Charlie Munger: Bitcoin is an “Artificial Substitute for Gold,” Recommends Buying Neither

Charlie Munger: Bitcoin is an “Artificial Substitute for Gold,” Recommends Buying Neither

The 97-year old vice-chairman of Warren Buffett’s Berkshire Hathaway also can’t decide which is “worse” Bitcoin at $50k or Tesla at $1 trillion.

Charlie Munger, the longtime business partner of Warren Buffett, recommends against buying Bitcoin or even gold. Munger at the Daily Journal annual meeting on Wednesday said.

“I don’t think bitcoin is going to end up the medium of exchange for the world. It’s too volatile to serve well as a medium of exchange.”

97-year old vice-chairman of Buffett’s Berkshire Hathaway said Bitcoin reminds him of Oscar Wilde’s comment about fox hunting, “the pursuit of the uneatable by the unspeakable.” He has no love lost for bullion either.

“(Bitcoin) is really kind of an artificial substitute for gold, and since I never buy any gold, I never buy any bitcoin. I recommend that other people follow my practice.”

The chairman of Daily Journal, a newspaper publisher and software developer, said, “will not be following Tesla into bitcoin.” Earlier this year, the electric car maker bought $1.5 billion worth of Bitcoin.

As a matter of fact, he doesn’t know which is “worse” — Bitcoin at $50k or Tesla with a fully diluted enterprise value of $1 trillion.

Quoting author Samuel Johnson, “I can’t decide the order of precedency between a flea and a louse.” Munger said, “I feel the same way about those choices,” adding: “I don’t know which is worse.”

This isn’t nothing new; back in 2018, he said trading in cryptocurrencies is “just dementia.”

During the meeting, Munger also had a warning for stock market speculators and criticized trading platforms for enabling them.

According to him, the stock market is bearing signs of a bubble because everybody wants to hold stocks at higher price-earnings multiples when interest rates are low, and he thinks “it must end badly, but I don’t know when.”

He recommended shareholders to be more sensible and not to crowd into stocks just because they are going up and they like to gamble.

Munger likened the Gamestop (GME) traders to those who would bet on racehorses.  He added,

“It’s very dangerous, and it’s really stupid to have a culture which encourages as much gambling in stocks by people who have the mindset of racetrack bettors.”

As for the new type of brokers like Robinhood allowing that to happen, he believes “civilization would do better without it” and “Wise people just stay out of them.”

He then went on to blasting SPACs, saying “the world would be better off without them,” adding: “The investment-banking profession will sell shit as long as shit can be sold.”

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Author: AnTy

Rising Treasury Yields are a Danger to Bitcoin & They Are Soaring Right Now

The ongoing yield debacle is not good for risky assets and gold, and the leading digital currency is still struggling to recover from the losses.

Risky assets are back on the incline as Treasury yields ease off after hitting multi-year highs on Thursday. Also, the Federal Reserve Chairman calmed the nerves by committing to keeping the interest rates low and that it will continue to pump money into the economy.

In the early hours of Thursday, 10-Treasury yields jumped to 1.427%, last seen in March 2020, but ended the day lower at 1.3740%. Yields on 30-year Treasury soared to 2.888%, Dec. 2019 high to end lower at 2.226%. Bond prices and yields have an inverse relationship.

Today, they both are back on the rise by about 0.059%.

“Bonds puking, again… Need this to stop going down (i.e., rates going up) to have nice things,” said trader and economist Alex Kruger.

The 30-year German yield has also turned positive, rising to 0.2% from -0.2% in three short months. German 10-year yields are still negative though at -0.3%.

This spooked the central bank, and now “the ECB is closely monitoring the evolution of longer-term nominal bond yields,” said European Central Bank President Christine Lagarde this week.

Fed, however, is not that concerned when asked about the rise in yields; Jerome Powell said, “It’s a statement of confidence on the part of markets that we will have a robust and complete recovery.”

Rates going up is negative for stock valuations, particularly tech, and assets that benefited from negative real yields the most, gold and bitcoin, Kruger said,

“The thesis is the Fed will intervene to bring rates down.”

“If that trend is not stopped hold on to your horses because risk assets, gold and highly likely bitcoin as well are all in for a very rough ride down. You want to watch interest rates like a hawk.”

Risk On or Off?

This fall in yields, meanwhile, has sparked a rally in stocks. S&P 500 is yet again reaching its peak at nearly 3,935 from Feb. 12.

Tech-heavy Nasdaq, which slid 5.6% this week, is back at 13,600, still in need of a pump to hit its 14,095 all-time high from Feb. 12.

