On Sunday, a new era begins for bitcoin when CBOE Global Markets (CBOE) launches bitcoin futures trading for the first time. But while bitcoin seems to have captured the imagination of the investment community, a man who is considered by many to be the greatest investor of all time says bitcoin is simply a textbook bubble.
It seems almost everyone has an opinion about bitcoin. Notable bitcoin bulls include billionaire venture capitalists Peter Thiel and Mark Cuban and Microsoft co-founder Bill Gates. However, the legendary Oracle of Omaha and second-richest man in the world, Warren Buffett, has repeatedly warned investors of the dangers of bitcoin.
Buffett has been on the record about bitcoin since he dismissed the cryptocurrency in a 2014 interview on CNBC. At the time, Buffett praised the cryptocurrency as an effective way of transferring money, but said it is a terrible investment.
“Stay away from it,” Buffett said at the time. “It’s a mirage basically. The idea that it has some huge intrinsic value is just a joke, in my view.”
Of course, at the time bitcoin was priced at about $640. Now it’s trading above $16,000. But Buffett, who is known for his patience and resolve, is still sticking to his guns.
At a Q&A session with business students in October, Buffett was again asked about bitcoin, to which he replied that the cryptocurrency is a “real bubble.”
“You can’t value bitcoin because it’s not a value-producing asset,” Buffett said, according to MarketWatch.
Bitcoin bulls are quick to dismiss Buffett’s opinion, specifically when it comes to technology. Buffett recently admitted that he missed the boat on both Alphabet (GOOG, GOOGL) and Amazon.com (AMZN) because he didn’t recognize their long-term value and the opportunity to buy them. However, Buffett’s aversion to technology stocks also allowed him to side-step much of the fallout from the bursting of the dot-com bubble in 2000.
Even without big gains from the FANG stocks that have led the eight-year bull market, Buffett’s Berkshire Hathaway (BRK.A, BRK.B) has done just fine. In the past decade, Berkshire has delivered…
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