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Novogratz Challenges Peter Schiff to a $1 Million Bet on Bitcoin

In a recent exchange of opinion on Twitter, Mike Novogratz has proposed an unconventional bet to Peter Schiff. Schiff, a cryptocurrency skeptical stockbroker, often publicly criticizes Bitcoin and other coins.

After a general introduction about Novogratz and Schiff, this article will deal with what we know now as “the $1 million bets” on BTC. Most importantly, we will try to look at the past views of both experts, providing the readers with both sides of the coin.

A few words about Mike Novogratz

If you have been reading about blockchain recently, you will be familiar with Galaxy Digital. The company presents itself as “the bridge between the crypto and the institutional worlds”, with Michael (Mike) Novogratz leading it.

Novogratz, a former hedge-fund manager, is famous for his strongly bullish position on Bitcoin. Some may remember him because of his famous 2017 claims on the way people would make “a whole lot of money” on the BTC speculative bubble.

In that same interview, Novogratz said that he managed to earn $250 million between 2016 and 2017. However, the following year, Novogratz lost more than half of this amount in the same market, proving the famous volatility of the industry.

Who is Peter Schiff?

Peter Schiff is the current CEO and Chief Global Strategist of Euro Pacific Capital Inc., a U.S. stockbroker. During the years, he publicly drew attention to himself following several economic predictions, such as:

  • “The United States economy is like the Titanic”, predicting in 2006 the approaching financial crisis of 2007-2008
  • “The hyperinflation […] is now far less remote”, expecting a solid inflation period following the current expansive monetary policy in the U.S.

“Economists have successfully predicted nine of the last five recessions” is a popular joke among academics in the field. The joke intends to highlight the typical overdramatization of the economy by many economists.

However, Schiff proved to be correct several times. For example, while we are still waiting for hyperinflation, he correctly spotted the real estate crisis in 2006.

The Bet proposal

When Novogratz tweeted about the recent decline in ETH prices, Schiff quickly entered the debate. The broker mockingly highlighted how ETH prices fell below those that technical analysts call “support levels”.

This answer was enough for Novogratz to challenge Schiff on the matter. The crypto bull is ready to bet $1 million that the BTC price will be above $35,000 one year from now. The broker did not answer the bet offer. However, it certainly would be interesting to see a future development on the matter.

What Novogratz is publicly asking Schiff is to put his money where his mouth is, as one could say. At the moment, we do not know whether Schiff and his company have taken any official bearish position on BTC and other cryptos.

Learning from experience

Although Schiff did not officially answer Novogratz’s proposal, many other Twitter users did. Among the answers, a user called Schiff’s tweet “a buy signal”, and his argument is amusingly interesting.

The user reminded how Schiff hinted at the end of 2020 that 2021 could be a bad year for BTC. Schiff talked about a crashing Bitcoin several days later too.

Interestingly, Bitcoin moved 19% higher after the first tweet and over 23% higher following the second claim. While correlation certainly does not indicate causation, one may argue that it is easy to be bearish during a market correction.

Looking at the future of Bitcoin

In 2021, many crypto enthusiasts were happily discussing the possibility of seeing BTC reach $100,000 soon. Looking at Bitcoin’s live price, articles on the matter may appear funny today. It would be better to study why the timing of this forecast was wrong.

First of all, crypto pundits cannot afford to disregard what happens in the other markets. The way BTC and other coins are moving in this period is that the U.S. Federal Reserve still has a significant role in the world.

The expectations of rate hikes by the Fed are creating a certain degree of pressure on Wall Street. Companies with high debt now foresee an increase in their lending costs, reducing their growth potential.

Investors see cryptocurrencies as a risky and volatile asset. As such, the recent stock market correction saw a far deeper reduction in crypto prices. Furthermore, at the moment, cryptocurrencies are proving to be a lousy hedging product against inflation.

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While  expecting BTC to reach $100,000 is not wrong, providing an exact timing to the prediction appears difficult. If we were to paraphrase Warren Buffet’s words, one could know whether to buy an asset, but not when.

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