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.”

HODL: Tom Lee Reaffirms BTC's Full-Year Gains Are Generated in Only 10 Days

Francisco Memoria

Tom Lee, the head of research at Fundstrat Global Advisors and a well-known bitcoin bull, has recently reaffirmed that his research has shown bitcoins’s full-year returns are generated in only 10 days, hinting that HODLing makes sense.

On social media, Lee referenced this week’s crypto market rally, Lee noted that it can serve as a reminder that bitcoin, the flagship cryptocurrency, has historically generated its annual gains in 10 days.

Lee’s research was initially revealed last year, and it showed that, since 2013, the flagship cryptocurrency needed only 10 days or less to see its full-year returns. At the time, Lee used 2017 as an example, noting then “a total of 12 days” represented the cryptocurrency’s full-year return.

According to the Wall Street analyst, if an investor didn’t hold on to stocks through the 10 best days for the S&P 500 each year, his annualized return would drop from 9.2% to 5.4%. Comparatively, if an investor doesn’t hold BTC for its top 10 days, his annualized return would drop to -25%.

Lee’s recent tweet came as a reminder the HODLing makes sense for those investing in BTC. In the last few days the flagship cryptocurrency has been seeing its price rise significantly, so much so it’s up 41.3% in the last 30 days, according to CryptoCompare data.

What’s behind BTC’s price surge is unclear, although some analysts believe various factors could be involved. The cryptocurrency last month saw a ‘golden cross’, and Fidelity Investments is reportedly going to “buy and sell” the crypto for institutional clients in the next few weeks, showing technicals are improving, as well as adoption.

Tom Lee is a notable bitcoin bull as he’s made various bullish predictions regarding the cryptocurrency’s future price. Last year, he predicted it would hit $25,000 by the end of 2018, and that it would hit $91,000 by March of 2020.