“In institutional circles, corporate treasuries are often looked down on as dumb money,” notes Kruger.

While stocks are clearly enjoying this fall in Treasury yields, the same is not the case for the traditional safe-haven asset.

Gold is not having a good week, and today the spot gold went under $1,790 per ounce. The precious metal is on a downtrend ever since it hit a new high in August at about $2,075.

The US dollar is also not enjoying the increase in yields and is back under 90, aiming to go for fresh multi-year lows at 89.2 in early January.

Coming to digital gold, Bitcoin had a brutal week, losing 23% of its value with a drop under $45k. For now, the market struggles to recover completely despite the price of Bitcoin going above $50,000. Trader Cantering Clark said,

“Rates are rising. Risk-on assets don’t really benefit in that situation. All assets would get hurt with a rapid rise. Saylor purchase and Tether news came out, and we don’t have a very obvious response. Would not get overly bullish.”

However, according to him, this is all just short-term as “Bitcoin has already cleared the runway and is now on its way to further appreciation and adoption.”

Alex Kruger is of a similar opinion as he notes that there’s a chance Bitcoin will do its thing as “institutional penetration remains very low.” This means the institutional inflow may continue, and retail will be busy stacking regardless. Also, corporates may join in and “be more focused on inflation or digitalization than rates.”

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Author: AnTy

Bitcoin is the ‘Best Hedge’ Against Wealth Confiscation, Especially Inflation: Ark Investment CEO

Bitcoin is the ‘Best Hedge’ Against Wealth Confiscation, Especially Inflation: Ark Investment CEO

Cathie Wood has also been “very happy” for the healthy correction and advised everyone to have some “dry powder” for moments like these.

Cathie Wood is “very positive on Bitcoin,” revealed the founder and Chief Executive of Ark Investment Management in an interview with Bloomberg.

She said she is bullish on the leading cryptocurrency, but more importantly, Wood is “very happy to see a healthy correction here” — “No market is straight up. Everyone should know that.”

Much like Wood, Antoni Trenchev, managing partner and co-founder of crypto lender Nexo in London, believes that “On the grand scale of things, it’s less than a speeding ticket.”

The price of Bitcoin dropped about 23% to under $45,000 from its ATH of $58,300 hit this Sunday. Already, the cryptocurrency has recovered from the losses, going above $51,350 today.

This was actually a ‘buy the dip’ opportunity; according to her, “Everyone should have some dry powder for days like these.”

She had similar sentiments for Tesla stocks which have been declining. Wood loved this shakeout because it brings liquidity, and she even bought more of its shares.

Wood is a well-known Bitcoin supporter and a big investor in the digital asset through the largest digital asset manager, Grayscale’s products. ARK Investment Management LLC has 5.17 million of Grayscale holdings, as per Bybt.

It also holds 4.94 million Grayscale scales in its Ark Next Generation Internet ETF (ARKW). Grayscale Bitcoin Trust (GBTC) actually has the second-highest weightage in this product after Tesla and followed by Square, both of which have included BTC in their balance sheet.

In her interview on Tuesday, while further talking about Bitcoin, Wood said there are many use cases of the digital currency, but “the most important use case is an insurance policy around the world against confiscation of wealth.”

One of the ways this wealth confiscation can happen is through inflation, declining the purchasing power of the fiat currency.

“Bitcoin, I think, is the best hedge against inflation out there,” and it is “better than gold,” said Wood.

As such, she advised everyone to put 5 percent of their portfolio or their wealth into something like Bitcoin for the long term.

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Author: AnTy

Tesla has Already Made $1 Billion on its $1.5 Billion Bitcoin Investment

Tesla has Already Made $1 Billion on its $1.5 Billion Bitcoin Investment

Equity analyst Dan Ives expects about 5% of public companies to follow the same route as Tesla until more regulatory clarity comes.

The electric car company has doubled its Bitcoin investments in less than two months.

The leading digital currency made another all-time high at about $58,360 on Sunday, appreciating more than 14x in value since the March 2020 low. These gains helped Bitcoin become a trillion-dollar asset.

This week, however, the market is experiencing a sell-off after a 71.5% uptrend this year.

Bitcoin’s rally, before this recent pullback that went into action over the weekend, has racked up Tesla’s profits worth $1 billion, according to estimates by Dan Ives, an equity analyst at Wedbush Securities. Ives wrote in a note published Saturday,

“Based on our calculations, we estimate that Tesla so far has made roughly $1 billion of profit over the last month from its Bitcoin investment given the skyrocketing price of Bitcoin, which now tops a trillion of market value.”

