Peter Schiff Says Prepare for Worse Inflation, What Does This Mean for Bitcoin?

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Economist Peter Schiff has long been opposed to bitcoin, and his stance on the digital asset hasn’t changed over time. However, the Economist’s recent predictions could actually be in favor of bitcoin if they come true. Just before the end of 2022, Schiff shared his thoughts on inflation, the US dollar, and where it’s headed for both.

Inflation will soar, the dollar will suffer

In tweets shared by the economist, he talks about the current inflation trend. According to Schiff, the current belief that inflation will slow in the new year is wrong. Instead, he expects higher inflation in 2023.

The economist told his more than 900,000 Twitter followers that the strong performance of the U.S. dollar index was not an indication of continued strength. He points out that the index had closed 2022 at a six-month low and that is what he expects to be the theme for 2023. Moreover, he adds 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 it ended the year at a six-month low, down 10% from its peak in November. This weakness will likely continue into 2023 as the dollar experiences one of its worst years. If I’m right, the #inflation problem is about to get worse.

— Peter Schiff (@PeterSchiff) December 30, 2022

As for inflation, he explains that the weakness of the dollar will see inflation worsen. He attributes this to rising consumer prices such as rent, taxes, utilities, insurance, etc. He also expects stocks that performed poorly in 2022 to continue the same trend in 2023.

Why It Could Be Good For Bitcoin

One environment in which bitcoin thrives is during periods of low dollar value. As the dollar index loses strength, investors tend to flock to other assets that have proven more effective at holding their value over time. Usually the default was gold, but with the performance of bitcoin over the past decade, the digital asset has become one of the top choices for investors.

BTC Price Trends Below $16,700 | Source: BTCUSD on TradingView.com

An example of this was back in 2021 when the dollar index hit a three-year low. In response to this, the Bitcoin price rose rapidly and would later reach its current all-time high of $69,000 in November of the same year.

The same trend was also recorded during the 2017 bull market, when the index also fell to its lowest level in three years. Both times, the weakening dollar had worked in bitcoin’s favor and propelled each bull market forward.

If Schiffs’ prediction is correct and there is further dollar weakening in 2023, then a bull rally for bitcoin is possible as investors flock to take refuge in inflation hedging. However, there are also other factors to consider such as the correlation with the stock market. If it continues to perform poorly, it could stifle BTC growth – unless there is a decoupling in the coming months.

Featured image from Verdict, chart from TradingView.com

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