Warren Buffett Has the Last Laugh on Bitcoin; Here’s Why
Did Warren Buffett accurately predict Cryptocurrency market crash? Bitcoin, the industry leader, plunged 30% this month and it is down 80% since the start of this year. The largest coin is trading around $4,300 at present after hitting a 1-month low of $3,500 last week.
The rest of the market is also in the red. The total cryptocurrency market cap plunged $700 billion over the past eleven months.
The crypto market bulls, who were expecting the market to reach the new high by the end of this year, are now blaming several jittery factors for the selloff. They blame regulators, crypto exchanges, and other technical changes in the selloff of crypto coins.
Warren Buffett’s Prediction Turned True
Warren Buffett is among the biggest critics of the cryptocurrency market. He had suggested that investors avoid crypto markets; the business tycoon had claimed that crypto markets could burst anytime in the future because they don’t have any fair value concept. The big Wall Street player also raised some genuine questions over the digital coins’ potential to work as a medium of exchange and store of value.
Explaining the stance about cryptocurrency markets, Buffett had said, “If you buy something like Bitcoin or some cryptocurrency, you don’t have anything that is producing anything.” In an interview with Yahoo Finance, he also stated, “You’re just hoping the next guy pays more. And you only feel you’ll find the next guy to pay more if he thinks he’s going to find someone that’s going to pay more. You aren’t investing when you do that, you’re speculating.”
Bitcoin Fails to Work as a Medium of Exchange and Store of Value
Bitcoin and the rest of the virtual currencies neither work as a medium of exchange nor store of value despite a lot of hype. This is due to the huge amount of volatility associated with these coins. Crypto markets are historically volatile; they had the potential to gain or lose billions of dollars in a single day alone. The significant price crash and the huge amount of uncertainty associated with digital coins continue to raise questions on how Bitcoin can truly store money.
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