Economist Warns Trump’s Bitcoin Push Could Undermine U.S. Dollar

Summary: President Donald Trump’s increasing endorsement of Bitcoin has sparked sharp criticism from economist Peter Schiff, who argues the move may weaken the U.S. dollar and elevate financial risk across government reserves.

Background: Trump Aligns With Bitcoin Amid Political and Economic Strategy

Former President Donald Trump has ramped up his support for Bitcoin, suggesting the cryptocurrency could create jobs and reduce economic pressure on the U.S. dollar. This pro-crypto stance comes amid a broader strategy to appeal to tech-savvy and affluent donors, including efforts through Trump Media and meme coin campaigns.

Trump’s private firm, Trump Media, raised $2.3 billion to develop a Bitcoin treasury using proceeds from stock offerings and convertible notes. In May, the White House hosted holders of the “TRUMP” meme coin, with ticket sales totaling $150 million.

Market Impact: Schiff Warns of Pressure on the Dollar

Noted economist Peter Schiff cautioned that exchanging U.S. dollars for Bitcoin reduces global demand for the greenback. In a post on X (formerly Twitter), Schiff said, “Selling dollars to buy Bitcoin puts added pressure on the dollar,” calling the practice “harmful to our country.”

Pandering to his donors and to promote his family business, Trump claimed that Bitcoin “takes pressure off the dollar and is good for the country.” But selling dollars to buy Bitcoin puts added pressure on the dollar. Also, wasting resources on Bitcoin is harmful to our country.

— Peter Schiff (@PeterSchiff) June 28, 2025

Bitcoin has soared over 30% in 2025, with many treating it as a hedge against inflation. However, Schiff warns that large-scale dollar-for-Bitcoin conversions could deteriorate the U.S. dollar’s role as the world’s reserve currency and threaten macroeconomic stability.

Strategic Bitcoin Reserves and State Involvement

The federal government reportedly does not intend to sell U.S. dollars to fund its Bitcoin strategy. Instead, it plans to use assets seized through criminal and civil forfeiture to establish a Strategic Bitcoin Reserve.

States such as Texas and Florida have also shown interest, allocating capital to hold cryptocurrencies on their balance sheets. While proponents argue this modernizes public finance, critics warn these reserves could be highly vulnerable to market volatility.

Reactions: Political Agenda or Economic Policy?

Schiff claims Trump’s Bitcoin push is primarily politically motivated. “This is a ploy to attract crypto-based support,” he said, suggesting the initiative is less about long-term monetary stability and more about expanding political donations from wealthy crypto investors.

Financial analysts echo concerns over the high risk associated with holding crypto on government balance sheets. A sudden market downturn could erase public funds dedicated to Bitcoin reserves, intensifying fiscal deficits.

Trump Family’s DeFi Expansion

Separately, the Trump family’s financial firm, World Liberty Financial, secured a $100 million investment from Aqua 1 to grow its footprint in decentralized finance (DeFi). Donald Trump Jr. stated that restrictions from traditional banks led the family to pivot to cryptocurrencies.

Critics argue the move aligns with a broader effort to attract funding and influence from the crypto sector rather than purely financial necessity. Regardless, it underscores the Trump family’s continued high-stakes commitment to emerging digital asset markets.

Featured image from MediaNama, chart from TradingView