At the time of the announcement in January, when the BTC price was between $30k to $40k, the company didn’t specify when or at what price it bought Bitcoin. But Tesla is ready to make more from its BTC investment than by selling the cars throughout the last year.

The company “is on a trajectory to make more from its Bitcoin investments than profits from selling its EV cars in all of 2020,” he added.

Tesla, whose CEO is Elon Musk, who repeatedly tweets about Bitcoin and cryptos, also announced at the time of Bitcoin investment that it would soon begin to accept the cryptocurrency as payment for its products.

As the Crypto Twitter (CT) has been calling and hoping, the analyst also expects other companies to follow in Tesla’s footsteps. Ives said in the note,

“While the Bitcoin investment is a sideshow for Tesla, it’s clearly been a good initial investment and a trend we expect could have a ripple impact for other public companies over the next 12 to 18 months.”

However, per him, less than 5% of public companies will take the same route at least until more regulatory clarity comes around.

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Author: AnTy

4th Richest Billionaire, Bill Gates, Shares Opinions on Bitcoin; Throws Shade At the Asset’s Volatility

4th Richest Billionaire, Bill Gates, Shares Opinions on Bitcoin; Throws Shade At the Asset’s Volatility

Bill Gates has claimed that he doesn’t hold a specific view on Bitcoin as an investment. Microsoft has refrained from integrating Bitcoin in any way, although the company’s bosses aren’t ruling it out.

  • Bitcoin continues to draw reactions from some of the world’s most notable names, whether in tech, political, or finance.
  • In a recent interview, however, Microsoft founder and former chief executive Bill Gates explained that he is standing on the fence regarding the asset.

Sitting on the Fence

Bill Gates appeared on CNBC Squawk Box, where he spoke with host Andrew Ross Sorkin on several topics, including cryptocurrency. Sharing a summary of the interview, Sorkin explained that he had approached the billionaire about his opinions on Bitcoin and its climate change implications.

Like many billionaires, Gates has focused more on his philanthropic efforts in the past few years. After spending decades fighting malaria, the billionaire is now looking to improve environmental sustainability and eradicate the coronavirus. Considering that Bitcoin had always been criticized for the effect that mining has on the environment, Sorkin was curious to know Gates’ take on the leading cryptocurrency.

Sharing his views, Gates explained that he is pretty much sitting on the fence as far as Bitcoin is concerned. The billionaire explained that while he doesn’t own any Bitcoin, he doesn’t think less of the leading digital asset as well.

However, Gates went in a more nuanced direction, explaining that he recognized Bitcoin’s potential for digitizing asset management and speeding up transactions. Comparing that to the work of his Gates Foundation, the former CEO explained,

“I do think moving money into a more digital form and getting transaction costs down, that’s something the Gates Foundation does in developing countries. But there, we do it so that you can reverse the transactions and you have total visibility over who’s doing what.”

Gates added that he was also skeptical of Bitcoin’s volatility, explaining that he didn’t know how to predict the asset’s progression since it always seems susceptible to speculative mania.

Microsoft Watches as Tech Goes Crypto

While Gates appears to be minding his words, the billionaire has been a pretty sharp critic of cryptocurrencies in the past. In a Reddit “Ask Me Anything” session back in 2018, the billionaire criticized cryptocurrencies’ anonymous nature, explaining that it was generally not a good thing,

At the time, Gates explained that cryptocurrencies were being used to purchase illegal drugs and substances from nefarious individuals. Given that these drugs end up in the United States and have been feeding the country’s opioid crisis, he pinned some of the country’s drug-related deaths on cryptocurrencies.

Gates and Microsoft also appear to remain uncommitted to cryptocurrencies, despite the market’s incredible maturity over the past year.

Several tech companies already made the move to crypto in the past few months, including auto manufacturer Tesla and payment processors MasterCard and PayPal. This week, e-commerce behemoth Amazon also posted job openings for engineers as it looks to build a digital currency. Despite all these tech-crypt integrations, Microsoft has chosen to stay away from the crypto market.

Brad Smith, the Seattle-based tech giant’s president, told CNN this week that they have so far not had any discussions about making any crypto investments. While he left the door open for a possible pivot, he asserted that there are no plans for now.

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Author: Jimmy Aki

First Publicly-Traded German Company Buys Bitcoin as a Hedge Against Euro Devaluation

First Publicly-Traded German Company Buys Bitcoin as a Hedge Against Euro Devaluation

Bitcoin “exact antithesis of traditional currencies,” said Lars Müller, CEO of Cannabis company SynBiotic SE.

