‘They will come to a bad ending’: Just over a year since its $69K peak, Bitcoin has plummeted more than 70% — here’s why Warren Buffett has hated cryptocurrency all along
It’s been a tough year for Bitcoin and its backers. Even back in 2018, the Oracle of Omaha himself predicted that it and other cryptocurrencies were headed for trouble.
“They will come to a very bad ending,” Warren Buffett told CNBC at the time.
After hitting an all-time peak of around $69,000 per unit on November 10, 2021, the world’s leading digital currency has since erased roughly 75% of its value, sitting at $16,600 as of the end of the trading day on Dec. 19.
Holdout investors who once thought they’d missed an opportunity of a lifetime are now sighing with relief; meanwhile, those who bought in at the peak are trying not to think about their losses.
What would the world’s most famous investor say to those who might be thinking of firing up their investment apps and buying Bitcoin at a bargain price?
“If you … owned all of the bitcoin in the world and you offered it to me for $25, I wouldn’t take it,” Buffett told CNBC earlier this year.
Other than Bitcoin’s disappointing track record, here are three more reasons Buffett won’t go near it.
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1. It has ‘no unique value at all’
The billionaire investor doesn’t like Bitcoin because he considers it an unproductive asset.
Buffett has a well-known preference for stocks of corporations whose value — and cash flow — come from producing things. But cryptocurrencies don’t have real value, Buffett said in a CNBC interview in 2020.
“They don’t reproduce, they can’t mail you a check, they can’t do anything, and what you hope is that somebody else comes along and pays you more money for them later on, but then that person’s got the problem.”
Though Bitcoin is intended to provide real value as a payment system, that use is still pretty limited. As Buffett sees it, Bitcoin’s value comes from the optimism that someone else will be willing to pay more for it in the future than you’re paying today.
2. He doesn’t think crypto counts as money
Buffett has made his share of extremely cutting remarks about Bitcoin and cryptocurrency over the years: “I don’t have any Bitcoin. I don’t own any cryptocurrency, I never will,” he told CNBC back in 2020.
As a tradeable asset, Bitcoin boomed. But does it meet the three criteria of money? According to the most common definition, money is supposed to be a means of exchange, a store of value, and a unit of account.
Read more: 4 easy alternatives to grow your hard-earned cash without the shaky stock market
But Buffett calls it a “mirage.”
“It does not meet the test of a currency,” the billionaire said on CNBC in 2014. “It is not a durable means of exchange, it’s not a store of value.”
He adds that it’s a very effective way of anonymously transmitting money. But: “a check is a way of transmitting money too,” he said. “Are checks worth a whole lot of money just because they can transmit money?”
3. He doesn’t understand it
Buffett became one of …….