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Warren Buffett predicts a “bad end” for Bitcoin: is it an investment destined to fail?
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Currently sitting at #6 on Forbes’ Real-Time Billionaires List, Berkshire Hathaway co-founder, chairman and CEO Warren Buffett is a prime example of an investor who has stuck to his core financial beliefs early in life to become not only a success but a once-in-a-lifetime inspiration for those who followed in his footsteps.
One of the most trusted investors in decades, the 93-year-old Buffett isn’t shy about pontificating about his investment philosophywhich is focused on value investing, buying stocks at a price below their intrinsic value and holding them for the long term.
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He is also quite vocal about the investments he believes are useless. AND one of them is Bitcoin.
Buffett’s Approach to Bitcoin
Over the past decade, it’s been clear that the cryptocurrency craze is not something Buffett wants to be a part of. Back in 2018 he described Bitcoin as “probably rat poison squared”.
“In terms of cryptocurrencies, in general, I can say with almost certainty that they will come to a bad end,” Buffett said in 2018. And his position has not wavered since. According to Benzinga, Buffett believes that cryptocurrencies are not a profitable or valuable investment.
“Now, if you told me you had all the Bitcoin in the world and you offered it to me for $25, I wouldn’t take it because what would I do with it? I’d have to sell it back one way or another. It won’t do any good,” Buffett told the Berkshire Hathaway annual shareholder meeting in 2022.
While the Oracle of Omaha has his doubts about the unpredictability of investing, does this mean that cryptocurrencies are destined to be a doomed investment? Not necessarily.
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Is Buffett wrong about Bitcoin?
Bitcoin bulls argue that although it is not government-issued, the cryptocurrency is fungible, divisible, secure and portable like fiat currency and gold. Because they occupy a digital space, cryptocurrencies are decentralized, scarce, and durable. They can last as long as they can be stored.
Cryptocurrency advocates continue to predict massive growth in the value of the coin. Earlier this year, SkyBridge Capital founder and former White House communications director Anthony Scaramucci told reporters that Bitcoin could surpass $170,000 by mid-2025, and Ark Invest CEO Cathie Wood predicts that Bitcoin will reach $1.48 million by 2030, according to Fortune.
The story continues
“They don’t really understand the concept and the whole history of money,” Scaramucci said of cryptocurrency critics like Buffett on a recent episode of Jason Raznick’s “The Raz Report.” Because we value “traditional” currency, it is essentially worthless compared to transparent and reliable digital Bitcoin, Scaramucci said.
Currently trading around the $66,000 mark, Bitcoin will rise nearly 50% in 2024. That means it is significantly outperforming most indexes this year, including the S&P 500, which will rise about 6% in 2024.
Although Berkshire Hathaway has invested heavily in Bitcoin-related Brazilian fintech firm Nu Holdings, which has its own cryptocurrency called Nucoin, it’s possible that Buffett will never fully move into cryptocurrencies, despite the recent surge in value. This is contrary to the reliable investment strategy that has served him so well for decades.
“The impulse to participate in something that seems like easy money is a human instinct that has been unleashed,” Buffett said. “People love the idea of getting rich quick, and I don’t blame them… It’s so human, and once it’s unleashed you can’t put it back in the bottle.”
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