Bitcoin (BTC) is not an investment, but a rat poison squared that will not end well, according to billionaire investor Warren Buffett. Sharing the same sentiments is longtime business partner, Charles Munger, who insists there is no merit in investing in cryptocurrencies.
How accurate the remarks are, is a point of discussion, as Bitcoin has shown signs of resilience backed? by a valuable underlying technology in the name of blockchain. According to some observers, the trio doesn?t have a clear understanding of what cryptocurrencies are all about.
However, Buffett insists on buying an asset that produces a product that everyone can see. That according to him cannot be said about Bitcoin, given that its price has only risen because people are willing to pay more.
“You’re just hoping the next guy pays more. And you only feel you’ll find the next guy to pay more if he thinks he’s going to find someone that’s going to pay more,? says Mr. Buffett.
For how long people will continue to buy the cryptocurrency, is the million dollar question of which Mr. Buffett believes will have a bad ending.
Buffett sentiments have in some occasions turned out to be true, but not with the magnitude envisioned. For instance, Bitcoin imploded from record highs of $20,000 to the $6,000 mark early in the year, amidst concerns of a potential bubble burst in the space.
Fast forward temperatures have cooled, and the cryptocurrency has bounced back to the $9,000 mark awaiting to see if it will stabilize above the $10,000 mark, a critical psychological level.
Why Buffett Might be wrong
The probability of Mr. Buffett being wrong about Bitcoin’s long-term prospects is very high. A closer look at Buffett investment career, it is clear that technology space has never been his area of competence.
His investment in International Business Machines, a company that went on to report 22 quarters of losses, is an excellent example of why the most successful investor could as well be wrong about bitcoin and cryptocurrencies at large.
Nokia paid a hefty price for failing to adapt as the phone industry evolved with the emergence of the smartphone technology. The same could be said about Buffett as he has continued to take a swipe at bitcoin even though it has shown signs of trading higher and sticking around much longer.
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