Is the Bitcoin Market Worth Less than US$25, as Buffet Says?

Is the Bitcoin Market Worth Less than US$25, as Buffet Says?

Warren Buffett said if someone owned all bitcoin around the world and offered it to him for US$25

From humble beginnings in 2008 to its 2021 price peak, Bitcoin (BTC) has taken investors and the world for quite the ride. In just over a decade, the first cryptocurrency has spiked and crashed and rallied and fallen again, over and over, on the way to gaining a price in tens of thousands. Bitcoin is the king of cryptocurrencies as it strongly holds its number 1 position. Even though Bitcoin is highly volatile, many investors have high hopes for this cryptocurrency but still, few investors believe that investing in Bitcoin is nothing but putting your hard-earned cash in the dump yard. Investment guru Warren Buffett remained bearish about bitcoin, being certain the cryptocurrency would not "produce anything" regardless of its rise or fall in the future.

At Berkshire Hathaway Inc.'s annual shareholders' meeting last weekend, Buffett said if someone owned all bitcoin around the world and offered it to him for US$25, he would not take it because he would then have to sell the crypto back to that person one way or another. Buffett stressed bitcoin's lack of productivity as well.

Well, this is not the first time Warren Buffett has used harsh words against Bitcoin. In 2018 at the Berkshire Hathaway annual shareholder meeting, Buffett called bitcoin "probably rat poison squared" and warned investors against it. He has often compared the cryptocurrency to gold, saying that both assets are strictly speculative and don't produce earnings and dividends as stocks do.

Warren Buffett is not only the one

Thomas Peterffy took out a full-page ad in the Wall Street Journal in 2017 warning of the dangers that bitcoin futures posed to capital markets. These days, the Hungarian-born billionaire got well versed in crypto speak. Peterffy, worth US$25 billion, said it's prudent to have 2 percent to 3 percent of one's personal wealth in cryptocurrencies, just in case fiat currency goes to "hell."

He owns some himself, while his firm Interactive Brokers Group Inc. recently offered customers the ability to trade Bitcoin, Ethereum, Litecoin, and Bitcoin Cash, after detecting "urgency" from its clients to get in on the action. Peterffy, 77, said Greenwich, Connecticut-based Interactive Brokers will offer the ability to trade another five to 10 coins or so starting this month.

Munger has also referred to bitcoin as poison. At the shareholder meeting of The Daily Journal (DJCO), a newspaper publisher in Los Angeles where Munger serves as chairman, he called it "noxious." It was definitely a bold statement but to be fair to bitcoin bulls, both Buffett and Munger have been wrong about the cryptocurrency. Buffett in particular.

He first called bitcoin a "mirage" in 2014 — back when it was trading for about US$600. So even with the recent pullback, bitcoin has drastically outperformed the broader market, not to mention Berkshire stock and top Berkshire holdings like Apple (AAPL). That's why some cryptocurrency experts think that investors should ignore Buffett's and Munger's repeated bitcoin bashing.

Double Standards: The US$1 Billion Investment

Berkshire Hathaway made its crypto investment public with an SEC filing in February 2022. It revealed that Buffett's company had purchased US$1 billion in shares of Nubank, a digital bank based in Brazil, and the largest of its kind in Latin America.

Nubank is a so-called neobank, a type of bank that operates outside of the rules of the traditional banking system. The 'crypto friendly' digital bank's investment unit, NuInvest, allows users to put money in a Bitcoin exchange-traded fund (ETF)—tapping a financial space that Berkshire's leaders have shown little love for.

Shockingly, this most recent speculation by Buffett's organization in Nubank is not the first time they have dabbled in this market. Last year, Berkshire had effectively purchased a US$500 million stake in Nubank, months before the organization opened up to the world in December 2021.

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