Famous investor and CEO of Berkshire Hathaway, Warren Buffet, described Bitcoin as “likely rat poison squared” in 2018. In his fourth quarter 2020 market letter, financial analyst Bill Miller agreed with Buffett’s description of the asset – but not without his own addendum.
“Warren Buffett famously called Bitcoin” rat poison, “” Miller said in his Saturday letter, adding:
“He might be right. Bitcoin could be rat poison and the rat could be cash. “
Miller began his letter by explaining how each New Year often paves the way for various financial predictions. However, financial expectations and projections can be worthless, as evidenced by the unexpected COVID-19 pandemic and its impact on Miller. However, projections can be beneficial when the reasons for making such predictions are considered.
Even so, Miller analyzed the current scene in the US in terms of markets, inflation, interest rates and other issues, pointing out the importance of understanding the current landscape as opposed to predictions.
He concluded his letter with a paragraph on Bitcoin (BTC) highlighting the coin’s outstanding results over the past year. “Its market cap is larger than JP Morgan’s and Berkshire Hathaway’s, yet it’s still very early in its adoption cycle,” Miller said.
“The Fed has a policy of making investments in cash lose real money for the foreseeable future,” Miller added, then noting the trend of large mainstream players buying the asset. In 2020, MicroStrategy, MassMutual, and several other large stacks bought Bitcoin. MicroStrategy in particular bought Bitcoin in part to avoid the inflation-related loss of present value.
“It is estimated that PayPal and Square, on behalf of their customers alone, are buying all 900 new bitcoins that are mined every day,” Miller said, adding:
“If inflation picks up or not, and more companies choose to diversify a small portion of their cash balance into Bitcoin instead of cash, the current relative trickle in Bitcoin will turn into a stream.”
Bitcoin has seen its price spike lately, surpassing the $ 35,000 mark as it continues to find widespread acceptance.
