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.”

Bitcoin Dominance May Retrace to ‘50–60% Range,’ Says Binance Research

In their latest paper, Binance Reseach has proposed that bitcoin's (BTC) dominion over the cryptocurrency market may soon subside. According to the report, BTC dominance will potentially retrace to the "50-60% range."

Researchers highlighted the recent 70% milestone that Bitcoin reached this week, a percentage which marks 29-month high. The last time Bitcoin dominance was at these levels was back in March 2017, when one BTC fetched a relatively modest price of roughly $1000.

Bitcoin dominanceBitcoin dominance at 70.28% | Source: CoinMarketCap

It seems, however, that bitcoin's days at the top may soon come to an end. Reiterating their stance, Binance suggested that BTC dominance will eventually head back down to 50 or 60%, due to the fact that bitcoin has shown stability within this range:

BTC dominance will go back down to the 50-60% range. We still believe in this, partly because BTC dominance was below 60% for an extended period, from May 2017 until June 2019.

When Altseason?

For months, during Bitcoin's supreme 180% rally this year, analysts, traders, and enthusiasts alike, have been speculating upon the phenomenon of altseason. The almost mythical altseason event typically coincides with a lull in Bitcoin dominance, which occurs when more people sell BTC. As a result, If traders are indeed exchanging their bitcoin for altcoins, an altseason could be observed.

However, dreams of an altcoin reprisal have mostly died out, thanks to the steady rise in BTC dominance.

Prominent bitcoin bull, Max Keiser, is among some of the naysayers who not only believe that altseason will never happen again, but also that altcoins, in their entirety, will cease to exist. Keiser recently took to Twitter to share his rather dismal outlook for alts:


Veteran trader Peter Brandt also believes that altcoins have had their time, going as far as to analogize alts as the lead to bitcoin's gold:

 

In response to the argument that newcomers to the space would prop up the altcoins market, Brandt retorted that 99% of cryptocurrencies would be "forgotten five years from now."

Regardless, Binance researchers still hold out hope for alts, noting that they may be necessary for mass adoption of the industry:

BTC price increases help overall crypto adoption, and altcoin performances remain mostly dependent on projects themselves. For the whole crypto industry to develop, though, we feel that altcoins must be an integral part of the maturation process.