Warren Buffett and Charlie Munger Reiterate Harsh Words Against Bitcoin, But it Doesn’t Matter

Warren Buffett and Charlie Munger Reiterate Harsh Words Against Bitcoin, But it Doesn’t Matter

Because as Avichal Garg of Electric Capital puts it, “they were the best investors of the industrial age. But we are now in the software age,” and they are already having a hard time catching up.

Warren Buffett avoided talking about Bitcoin during the recent Q&A session at Berkshire Hathaway’s annual shareholder meeting, saying he doesn’t want to make the herd of longs mad.

However, the “Oracle of Omaha” did agree with Berkshire Vice Chairman and his longtime business partner Charlie Munger’s assessment of the trillion-dollar cryptocurrency.

As for what Munger had to say, which was a lot and not at all positive.

“Of course, I hate the bitcoin success,” said the 97-year-old Munger.

From here, he goes on to point out how Bitcoin is a currency that is useful to kidnappers and extortionists, and he doesn’t welcome such currency, and neither he likes to “just shuffling out of your extra billions of billions of dollars to somebody who just invented a new financial product out of thin air.”

“I think I should say modestly that the whole damn development is disgusting and contrary to the interests of civilization.”

This is no surprise coming from Munger because both he and Buffett have long been criticizing cryptocurrencies. And, of course, the crypto twitter (CT) didn’t like it one bit, to say the least.

While some pointed out how Munger had such harsh words for Bitcoin when the legendary investors themselves were involved with the sugar industry, responsible for obesity and diabetes, others noted that they missed out on the tech stocks as well.

It has only been recently that the duo became bullish on tech stocks and saw valuations of mega-cap as not “crazy” because of incredibly low rates on short-term government debt or Treasuries.

Trader and economist Alex Kruger, saying, “money managers that don’t adapt to technological changes have a hard time outperforming,” which they are currently having.

“They haven’t beaten the market since the market came to be dominated by software. They missed the biggest revolution in business and society since the industrial revolution,” said Avichal Garg of Electric Capital.

“They were the best investors of the industrial age. But we are now in the software age.”

Berkshire, meanwhile, is sitting at a cash pile of more than $145 billion at the end of 2021’s first quarter.

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Author: AnTy

Bitcoin Sellers Are Running Out of Ammo; Sees Green Start of the New Month

Meanwhile, Warren Buffett says Fixed-income investors worldwide, from pension funds, insurance companies to retirees, all are facing a “bleak future.”

Last week has been a brutal one for Bitcoin as the prices continued to go lower and lower. The low, for now, has been set at around $43,100, representing a drop of 26% from the Feb 21 high of about $58,300.

“BTC has not yet seen a capitulation wick but sellers running out of ammo,” commented trader and economist Alex Kruger. “Stocks & bonds opened sharply higher. Playbook is strong week up, not just a strong open.”

Still, another drop lower will take us to the January high of $42,000, which still won’t be anything out of the ordinary.

During the 2017 bull cycle, Bitcoin had several drawdowns of an average of 30% to 40%, and such a pullback this time would take us just under $35,000. This means we can see another leg lower especially given that March is not historically a bullish month for Bitcoin rather just the opposite.

$45k is actually very strong support, and “any dip into $39k is a no-brainer BTFD,” said on-chain analyst Willy Woo.

Moreover, the recent sell-off has been ignited by the macro environment. As we reported, the stock market has been dragging Bitcoin down along with it in the aftermath of bond prices soaring.

The sudden US treasury lift-off has been on the changing outlook for inflation and economic growth following unprecedented stimulus and monetary easing along with the increasing COVID-19 vaccinations. This further pushed the US dollar up.

Still, with the recent uptrend, the rates have only gone to pre-COVID levels. Even Warren Buffett mentioned it in their annual letter to his followers Saturday where he wrote, “bonds are not the place to be these days.”

The billionaire mentions how the yield on 10-year U.S. Treasury bonds has fallen 94% from Sept. 1981 levels. “Fixed-income investors worldwide – whether pension funds, insurance companies or retirees – face a bleak future,” reads the letter.

Commenting on this, Bitcoin bull MicroStrategy CEO Michael Saylor said if we agree with this that “bonds are broken as a store of value, then corporate treasury reserve strategies employing bonds no longer work to preserve shareholder value,” and of course, the answer according to him is the leading cryptocurrency.

