The bull-run in cryptocurrency market has ended after Warren Buffett and Bill Gates completely rejected cryptocurrency in a show on CNBC. The world’s wealthiest investors and business icons are showing their concerns over the significant growth in Bitcoin (BTC) and other digital currency prices.
They have announced that they will never invest in the cryptocurrency markets despite the increasing adaptations for it from Central Banks and global regulators.
Bears say both investors have raised genuine questions. Warren Buffett and Bill Gates are claiming that the cryptocurrency markets are colliding with the basics of investing. They are actually pointing towards the concept of the real value of assets.
Warren Buffett and Bill Gates Reject Cryptocurrencies
The Berkshire Hathaway Chairman told CNBC on Monday that the “asset itself is creating nothing.”
Further elaborating his claim, he said, “When you’re buying nonproductive assets, all you’re counting on is the next person is going to pay you more because they’re even more excited about another next person coming along.”
Bears believe Buffett’s comments are worthy of consideration. Cryptocurrency traders are buying coins with an expectation that market speculations will allow them to sell these coins to another person at the higher price. Traders aren’t giving any importance to the concept of fair value when it comes to investing in digital currencies.
Bitcoin and other digital currencies aren’t backed by any asset – like Gold or the Dollar. These digital currencies are moving on speculations of higher adaptations and bullish bets, while their cost of production is much lower than their current price.
Bill Gates – A “greater fool theory“
Bill Gates, Microsoft Co-founder, also was bearish about cryptocurrency when he spoke in the same interview on Monday. Bill Gates said, “He would like to bet against bitcoin if he could.”
Considering the cryptocurrency markets a greater fool theory he says: “As an asset class, you’re not producing anything, and so you shouldn’t expect it to go up. It’s kind of a pure ‘greater fool theory’ type of investment,” Gates said. “I would short it if there was an easy way to do it.”
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