Buying Bitcoin “Is Not Investing” Says Billionaire Investor Warren Buffett

Francisco Memoria
  • Billionaire investor Warren Buffett claims buying bitcoin isn't investing.
  • According to him, buying cryptocurrencies is speculating, as people just want others to buy at a higher price later on.

Berkshire Hathaway CEO and billionaire investor Warren Buffet has recently stated he believes buying cryptocurrencies like bitcoin “is not investing,” and laid out his thoughts on the crypto market during an interview with Yahoo Finance in Omaha.

According to the investor, there are two kinds of items people buy when they think they’re investing. He explained that “one really is investing, and the other isn’t.” Bitcoin, per Buffett, isn’t.

The CEO then compared investing in cryptocurrencies to other investments. He said:

“If you buy something like a farm, an apartment house, or an interest in a business… You can do that on a private basis… And it’s a perfectly satisfactory investment. You look at the investment itself to deliver the return to you. Now, if you buy something like bitcoin or some cryptocurrency, you don’t really have anything that has produced anything. You’re just hoping the next guy pays more.”

Warren Buffett

Buffet continued, adding that buying bitcoin and other cryptocurrencies isn’t investing, but speculating. Although he claimed there’s nothing wrong with speculating, he implied cryptocurrency users just buy so someone else buys at a higher price later on, which to him is a “kind of game.”

Per his words, if regulators stopped people from trading farms, apartments, or even equities, investors would still do fine. If the same happened to “some bitcoin which nobody knows exactly what it is,” people wouldn’t want to buy.

Notably, the billionaire has earlier this year poured contempt on the cryptocurrency industry, stating that he can say “almost with certainty” that cryptocurrencies would come to a bad ending.

During an interview on CNBC’s “Squawk Box,” Buffett was asked if he had considered opening a futures position to short the market. He revealed he wouldn’t do it, as he gets into enough trouble with things he knows something about, so asked “why in the world” should he take a short position in something he “knows nothing about.”

Nevertheless, he maintained cryptocurrencies would come to a bad ending, and added Berkshire Hathaway doesn’t own or short any cryptocurrencies, and “will never have a position in them.”

Altcoin Price Movements Suggest Potential Crypto Market Sentiment Reversion

  • Altcoin analysis from Crypto Cohort suggest that larger digital asset market could be making a recovery.
  • This, as prominent trader Alex Kruger notably believes the bear market has been over for 3 months now - citing fundamentally technical reasons.

The cryptocurrency market appears to be making a recovery as the prices of several altcoins surged by double-digit percentages in the past few weeks. The price of bitcoin, the world’s most dominant cryptocurrency, also appears to be in recovery mode as it’s currently trading above the $4,100 mark - according to CryptoCompare data.

According to prominent crypto trader and investor, Alex Kruger, the cryptocurrency bear market “has been over for three months now.” Kruger has also predicted that if bitcoin manages to break past $4,200, then it could potentially “mark the end of the bear trend that started in January 2018.”

Kruger: Bearish Trend Could End If BTC Surpasses $4,200

Kruger further clarified that his statements regarding bitcoin's price was “not a call.” He explained that from strictly a technical standpoint, the price movements that are considered “bearish” (which began in early 2018) should end if BTC surges past $4,200.

Meanwhile, Crypto Cohort, which provides “in-depth cryptocurrency market analysis,” has noted in a blog post, published on March 30, that bitcoin has failed to break key resistance levels of between $4,000 to $4,200. This, despite bitcoin recently recording the highest 24-hour trading volume, of over $30 billion, in the past nine months.

As confirmed in Crypto Cohort’s post, historical data suggests that “there has always been a correlation/cycle between an alt-season,” or when altcoin prices are surging, and the “relatively sideways BTC price action.” This, “as traders are constantly moving their funds” to trade or enter positions in seemingly “promising” altcoins, the post stated.

Altcoins Market Cap Dominance Keeps Rising

Available data also shows that “altcoins market cap dominance” (the top 60 cryptocurrencies by market cap, except for BTC) has been increasing steadily over the past three months as it has gone from around 19.5% to around 22%, Crypto Cohort noted. Acknowledging that the increase in altcoin dominance might appear to be quite moderate, the analysis indicates that “the highest market cap dominance of all-time for altcoins” was only of about 26%.

Moreover, this figure had “hovered between 23 to 26%” towards the end of 2017 and early 2018 - when digital asset prices recorded their all-time highs. Further examining the data for the top 60 cryptos by market cap, Crypto Cohort found that 30.4% of these altcoins had “reached [their] all-time low prices” around Q4 2018 and Q1 2019.

Altcoin Movements Suggest “Possible Reversion In Overall Market Sentiment”

Notably, in this same time period, 58.3% of altcoins “also broke through” and remained above their respective 100 day moving averages (MA).

The crypto market research group’s report also revealed that these altcoins continued to stay above the critical 100 day MA for “more than 21 days.” This, Crypto Cohort believes is “significant” because it has essentially “created higher lows ever since ... indicating a possible reversion in the overall market sentiment.”