Investors Are Thinking Back To Warren Buffett’s Early Dismissal Of Bitcoin As Cryptocurrencies Collapse
The price of cryptocurrencies has dropped to its lowest level since November 2021, and many personal finance experts have likened the unrestrained decline to a pack of cards.
Many people have been impoverished due to billions of dollars being wiped out of the cryptocurrency space, as opposed to 2021, when many new investors bet their earnings in Bitcoin, Ether, and other cryptocurrency forms following numerous cryptocurrency success stories.
For instance, the price of Bitcoin reached $ 67,566.83 in November 2021. The current cost of one bitcoin is approximately 24,307.84 dollars. Similar to Bitcoin, the price of Ethereum has fallen to $1,673.75 from a high of $4,812.09 in November 2021.
When you consider how many people invested their life savings and earnings, investor confidence has never been lower. However, Warren Buffett, the CEO of Berkshire Hathaway, has remained sceptical about cryptocurrencies despite all the clamour in favour of them and the world’s largest cryptocurrency, Bitcoin, entering the mainstream in 2021.
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Bitcoin is being brushed off as “rat poison squared”
Buffett gave the following example to illustrate why he does not consider Bitcoin to be an investable asset: “If you told me you owned all of 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? In some way or another, I would have to sell it back to you. He continued that it will stay the same, and whether it rises or falls in the upcoming year or five or ten years, I don’t know. I am fairly certain, however, of one thing: it has no effect. It has the magic to it, and people have associated magic with many different things.
Ironically, many cryptocurrency investors have come up with creative ways to put these coins to good use, like lending them out or using them as collateral to get loans from banks and other financial institutions. Until all hell broke loose and new-age investors realised that crypto coins were nothing more than risky and worthless delusion, they were the most sought-after types of investments people looked for to add to their investment portfolios.
Predicting a bad outcome for cryptos
Buffett described these coins as liabilities and a byproduct of the craze and misconceptions surrounding how one must evaluate investments in the long run. At the same time, crypto enthusiasts ignored all warning signs from conservative investors worldwide.
In 2018, Buffett told CNBC, “If you and I buy different cryptocurrencies, they’re not going to multiply. No, there won’t be a herd of bunnies waiting in front of us. They will merely remain still. And I have to hope that the next time I buy from you, you’ll be more excited after I’ve done so, and I’ll be even more excited to buy from you. We could remain seated in the house together and continue to drive up the cost. But in the end, there is just one bitcoin left, so we need to find a new recipient. They come to a close.
The well-known billionaire further stated, “I can almost say with certainty that cryptocurrencies in general will have a bad outcome. I’d be happy to buy a five-year put on each cryptocurrency, but I wouldn’t ever short a dime’s worth of it,” he replied, putting his concerns about such phoney investments to rest.
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