Buffett, however, didn’t mention Bitcoin, Robinhood, or WallStreetBets in his letter at all. Meanwhile, his company’s cash stockpile, known for being massive, has come down a bit to $138 billion.

A low yield has been actually positive for Bitcoin and risky assets; as such, rising yields impact the prices in the market.

On the first day of March, Bitcoin went just over $48k, making a green start of a new month, following positive sentiment in the risky asset driven by three variables: bond panic over, Powell to calm markets, and fiscal package approved, noted Kruger

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Author: AnTy

Banking Sector Bleeds in 2020 While DeFi Records 900% Growth

In 2020, we saw the Oracle of Omaha, Warren Buffett selling all his positions in banks that included; Goldman Sachs, JPMorgan Chase, Wells Fargo, and others.

Given that the banking sector of Dow Jones, Nasdaq, and S&P 500, all three remain under losses, negative 35% returns YTD, it makes sense that even Buffett has jumped the ship.

In the current environment of ultra-low interest rates, banks are struggling to remain profitable.

But while centralized financing is suffering, Decentralized Finance (DeFi) has emerged in the crypto market as the latest craze which is seeing explosive growth.

The DeFi Boom

On January 1st, 2020, the total value locked in the DeFi sector was $680.9 million, which has now grown to $6.67 billion in just eight months.

The total market capitalization of the top 100 DeFi coins is close to touching $14 billion, as per CoinGecko. The biggest gainers of this sector this year include LEND (6,280%), REN (1,300%), KNC (835%), YFI (789%), LINK (650%), and SNX (480%).

The blockchain underpinning majority of the DeFi development, Ethereum is also up 209% YTD. Also, a record 4.6 million Ether are locked in these DeFi protocols along with 47.8k BTC.

“From a portfolio standpoint I want to be long the asset that is driving the market with real demand. ETH is a newer trade than the traditional trade of BTC vs central banks printing money,” said trader CryptoISO.

“Rocket Fuel” for DeFi Growth

The DeFi sector is seeing a new wave of financial experiments which is tokenizing everything from money, debt, mortgages, to insurance.

As Asheesh Birla, SVP of Product at Ripple notes, “We’re seeing a melding of the old world and new. It’s only a matter of time before banks offer custody services, acquire companies with those capabilities, and potentially even offer crypto lending as they see consumer interest in DeFi.”

Decentralized exchanges, with no central operator, in the crypto world, are already giving centralized exchanges a run for their money. Fiat-backed stablecoins have been providing the fiat on and off-ramps while enabling global consumers to access the USD without a bank account through the likes of Tether (USDT).

But within this sector, a new wave of Yield Farming is what is taking DeFi world by storm. It is basically serving as “rocket fuel” for the current growth cycle in DeFi, states Delphi Digital in its latest report.

Yield farming is generating the most returns on your crypto assets, and since people started chasing high yields, many ‘experiment” projects have cropped up in this really short period. It started with Compound and only grew from there to the likes of Yearn.Finance (YFI), Balancer, YAM.Finance, the Curve-Ren-Synthetix mix, and so much more.

But Not Without the Risks

As we reported, the skyrocketing Ethereum transaction fees are pricing out smaller layers and making DeFi increasingly a game of whales.

Another big question is: Are these governance DeFi tokens, that are at the heart of DeFi’s explosive growth, really that decentralized? According to the Token Daily report, the distribution of these tokens might not be that different from the ownership structure of JP Morgan or Bank of America.

For starters, the investors of these DeFi projects control a “disproportionately large amount of votes,” such as more than 13% of the voting power for Compound is controlled by the top 10 addresses.

Also, “In yield farming, funds and wealthy investors, aka whales, are maximizing their benefit/share of governance tokens using recursive provisioning of liquidity. This ultimately leads to a concentration of these tokens into the hands of a few players/farmers.”

Although with liquidity mining as with Yearn.Finance, a new dynamic of money distribution is being added; large gatekeepers still have a big influence on the protocol, which could be even more concentrated than the centralized options.

Moreover, all this craziness will inevitably invite “difficult legal questions and regulatory scrutiny,” said Jason Somensatto, senior counsel at 0x Labs. But in the end, he hopes, it will leave a “healthier ecosystem.”

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Author: AnTy

Bad Move Buffett as Berkshire Hathaway CEO Lost Over $200 Million on Amazon vs Bitcoin Investment

Bad Move Buffett as Berkshire Hathaway CEO Lost Over $200 Million on Amazon vs Bitcoin Investment

Back in the middle of May, The CEO of Berkshire Hathaway, Waffen Buffett made the news headlines in a big way thanks to his rather lavish spending in the pool of Amazon Equities. As of May 15th, Berkshire Hathaway officially added an extensive amount of Amazon stock to its portfolio for the very first time.

