Bitcoin Price: Why Warren Buffett’s Comments Are Important
Bitcoin price (BTC) rallied 50% last month amid improving trader confidence. The market pundits, however, are predicting BTC price to reach $20,000 by the end of this year. The overall trader’s sentiments and market data have also been supporting bull’s stance. The potential institutional investment and claims for higher adaptation are adding to traders sentiments.
However, Warren Buffett – the stock market specialist and business icon, has different thoughts about the cryptocurrency markets. He refuses to invest in bitcoin and other digital currencies when several other institutional investment firms (such as Goldman Sachs) are preparing to enter the cryptocurrency trading spere.
Warren Buffett believes Bitcoin is more like gambling than investing saying: “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, the chairman of Berkshire Hathaway and the third wealthiest person in the world, is always considered to be the best stock picker. Considered the “godfather” of value investing and also the founder of the “intrinsic value” idea, he loves to invest in assets that are undervalued from their fair price.
Warren Buffett, however, thinks bitcoin and other digital currencies don’t have any underlying value to support the price movement on cryptocurrency markets. He considers cryptocurrencies are moving on speculation without any support from their underlying value and cost of production.
The cost of production of bitcoin and other digital currencies mainly depends on electricity price. Reports suggest that the cost of bitcoin mining declines below $1,000 in certain countries – primarily due to lower electricity price.
The Elite Fixture survey showed that South American countries could mine a single coin for $531. China also stands among the cheapest countries for bitcoin mining.
Although he refused to invest in bitcoin and other digital currencies, he thinks traders can take advantage of price movement based on market speculations. He added, “There’s nothing wrong with it. If you want to gamble [that] somebody else will come along and pay more money tomorrow, that’s one kind of game. That is not investing.”
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