Peter Schiff said the Federal Reserve has already lost the fight against inflation and that continued interest-rate increases could put strong downward pressure on bitcoin and the crypto market.

Bitcoin Magazine reported on Sept. 16 that Schiff, in a discussion with Grace Remington and Sean Hagan, described bond-market instability, rising U.S. Treasury yields, weakening dollar purchasing power and increased central-bank gold buying as one connected trend.

Schiff said the bond market did not suddenly wobble recently, but had already structurally collapsed in 2020, and that what followed was a “slow rewind.” Asked how long the bond bear market could last, he replied that structural pressure matters more than short-term fluctuations. He said cutting spending and raising interest rates further would be needed to actually bring prices down.

He said such prescriptions would inevitably come with a recession, but that policymakers and politicians cannot accept it. On the possibility of additional Fed rate hikes, he said they could surprise markets but would be unlikely to restore real trust. Schiff called it a “cosmetic hike” and said tightening not backed by credibility would be unlikely to break inflation expectations.

He said the outlook is not favorable for bitcoin. Schiff said if rates rise further and the stock market undergoes a correction, it would be a very bearish factor for bitcoin and the broader crypto sector. He also said Washington’s political capital has already turned its back on crypto. On the relative moves of gold and bitcoin, he said bitcoin is 23 percent below its peak while gold rises to 5,500.

He also raised the possibility that bitcoin, valued in gold terms, may already have peaked in 2021. At that point, Schiff and the hosts clashed head-on over what actually backs bitcoin. Schiff emphasized the basis of money and the conditions required of a store of value, while the hosts argued back on bitcoin’s attributes as a digital asset.

Later in the conversation, they also compared tokenised gold with bitcoin. Schiff said the key distinction between tokenised gold and bitcoin is counterparty risk and whether there is an underlying asset. He reiterated his view that gold tokens are backed by physical gold, while bitcoin has no such backing. The hosts, meanwhile, stressed that bitcoin is a network asset that operates without a separate issuer.

The remarks were seen as again highlighting a long-running debate over gold and bitcoin as stores of value. Schiff linked the possibility of an early-stage dollar crisis with central banks’ preference for gold, and drew a line against claims that bitcoin functions as a defensive asset in such an environment. The market is therefore expected to watch how the Fed’s rate decisions, U.S. Treasury yield moves and whether stocks correct affect the relative strength of bitcoin and gold.