Just how big of acquisition was this? According to news reports, Berkshire has executed a staggering acquisition of 904 million dollars for the international retail giant shares. Over the last few months, this specific investment had managed to perform quite well over the next two months.

While this is something to take on in solace, Amazon has not managed to do anywhere near as well as the price of Bitcoin over the same span of time. So how much does this all equate to? We’ll be taking a look at just how much the ‘Oracle of Omaha’ managed to lose out on by buying into Amazon instead of buying into Bitcoin.

A Stake in the Amazon – What Buffett Lost out on

During the same day that Berkshire Hathaway successfully completed this acquisition, Amazon Stock effectively traded for $1,871 by market close on the same day. According to market reports two hours before the close of business on Thursday, these same shares managed to trade at a price of $1957, demonstrating a rally from the days previous losses from the day when the market slipped from $1,980 per share during the beginning of trading that day.

According to news reports from the same day, the record number of sales during the Prime Day sale helped send Amazon stock higher.

CCN Markets – @CCNMarkets,

“Prime Day Blowout sees Bullish Amazon Stock Aiming to Deliver All-Time High: Amazon Prime Day may be over with technical and fundamental factors aligning, investors should consider the company’s stock.”

All in all, that is not at all a bad kind of return for Warren Buffett making this investment over just two months, and is a particular impressive Return on Investment. Since May 15th, for example, Berkshire’s stake in Amazon ultimately grew from an initial value of $904 million to $945 million in the space of mere months.

Overall, this makes for a 4.6 percent return on investment and more than $41.55 million worth of profit for shareholders in Berkshire Hathaway.

There’s certainly no arguing that it was a great move by Buffett, but what would have happened if he suddenly decided to pour this investment capital into Bitcoin on May 15th instead of going into Amazon? A whole lot more than from Amazon.

Bitcoin’s Price Skyrockets, Outmatching Amazon by 600 Percent

During the same time as Buffett decided to invest in Amazon, the price of Bitcoin officially peaked afte what amounted to a two week long bullish run, sending its value peaking at more than $8,250. From here, it then traced what we refer to as an ascending wedge pattern, allowing it to edge just past the $8,800 mark by the beginning of June.

This was all before pulling back to the low $7,500 range in Mid-June, all before successfully launching beyond the $13,000 level before the end of the same month. Moving forward, by July, the price of Bitcoin had managed to endure a pretty turbulant ride between its lower support of $9,500 and its upper resistance point of $12,000.

As Amazon stock managed to reach a peak in trading at $1,957 on the NASDAQ as of 2pm EDT on Thursday this week, Bitcoin was also trading at the same time on the cryptocurrency exchange – Coinbase – for a total of $10,540 USD. Directly comparing this with Amazon’s return on investment for Berkshire Hathaway, Bitcoin would have provided a 27.75 percent ROI if the company would have held BTC since mid-may, in stark contrast with Amazon’s 4.59 percent return.

Ultimately, what this would have meant is 604 percent more Return on Investment for the ‘Hodlers.’

CCN – @CCNMarkets,

“Newsflash – Bitcoin Price Skyrockets to $10,000 to Reverse its Brutal Plunge: The bitcoin price skyrocketed back across the $10,000 threshold on Thursday, reversing much of the cryptocurrency’s recent plunge.”

If, hypothetically, Warren Buffett had decided to go for an investment strategy much more akin to the likes of entrepreneurs like Tim Draper or the Winklevoss Twins, and acquired more than $904 million worth of Bitcoin on May 15th, he would have effectively been holding an investment worth $1.15 billion as opposed to $945 million.

So, rather than walking away with $41.55 million over the last two months, Berkshire Hathaway could have effectively made off with more than $250.93 million.

As a result of Buffett’s choice, in choosing to invest in Amazon, the CEO of Berkshire Hathaway had managed to leave more than $209 million on the investment table. There’s no discrediting the kind of sage advice and wisdom that Buffett can provide in the world of investment.

They don’t call him the ‘Oracle of Omaha’ for no reason. But, by taking the more dismissive stance of calling Bitcoin a ‘Delusion’ he has effectively dismissed more than 200 million dollars worth of ROI.

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Author: James Fox