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Warren Buffett predicts a “bad end” for Bitcoin: is it an investment doomed to failure?
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Currently sixth on Forbes’ Real-Time Billionaires List, Warren Buffett, co-founder, chairman and CEO of Berkshire Hathaway, is a prime example of an investor who stuck to his core financial beliefs from a young age to become not only a success, but a unique inspiration to those who followed in his footsteps.
One of the most trusted investors in decades, Buffett, 93, is quick to pontificate on 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 open about investments he considers worthless. And one of them is Bitcoin.
Buffett’s View on Bitcoin
Over the past decade, it has become clear that Buffett does not want to participate in the crypto craze. He described Bitcoin as “probably rat poison squared” in 2018.
“When it comes to cryptocurrencies, in general, I can say with almost certainty that they will meet a bad end,” Buffett said in 2018. And his position hasn’t changed since. According to Benzinga, Buffett believes that cryptocurrencies are not a viable or valuable investment.
“Now, if you told me you own all the Bitcoin in the world and you offered it to me for $25, I wouldn’t accept it, because what would I do with it? I’ll have to sell it to you one way or another. It won’t do anything,” Buffett said at Berkshire Hathaway’s 2022 annual shareholder meeting.
Although the Oracle of Omaha has doubts about this unpredictable investment, does this mean crypto is doomed to failure as an investment? Not necessarily.
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Is Buffett Wrong About Bitcoin?
Bitcoin proponents argue that even though they are not government-issued, cryptocurrencies are as fungible, divisible, secure and portable as fiat currency and gold. Because they occupy a digital space, cryptocurrencies are decentralized, rare and durable. They can last as long as they can be stored.
Crypto boosters continue to predict massive growth in the coin’s value. Earlier this year, Anthony Scaramucci, founder of SkyBridge Capital and former White House communications director, told reporters that Bitcoin could surpass $170,000 by mid-2025, and Cathie Wood, CEO of Ark Invest , predicts that Bitcoin will reach $1.48 million by 2030, according to Fortune.
The story continues
“They really don’t understand the concept and the whole story of money,” Scaramucci said of crypto critics like Buffett on a recent episode of Jason Raznick’s “The Raz Report.” Because we place value on “traditional” currency, it is essentially worthless compared to transparent and trustworthy digital Bitcoin, Scaramucci said.
Currently trading around the $66,000 mark, Bitcoin is up nearly 50% in 2024. This means it is massively outperforming most indexes this year, including the S&P 500, which is up by ‘around 6% in 2024.
Although Berkshire Hathaway has invested heavily in Bitcoin-related Brazilian fintech company Nu Holdings, which has its own cryptocurrency called Nucoin, it’s possible that Buffett will never fully turn to crypto, despite its recent rise in value. This flies in the face of the reliable investment strategy that has served him very well for decades.
“The urge to participate in something that resembles easy money is a human instinct 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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