Bitcoin Surges Past $72,000; Buffett Says "It will end badly."
ETF Demand Outpaces Supply
It seems two things are certain. Well, four, if you count death and taxes.
Bitcoin’s demand will be greater than its supply. And Warren Buffett will never be a fan.
Since the SEC approved nine new Bitcoin ETFs (exchange-traded funds) on January 10th, the nine have scarfed up over 400,000 Bitcoins. That’s $28 billion worth. That’s twice the total that Michael Saylor and Microstrategy have accumulated in the past four years. It’s been an absolute game-changer.
BlackRock, Fidelity and other huge money managers have started to recommend a modest exposure to Bitcoin in their investors’ portfolios, and it’s making a huge difference.
The Halving is Near, Too
Each day, about 900 new Bitcoins are being created. That’s not nearly enough to keep up with current demand. And next month, some time around mid-April, that new supply will be cut in half, to only 450 per day. It’s written into Bitcoin’s code, of course, and occurs roughly every four years.
After every previous halving event, Bitcoin’s price has surged. In fact, its price has doubled within days or a few months in the past. If this were to occur in 2024, prices could soar to levels that Bitcoin’s biggest proponents have called for. Saylor, Cathie Wood, and others. Wood has famously predicted $1,000,000 per coin by 2030.
Demand going up, supply remaining constant. Equals number go up. Econ 101. (Having flashbacks of my college economics professor, Dr. Edward Howe.)
Predictably, Not Everyone is a Fan
Warren Buffett, the “Oracle of Omaha,” one of the world’s greatest investors, has called Bitcoin “rat poison squared.” He recently chimed in again on Bitcoin:
“I wouldn’t give $25 for all the Bitcoin in the world. I can say with 99% certainty that it will end badly.”
His late associate, Charlie Munger felt the same way about the orange coins. And that’s oaky; Bitcoiners don’t care. The Buffetts of the traditional finance world made billions of dollars investing in stocks, and they have been the best in the game. Bitcoin is a new technology, and there is no need for them to venture into that area.
They could be spot on, who knows at this point?
But right now, Bitcoin’s market cap has surpassed $1.4 trillion. Buffett’s Berkshire Hathaway has a total market cap of about $875 billion. Seems a lot of investors have faith in Bitcoin.
With Bitcoin hitting an all-time high this week, it means that every Bitcoin investor is in the black.
Sure, Bitcoin, like every asset class, will experience dips. And there have been big dips. Bitcoin has been quite volatile over the years. But each dip has resulted in higher low points. The price continues to ratchet up.
So enjoy this price surge. Do you rown research, and only invest what you can afford to lose. Bitcoin is volatile. Don’t let investing “FOMO” hit you too hard.
Trump Has a Change of Heart on Bitcoin
Did Donald Trump’s new BFF, Vivek Ramaswamy, orange pill Trump? Since dropping out of the preseidential race, Ramaswamy and Trump have played nice. And Vivek has been a big proponent of Bitcoin. He spoke at last May’s Bitcoin Conference in Miami Beach.
Trump, in an interview recently on CNBC, said he sees Bitcoin as “an additional form of currency.” He emphasized that crypto “has taken on a life of its own,” and that he lets people pay for his merchandise with Bitcoin. His recent sneaker sales, presumably.
The 45th president added, “There has been a lot of use on that, and I’m not sure I’d want to take it away at this point.”
Bitcoin could come up as a talking point in the 2024 race. Trump now appears to join Ramaswamy and Robert F. Kennedy Jr. as Bitcoin supporters.
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Issue No. 132, March 12, 2024
Rick Mulvey is a CPA, crypto consultant, and frequent contributor to Bitcoin Magazine. He writes about all things Bitcoin, and yells at the Yankees and Giants. He also runs marathons and makes wine, neither professionally.