Pot Stock Crash Will Dent The Bitcoin Price: Peter Schiff

The common Bitcoin hater Peter Schiff believes that speculators will start dumping Bitcoin after the pot stock crash. As the latest crypto news show, crypto assets and pot stocks do not have a correlation – but Schiff’s argument stands defeated given that the two assets have entirely different characteristics.

As you already know if you are following our news, Peter Schiff does not like Bitcoin and gets really happy when the flagship cryptocurrency takes a beating. His latest statement to bring down Bitcoin is comparing the cryptocurrency to pot stocks.

“Many of the speculators who were buying pot stocks were also buying #Bitcoin. With heavy losses in the former, perhaps they will look to realize some gains in the latter or mitigate their losses before the bottom drops out of the crypto market too,” he wrote.

Many of the speculators who were buying pot stocks were also buying #Bitcoin. With heavy losses in the former, perhaps they will look to realize some gains on the latter, or mitigate their losses before the bottom drops out of the crypto market too.

— Peter Schiff (@PeterSchiff) November 15, 2019

As the CEO of Euro Pacific Capital, Schiff says that the pot stock crash will follow a crash of the same caliber for Bitcoin. The Bitcoin naysayer believes that the rally in pot stocks seen earlier this year was mainly driven by speculators who were also buying the cryptocurrency asset.

As we can see from the charts on the Marijuana Index, pot stocks have dropped big time in the past six months. The decline led Schiff to believe that BTC will face a similar fate. However, there is not much merit to Schiff and his personal view as finding a correlation between pot stocks and Bitcoin is just like finding a needle in a haystack.

The first reason which defeats Schiff and his pot stock crash – Bitcoin comparison is the fact that both asset classes are not correlated. In fact, research has shown that Bitcoin’s direction does not depend on the stock market action.

#Bitcoin is often described as an uncorrelated asset, thus a suitable hedge against risks in traditional financial markets. But is really? I've taken a look at daily returns of Bitcoin, several stock markets and Gold and the answer seems obvious: It is. Gold as well, by the way. pic.twitter.com/DSk3UJFtE4

— Michele D'Oro (@keledoro) November 9, 2019

On the other hand, Schiff’s assumption that people buying Bitcoin and pot stocks are speculators also does not seem justified. The daily volatility of Bitcoin has after all nosedived to less than 2% as BitMEX research noted. This will probably encourage more institutional investors to pour their money in the crypto asset.

Meanwhile, pot stocks lost Wall Street’s backing and the marijuana bubble has burst resulting in a pot stock crash. Legalization has hit a roadblock while illegal sales and taxation are some of the biggest pain points.