Prominent economist and Bitcoin critic Peter Schiff is warning that the ongoing transfer of Bitcoin from early adopters, often referred to as "OGs," to newer, less experienced investors, or "weak hands," will likely exacerbate future market downturns.
Schiff's analysis comes amid a recent downturn in the cryptocurrency market, with Bitcoin experiencing a significant price drop. He argues that as early Bitcoin holders, who likely acquired the asset at much lower prices, begin to cash out their profits, the increased supply of Bitcoin in circulation makes the market more vulnerable to panic selling. This shift from "strong" to "weak" hands, according to Schiff, signifies a critical juncture for Bitcoin.
Schiff has likened the current situation to Bitcoin having its "IPO moment," suggesting that the cryptocurrency market now possesses sufficient liquidity for early investors to realize their gains. This perspective aligns with data indicating a substantial outflow of Bitcoin from long-term holders. In October alone, over 400,000 BTC were reportedly offloaded by whales and long-term holders, contributing to a price plunge below $85,000.
Illustrative of this trend are the high-profile exits of early Bitcoin adopters such as Owen Gunden, who sold his entire stash of 11,000 BTC (worth $1.3 billion), and Robert Kiyosaki, the author of "Rich Dad, Poor Dad," who liquidated his $2.25 million BTC position. These actions highlight a broader pattern of profit-taking among OGs, raising concerns about the ability of retail and institutional buyers to absorb the increased selling pressure.
Schiff has long maintained a bearish stance on Bitcoin, arguing that it fails as both a medium of exchange and a store of value. In a recent post on X, Schiff stated that Bitcoin "has no future," and that "the race to get out of Bitcoin is on". He has also criticized the narrative of Bitcoin as "digital gold," asserting that its decline relative to gold exposes this hype as a fraud. According to Schiff, investors who bought into this narrative will eventually be compelled to sell.
Furthermore, Schiff has targeted companies like MicroStrategy (now Strategy), whose business models heavily rely on Bitcoin holdings. He argues that these companies lack a real business and are unsustainable due to Bitcoin's price volatility. Schiff specifically noted that Strategy's stock has lost approximately 65% of its value since last year, and its share premium has largely eroded. He also warned that Strategy could lose access to capital markets, leading to a period of collapse.
Schiff's warnings come amid a backdrop of increasing volatility in the cryptocurrency market. Bitcoin's recent price drop has been attributed, in part, to options-driven volatility, where market makers hedge their positions by selling more Bitcoin as prices fall, amplifying the downward momentum.
Despite Schiff's grim outlook, some analysts remain optimistic about Bitcoin's long-term prospects. Cathie Wood's Ark Invest, for example, has highlighted a structural shift in Bitcoin ownership, with institutions absorbing selling pressure. Others argue that Bitcoin's verifiable scarcity and censorship-resistant utility as a digital monetary network make it a valuable store of value and medium of exchange. They view Bitcoin's volatility as a temporary phenomenon and maintain that its decentralized properties make it an unmatched asset in the digital age.