SynBiotic SE has become the first publicly-traded company in Germany to add Bitcoin to its balance sheet.

Corporate Bitcoin buying has now grown beyond the US, where already the likes of Tesla, MicroStrategy, and Square have bought the leading digital asset.

Now, Germany has also joined in with SynBiotic SE, a cannabis company, in an attempt to hedge against the devaluation of the euro due to the excessive increase in the money supply of the fiat currency.

“Our decision focused less on price fluctuations than the risk of devaluation of euro and dollar,” said SynBiotic SE CEO Lars Müller on the company’s decision to make a shift to Bitcoin.

Müller further points to Bitcoin’s limited supply of 21 million, which he said is the “exact antithesis of traditional currencies.”

“This limit is fixed and inviolable, which the cryptocurrency‘s decentralized organization and the blockchain‘s tamper-proof nature in turn guarantees,” added Müller, which he said instills “more long-term confidence in bitcoin than in euros or dollars, where a central institution, influenced by politicians, can expand the money supply immeasurably.”

Besides the risk of devaluing fiat currencies, the cannabis sector already has very positive experiences with bitcoin as a digital means of payment. SynBiotic’s several subsidiaries already accept payments in bitcoin in addition to euros.

According to a recent survey, 5% of company executives plan to hold Bitcoin. This increased corporate adoption has Bitcoin nearing the $52,000 level, up over 77% YTD.

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Author: AnTy

MicroStrategy Raises Debt Amount to .0 Billion at 0% Due 2027 to Buy More Bitcoin

MicroStrategy Raises Debt Amount to $1.0 Billion at 0% Due 2027 to Buy More Bitcoin

Publicly-listed MicroStrategy announced the pricing of its debt issuance, which has been raised from $690 million to $900 million aggregate principal amount, up to an additional $150 million of 0% convertible senior notes due 2027.

This company estimated the net proceeds from the sale of the notes to be $1.0 billion if the initial purchasers exercise in full their option to purchase the additional notes after deducting the initial purchasers’ discounts, commissions, and expenses paid.

The net proceeds from the sale of the notes will be used to acquire additional Bitcoin, adding to the company’s 71,079 BTC holdings.

Bitcoin is currently trading above $50,000, and during the day, it went as high as $51,717 level on cryptocurrency exchange Coinbase, which has been selected as the primary execution partner by MicroStrategy.

“Michael Saylor continues to lead the charge through the bull, putting his money where his mouth is, adding another significant buy to his companies sizeable BTC position,” noted HXRO Labs.

The convertible notes will be sold in a private offering to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933. The offering is expected to close on Feb. 19, 2021. The latest announcement reads,

“The notes will be unsecured, senior obligations of MicroStrategy. The notes will not bear regular interest, and the principal amount of the notes will not accrete.”

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Author: AnTy

5% of Companies Plan to Hold Bitcoin as Corporate Asset This Year: Gartner Survey

5% of Companies Plan to Hold Bitcoin as Corporate Asset This Year: Gartner Survey

Some companies are worried about the extreme volatility of Bitcoin. But this is actually a feature, not a bug.

The latest survey conducted by Gartner Inc., consisting of 77 finance executives, including 50 CFOs, showed that 5% of them plan to hold bitcoin on their balance sheet this year.

84% of respondents, however, said they do not plan on ever purchasing the leading digital currency as an asset, which is nearing $52,000.

Volatility was the biggest concern of these naysayers, with 84% of respondents saying Bitcoin’s wild price swings pose a financial risk, the February survey said.

“It would be extremely difficult to mitigate the kind of price swings seen in the cryptocurrency in the last five years,” said Alexander Bant, chief of research at Gartner Finance.

According to Mike McGlone, a commodity strategist at Bloomberg Intelligence, who sees $100,000 as a longer-term target, the volatility may continue to rise in the near term “until it settles in around its next plateau.”

For the crypto market, the famed volatility is actually a feature rather than a bug. Antoni Trenchev, the co-founder of crypto lender Nexo, reminded that Bitcoin never moves up in a straight line and

“Short-term volatility is very much a feature of this bull market.”

Besides volatility, broader risk aversion, digital currency’s slow adoption as an accepted form of payment, regulatory concerns, and cyber risks were also among the concerns.

“There are a lot of unresolved issues when it comes to the use of Bitcoin as a corporate asset. It’s unlikely that adoption will increase rapidly until we get more clarity on these challenges,” Bant said.

