Why Has 'Mr Wonderful' Changed His Mind About Bitcoin?

Neil Dennis

Billionaire investor Kevin O'Leary has seemingly changed his mind on bitcoin. In this article we'll take a look at potential reaons for this.

O'Leary is a venture capital investor and former owner of software companies, now more famous for his seat on the Shark Tank U.S. TV show and his frequent appearances on financial news channel CNBC. He is certainly outspoken, and often takes the opposing view to other CNBC panelists. This devil's advocate role adds theatre to the channel's flagship shows such as Squawk Box.

But is he really a hypocrite, or merely an investor who no longer trusts an asset class after getting burned? The evidence collected so far could point either way. Let's examine some of the things he's said on live media in recent months.

His 2019 Opinion

In May this year he questioned why anyone would want to invest in bitcoin. He said:

When people put money into this they make no interest they can't pay their taxes with it and the regulators don't like it.

In July, O’Leary offered his concerns that there were still few cohesive rules behind the legitimate trading of cryptocurrency. He said he had "no interest in doing any of this crypto crap" because it "is not compliant and regulators in every country do not agree."

He added - suggesting bitcoin is too often being used for criminal activity: 

I don't want to get involved with a drug dealer trading a bitcoin somewhere - I don't want to be involved in that.

He did suggest, however, that once regulators were preaching from the same prayer book, he might be interested in investing in the sector. He mused:

When is this industry going to get properly regulated so I can play baseball there?

His 2013 Opinion

However, back in a 2013 interview he said on Canadian media after a precipitous fall in the bitcoin price:

This is a proxy for the mistrust people have in central bankers. If you don't trust any other currency this is where you go.

Questioned on whether he thought bitcoin was merely a fad and would soon disappear, he was unambivalent, saying he ignores everything "until it gets to a $1 billion in market cap." At the time BTC had just reached said market cap, which led O'Leary to asset "it's here to stay."

But when asked by the presenter if it was all "hocus pocus", or whether it was a legitimate currency to trade, he said:

It is [a legitimate currency]. And as soon as it passed a billion [market cap] ... in my books, as an investor, it became real.

He concluded that he was going to start looking at it as an investment and maybe put 2% to 3% of his asset allocation into the sector.

There's The Rub

Indeed, he did hav a small amount of cryptocurrency under his name: as covered, two years ago he received $100 in several cryptocurrencies including bitcoin, bitcoin cash, XRP, ether and lumens. 

He's currently 70% down on these investments. This, perhaps explains his change of heart over cryptoassets better than accusations of his perceived hypocrisy or vacillation.