Economist Peter Schiff has long been an opponent of bitcoin, and his stance on the digital asset has not changed over time. However, recent predictions from economists could actually favor bitcoin if that happens. Before the end of 2022, Schiff shared his thoughts on inflation, the US dollar, and he believes that both will be headed there.
Inflation Will Rise, Dollar Will Suffer
In the tweets shared by the economist, he talked about the current inflation trend. According to Schiff, the current belief that inflation will decrease in the new year is wrong. However, they expect higher inflation figures in 2023.
The economist told his more than 900,000 Twitter followers that the strong performance of the US dollar index was no indication of continued strength. He pointed out that the index has closed 2022 at the lowest level in six months and this is what he expects to be the theme of 2023. Furthermore, he added that it will be one of the worst years for the US dollar index.
The US dollar index may have had a strong year, but ended the year at a six-month low, down 10% from its Nov. high. This weakness will continue in 2023, with the dollar having one of its worst years. If I’m right #inflation the problem will get worse.
— Peter Schiff (@PeterSchiff) December 30, 2022
As for inflation, he explained that the weakness of the dollar will see inflation “get worse.” This, he said, is an increase in consumer prices such as rent, taxes, utilities, insurance, etc.
Why This Could Be Good For Bitcoin
One of the environments where bitcoin can thrive is when the value of the dollar is weak. As the dollar index declines in strength, investors tend to flock to other assets that have proven better at holding value over time. Usually, the standard to open is gold but with the performance of bitcoin over the last decade, the digital asset has become one of the main options for investors.
BTC price trending below $16,700 | Source: BTCUSD on TradingView.com
This example returns in 2021 when the dollar index has reached a three-year high. In response to this, the bitcoin price rallied rapidly and would reach its current high of $69,000 in November of the same year.
A similar trend was recorded during the 2017 bull market when the index also fell to a three-year low. On both sides, the weakness of the dollar has played right into bitcoin and pushed every bull market forward.
If Schiff’s prediction is correct and there is another weakening of the dollar in 2023, then a bull rally for bitcoin is possible as investors flock to take refuge in the hedge of inflation. However, there are other factors to consider such as the correlation with the stock market. If the poor performance continues, it could hamper BTC’s growth – unless there is a decoupling in the coming months.
Option image from Verdict, chart from TradingView.com