After Peter Schiff spent the last 2 months predicting a drop in the price of Bitcoin to $1,000, no such price plummeting has occurred. Bitcoin recently traded at a 3-month high of $8,700, which is not making Mr. Schiff’s clairvoyance skills look too good.
Using some technical analysis jargon, Schiff had said that a classic head-and-shoulders price pattern was manifesting that would soon lead to the drop of Bitcoin’s price to lows not seen in the last 3 years. In his words:
“The right shoulder is now shrugged and the neckline slanted and parallel to the shoulders. If it breaks the price objective for the dump is $1,000 to complete the pattern.”
Gold Versus Bitcoin
Technical analysis aside, what makes this doubly embarrassing for Schiff is the fact that gold has dropped 4% in the last week or so. It is now trading in the $1,500 range, which would represent breaking through several support levels in the last few weeks.
Many investors have assumed that gold and Bitcoin would have a high correlation in times of uncertainty or geopolitical strife, however this has not been the case so far in 2020. Following the airstrike that killed Iranian General Soleimani in Iraq, Bitcoin’s price began a slow rally and gold was unresponsive.
Although it is not yet that far into the year, Bitcoin beating gold’s performance could be viewed as an indicator that the 2020s are going to be an even stronger decade for the top cryptocurrency.
At the end of 2019, Schiff was reveling in his observation that Bitcoin was the only asset class not rallying, but these words have quickly lost their pull.
Schiff’s Belief of Gold Superiority
Schiff has long been part of the camp that considers gold to be far superior to Bitcoin in terms of fundamentals. The main point he continually harps on is that there is no intrinsic value to Bitcoin and it is just a bunch of 0s and 1s in a computer. Gold, on the other hand, is in high demand for use in electronics and can also be used as jewelry.
These arguments may help to cap the downside on gold, however, the demand for gold jewelry is never going to be enough to prop up the price of gold in any significant way. In terms of upside, gold has been around for thousands of years and should be considered to be stabilized in price. Bitcoin does not have the same stability, and as it tries to “find” its fair market price and more Bitcoin investors come online, it will have lots more room to run.