Is the US economy about to decline? Peter Schiff: Inflation is about to skyrocket, and both BlackRock and MicroStrategy will eventually sell BTC!

‐ 2024.08.04 ‐ By Fenrir
Peter Schiff warns that the US has entered a recession, predicts that inflation will soar, and questions the Fed's decision to cut interest rates. This move may affect the cryptocurrency market. Peter Schiff's warning about the US economy.

Renowned economist Peter Schiff, known for his anti-Bitcoin stance, recently issued a stern warning, stating that the United States has entered a recession. He predicts that Inflation is set to soar, which will impact the Federal Reserve's interest rate decisions. According to the latest employment data, the US added only 114,000 jobs in July, the smallest increase since December 2020, well below the expected 176,000 and a significant drop from the revised 179,000 in June.

In addition, the unemployment rate rose to 4.3%, the highest level since October 2021. Schiff expressed concerns about the current economic situation, stating that 'recession is here and inflation is about to soar.' He also criticized the measurement methods of inflation and unemployment rates, pointing out that the 'misery index' is now higher than most of the time in the 1970s. He added, 'Bidenomics is a complete disaster, unfortunately not reported by the media.' The poor employment data has increased speculation about the Fed's next move. Some investors are now betting on a 50 basis point interest rate cut at the September meeting, instead of the previously expected 25 basis points. A user on social media also called on the Fed to consider more aggressive interest rate cuts, but Schiff warned that although rate cuts may trigger higher inflation, they may not necessarily help the economy or the job market. His comments highlight the Fed's delicate balance in addressing these economic challenges.

Potential Cryptocurrency Market Impact

Recent rise in unemployment rate and slowdown in job growth may affect the Fed's policy decisions. A weak labor market may prompt the Fed to take a more accommodative stance, possibly cutting interest rates to stimulate economic activity. This move could have significant implications for various assets, including Cryptocurrency. Lower interest rates typically decrease the appeal of traditional savings accounts and fixed-income investments, prompting investors to seek higher returns in alternative assets such as Cryptocurrency.

In addition, lower borrowing costs can encourage more venture capital and institutional investment in the cryptocurrency industry. Companies and startups may find it easier to expand their functions and innovations, leading to increased market activity and asset price rises in encryption. According to the CME FedWatch tool, there is currently a probability of more than 68.4% predicting that the Federal Reserve will cut interest rates by 50 basis points at the September meeting. In addition, recent employment data shows that the possibility of three rate cuts in 2024 has increased after the labor market has cooled down. Risk of BTCHoldings of BlackRock and MicroStrategy.

In addition, Schiff also expressed his views on MicroStrategy's purchase of 169 BTC in the past month. According to the latest data, MicroStrategy and BlackRock's BTC ETF (IBIT) together hold about 569,000 BTC, worth about 36 billion US dollars. As of now, MicroStrategy holds 226,500 BTC, worth about 15.06 billion US dollars; in contrast, IBIT ETF holds 343,387.46 BTC, worth about 21.7 billion US dollars.

Peter Schiff expressed concern over the large amount of BTC Holdings from these two market giants. He believes that MicroStrategy may be pressured by creditors to sell its encryption assets. Schiff pointed out that if investors in BlackRock's IBIT ETF decide to exit to reduce losses, the fund may also be forced to sell BTC. Schiff believes that these losses are inevitable as he considers BTC to be worthless. Schiff mentioned that a German administrative agency caused a 20% price drop within a month when selling $3 billion worth of shares a few weeks ago. If Schiff's prediction comes true and BlackRock and MicroStrategy decide to sell their BTC Holdings, the market may suffer even greater impact as these Holdings are 12 times the shares sold by Germany.