Peter Schiff Challenges Bitcoin’s “Digital Gold” Status Amidst Geopolitical Volatility

Economist Peter Schiff is once again questioning the notion of Bitcoin as a “digital version of gold,” reigniting a long-standing debate. His renewed criticism comes after global markets reacted sharply to news of Israeli airstrikes targeting Iran, where gold surged while Bitcoin experienced a notable decline below $103,000. The recent market movements, which saw a broad selloff in crypto assets despite steady institutional inflows into Bitcoin ETFs, have fueled discussions about Bitcoin’s credibility as a safe-haven asset.

Schiff articulated his stance, observing the contrasting market responses: “Israel attacks Iran. Oil prices jump 5% while S&P futures fall 1.5%. In response, investors seeking a safe haven buy gold, sending its price up 0.85%. Meanwhile, investors dump Bitcoin, pushing its price down 2%. How can anyone consider Bitcoin to be a digital version of gold?” he wrote, highlighting what he perceives as a fundamental divergence in behavior during crises.

On Friday, following reports of Israeli strikes on Iranian nuclear facilities and military commanders, Bitcoin’s price dipped below $103,000 during intraday trading. This escalation unsettled global markets, leading traditional safe-haven assets like gold, U.S. Treasuries, and the Swiss franc to appreciate. In stark contrast, Bitcoin and other digital assets witnessed a widespread selloff, with Ethereum falling nearly 9% and altcoins such as Solana, Avalanche, and Chainlink plunging between 8% and 10%.

This market downturn wiped out over $140 billion from the total global crypto market, which settled at $3.24 trillion. Analysts pointed to Bitcoin’s failure to hold above the $105K–$106K support zone and its rejection at the $110.5K level as indicators of a short-term trend reversal. The swift market reaction led to the liquidation of over $1.4 billion in long positions as traders rapidly moved to hedge their risks.

Despite this heightened volatility, institutional investment flows into Bitcoin remained consistent. BlackRock’s spot ETFs, for instance, reportedly acquired 2,650 BTC and 36,640 ETH on June 12, just days before the geopolitical shock.

Critics like Schiff contend that Friday’s market behavior underscores Bitcoin’s limitations as a reliable safe-haven asset during periods of instability. Gold, in particular, solidified its position amidst the uncertainty, while crude oil prices soared by nearly 10% due to supply concerns, with Brent crude reaching $78.50 a barrel—its highest since January 27—marking its sharpest weekly gain since 2022.

However, proponents of cryptocurrency maintain that short-term price fluctuations do not invalidate Bitcoin’s long-term value proposition. They assert that Bitcoin’s underlying fundamentals remain robust and that its utility as a decentralized, non-sovereign asset continues to be significant, especially during extended periods of monetary instability.

As the situation in the Middle East continues to develop, this episode provides fresh arguments in the ongoing discussion surrounding Bitcoin’s role in the global financial system. The question of whether it can consistently function as a safe-haven asset during geopolitical crises remains a key point of observation for Schiff and many other financial observers.