Bitcoin was closing in on $10,000 before dramatically falling almost 6% on Sunday (and another 2% on Monday) after comments from American business magnate Warren Buffett.
Warren Buffett, who is the CEO of American multinational conglomerate holding company Berkshire Hathaway, has not been shy about his negative view towards cryptocurrencies.
He’s often compared Bitcoin to gold, stating that both are speculative in nature and have limited earnings in comparison to stocks.
Before Berkshire Hathaway’s annual meeting last Saturday, Buffett told CNBC that bitcoin was “probably rat poison squared”.
He made fun of cryptocurrency at the company meeting again, diminishing its ability to produce any real dividends.
“If you had bought gold at the time of Christ and you figure the compound rate on it, it’s a couple tenths of a percent,” he joked.
His longtime friend and business partner Charlie Munger was even more stark in the way he shared his views.
“I like cryptocurrencies a lot less than you do,” Munger reportedly told Buffett. “To me, it’s just dementia. It’s like somebody else is trading turds and you decide you can’t be left out.”
Although the opinion of two of the most successful investors in the world is something to definitively take into account, their gloomy predictions around cryptocurrencies have not cemented entirely.
Buffett called Bitcoin a “mirage” back in 2014 when it was trading for about $600. If we take into account that it’s going for almost $10,000 today – well, we could certainly say it’s no mirage.
And that’s without even mentioning that it’s outperforming the stock of Buffett’s own company.
Some cryptocurrency analysts believe investors should scrape Buffett’s and Munger’s repeated Bitcoin criticisms altogether.
“What I do find monumentally baffling is that two of the world’s most successful investors cannot see the intrinsic value of some form of cryptocurrency,” says Nigel Green, CEO of financial consulting firm deVere Group.
“Do they honestly believe that there is no place for, and no value of, digital, global currencies in an increasingly digitalized and globalized world?”