Economist Peter Schiff doubled down on his Bitcoin skepticism this week, declaring that the cryptocurrency's rally is finished after it failed to participate in recent gains for both tech stocks and precious metals.

The Case Against Bitcoin

Schiff laid out his bearish thesis in a post on X, arguing that Bitcoin's inability to rise alongside other risk assets signals trouble ahead. His logic is straightforward: if Bitcoin won't go up when tech stocks rally or when gold and silver hit record highs, then when exactly will it go up?

"The Bitcoin trade is over," Schiff wrote. "If Bitcoin won't go up, it can only go down. If HODLers are lucky, it won't be a slow death."

The timing of Schiff's comments is notable. They came after the Nasdaq Composite posted gains while Bitcoin languished, and as gold and silver surged to record highs without dragging the cryptocurrency along for the ride.

When Correlations Break Down

The relationship between Bitcoin (BTC) and traditional assets has gotten weird lately, and the numbers back that up.

Bitcoin's correlation with gold has basically flipped upside down this month. According to TradingView data, the correlation coefficient dropped from 0.74 on December 9 to -0.57 currently. That's a dramatic shift in a short period, suggesting Bitcoin and gold are now moving in opposite directions more often than not.

Meanwhile, Bitcoin's relationship with the Nasdaq Composite has strengthened. The correlation has climbed from 0.33 at the start of the month to 0.66 now, meaning Bitcoin is increasingly tracking tech stocks rather than digital gold.

The Bigger Picture

Here's where Schiff's argument gets more complicated. Yes, Bitcoin has struggled recently. But zoom out to a five-year view, and the cryptocurrency has absolutely demolished both the Nasdaq and gold in terms of returns.

As of 10:50 p.m. ET, Bitcoin was trading at $87,294.60, down 0.93% over 24 hours. That recent weakness masks a five-year gain of 240%. By comparison, the Nasdaq Composite is up 84.01% over the same period, while spot gold has gained 138%.

The Nasdaq closed at 23,561.84, up 0.57%, while spot gold traded at $4,492.82 per ounce, up 0.18%.

Bitcoin Bulls Push Back

Bitcoin advocate Willy Woo, who has sparred with Schiff before over cryptocurrency, offered a different interpretation earlier this week. Woo argued that Bitcoin has always functioned as a "risk-sensing instrument" that tends to lead other risk assets into bear markets rather than follow them.

In Woo's view, Bitcoin's current behavior isn't a sign of weakness but rather a feature of how the asset operates. He also suggested that Bitcoin would prove resilient in an environment where gold "fails under its own inflation bug," though he didn't elaborate on what exactly that means.

The debate highlights a fundamental question about what Bitcoin actually is. Is it digital gold, a tech stock proxy, a risk barometer, or something else entirely? The shifting correlations suggest the market hasn't settled on an answer, and Bitcoin's identity might be more fluid than either its critics or supporters want to admit.

For now, Bitcoin holders are stuck waiting to see whether Schiff's dire prediction comes true or whether the cryptocurrency finds its footing again. Given Bitcoin's history of dramatic swings in both directions, neither outcome would be particularly surprising.