The survey came while publicly-listed MicroStrategy shared its plan to issue another debt round of $690 million to add to its 71,079 BTC stash. Earlier this month, Elon Musk’s Tesla also bought $1.5 billion worth of Bitcoin.

“The mood, music, and momentum is impossible to ignore,” said Trenchev. “To the annoyance of many, the Bitcoin express has left the station.”

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Author: AnTy

MicroStrategy Wants to Buy More Bitcoin with Another Round of 0 Million Debt

MicroStrategy Wants to Buy More Bitcoin with Another Round of $690 Million Debt

“CEO Michael Saylor is carrying out one of the highest conviction investment thesis we have seen in public markets.” – Bitcoin Bull Anthony ‘Pomp’ Pompliano

The publicly listed company has made yet another bet on Bitcoin by announcing that MicroStrategy intends to offer $600 million worth of convertible senior notes, up to an additional $90 million aggregate principal amount of the notes. The official announcement reads,

“MicroStrategy intends to use the net proceeds from the sale of the notes to acquire additional bitcoins.”

Bitcoin proponent Michael Saylor, the chief executive of MicroStrategy, has already added a total of 71,079 Bitcoin to the company’s balance sheet and is now ready to add even more. MicroStrategy’s $1.145 billion Bitcoin investment has them owning 0.38% of BTC circulating supply.

In December, the company issued convertible senior notes to raise $635 million, whose entire proceeds were used to buy Bitcoin. Veteran investor Bill Miller was one of the buyers of MicroStrategy’s 0.75% convertible bond who called this “unique purchase” a “very little downside and an almost-free call option on Bitcoin.”

Now, yet again, MicroStrategy is ready to take up more debt due 2027, to buy even more Bitcoin, which has been hitting $50,000 for two days in a row.

With the latest jump in prices, the leading cryptocurrency’s market capitalization rose above $940 billion, just a few inches away from the trillion-dollar mark.

The notes will be issued via a private offering to qualified institutional buyers, which will mature on February 15, 2027, unless earlier repurchased, redeemed, or converted and will bear interest payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2021.

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Author: AnTy

The Elephants are Moving In; Next Will be the Baby Boomer Wealth: Galaxy Digital CEO

The Elephants are Moving In; Next Will be the Baby Boomer Wealth: Galaxy Digital CEO

Morgan Stanley is now considering becoming a Bitcoiner.

The banking giant’s $150 billion investing arm, Counterpoint Global, is considering adding Bitcoin to its list of assets, reported Bloomberg, citing people with knowledge of the matter.

Counterpoint Global is led by Dennis Lynch and looks for unique companies whose market value can increase significantly, something Bitcoin more than fills the criteria.

The group oversees about 19 funds with prominent investments, including Amazon, Slack, Zoom, Shopify, and Moderna.

Moving ahead with its Bitcoin bet would require the approval of the regulators and the firm.

This morning Bitcoin and the rest of the crypto market is recovering from the sell-off that came not long after the price of Bitcoin nearly hit a new milestone of $50,000 following the BNY Mellon announcing support for the digital asset and Canada approving the first North American Bitcoin exchange-traded fund (ETF).

Already, Tesla has bought $1.5 billion worth of Bitcoin, and Mastercard will begin allowing cardholders to transact in selected cryptos on its network.

“The key for Bitcoin’s path higher is to win over more corporate endorsements,” said Edward Moya, senior market analyst at Oanda Corp.

“Bitcoin is no stranger to massive weekend moves and the next several days could easily see some wild swings.”

Even JP Morgan Chase, whose CEO Jamie Dimon called Bitcoin a “fraud,” is looking to get in with its Co-President Daniel Pinto saying that they will support Bitcoin if they find client demand, which isn’t there yet, but he’s certain that’ll change.

As such, according to Mike Novogratz, the chief executive officer of crypto investment firm Galaxy Digital, the market is yet to see more cash rush in, which is the Baby Boomer money — the “giant generational wealth transfer that’ll happen when they die off,” he said.

“I would tell you the big, big group that hasn’t participated is the baby boomer wealth channel in America,” which can’t participate through Morgan Stanley, JPMorgan, Goldman Sachs, Charles Schwab, UBS, and others yet.

But “that’s all going to change in the next two years. I can guarantee it’s going to change because I’m seeing it. We’re working with companies, it’s going to change,” said Novogratz in a recent episode of the Odd Lots podcast.

According to him, that’s why “the elephants,” the banking giants, have been lately moving in. They would first start with their wealth management division and then their trading business.

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Author: AnTy