Bitcoin Adoption Continues Amid Fresh Criticism From Warren Buffett
VYSYN Weekly Release #96: Interest in digital asset soars despite criticism
Despite Bitcoin's impressive performance over the past decade and the increasing amount of interest it is receiving, some critics are still not convinced it is an investable asset. Legendary billionaire investors, Warren Buffett and Charlie Munger, recently blasted the digital asset, expressing their lack of interest in it. Interestingly, adoption and interest in Bitcoin have continued unabated.
The latest VYSYN release will examine the different angles of criticism made by the duo and the crypto community's reaction to it. We will also analyze any effect this latest criticism has had on the market and positive activities amid the recent developments.
Bitcoin has "magic" attached to it — Warren Buffett
Veteran investors, Warren Buffett and Charlie Munger, reiterated their criticism of Bitcoin during the Berkshire Hathaway annual shareholders meeting. The duo noted that they are still not interested in the asset class despite massive interest from individual and institutional investors. Buffett claimed that Bitcoin is gaining attention because people have attached magic to it. He implied that he is unaffected by the Bitcoin "magic" and would still not buy all the BTC in the world even if it were offered to him for $25.
Munger said, "In my life, I try and avoid things that are stupid and evil and make me look bad in comparison to somebody else – and bitcoin does all three." Stupid because, according to him, Bitcoin's value would likely go to zero. Evil because it undermines the role of the Federal Reserve and makes the U.S. look bad relative to China's stringent stance on the digital asset.
The duo's latest criticism attracted massive backlash from the crypto community. Several prominent Bitcoin proponents spoke up to defend the digital asset, point out its use cases, and discredit its critics. Anthony Pompliano acknowledged that although Buffet is a legendary investor, he is not the best source of investment advice on modern-day technology.
Injective Labs CEO, Eric Chen, pointed out that Buffett and Munger's criticism of Bitcoin is evidence that the digital asset is indeed disrupting the financial system as they know it. He said, "They’re not exactly the most technology-forward investors in the space, and they’ve certainly lived on most of the growth strategies based on the traditional approach when it comes to investing. From their understanding of the financial market and financial infrastructure overall, fiat currencies, especially the dollar, is probably what they base everything on."
Changpeng Zhao, the founder and CEO of Binance, also weighed in on the matter. He commented that Buffett and Munger have already made up their minds to criticize Bitcoin and not invest in it. Zhao pointed out that it would be better to channel the energy used to promote Bitcoin to these investors into educating those that actually need it.
Adoption and interest in bitcoin continue unabated
While Bitcoin critics have tried to paint it as a less than desirable asset, interest has only increased. In a new development, the Central American nation of Panama has approved a bill that will legalize the use of Bitcoin in the country. While Panama's bill is not taking the legal tender route like El Salvador, it will create a favorable environment for crypto businesses. It will see crypto regulations introduced, and since the Panamanian government views crypto as a foreign-source income, it will be exempted from capital gains tax.
Politicians are also not left out of the Bitcoin adoption trend. Pierre Poilievre, a member of Canada's House of Commons, has recently gained massive popularity among Canadians for his Bitcoin advocacy. Bitcoin has formed a major pillar of the politician's campaign themes of financial security and autonomy. Poilievre is campaigning to help Canadians take back control of their finances using Bitcoin.
With Bitcoin adoption ramping up in various parts of the world, major banks and financial services institutions have doubled down on their Bitcoin exposure. They are increasingly providing these services to their clients as failure to do so will cause them to lose their relevance and client base. Argentina's largest private bank, Banco Galicia, has become the latest bank to provide crypto services to its clients. Fidelity Investments also recently added a Bitcoin option to its 401(k) retirement plan, and Goldman Sachs recently offered its first Bitcoin-backed loan.
Data from Bitcoin Treasuries has revealed that institutional investors currently own almost 7.5% of the total supply of bitcoin. The top holders have hundreds of thousands of bitcoins in their portfolio, with MicroStrategy topping the list with 129,218 BTC. Bitcoin Treasuries data puts the total BTC held by institutional investors at over 1.49 million BTC currently. This value accounts for a total of 7.13% of the current BTC supply.
(Source: Bitcoin Treasuries)
Wider macro issues affect Bitcoin market
While some have attributed the latest comments from Buffett and Munger to the recent Bitcoin price drop, analysts are convinced that they are not correlated at all. ProChain Capital's founder, David Tawil, noted that the drop could be attributed to other macro issues, including uncertainties in the market as investors offload their holdings. According to data from CryptoQuant, more short-term investors are panic-selling their Bitcoin at a loss, as global economic and geopolitical uncertainties linger.
However, a careful look at other charts reveals that long-term holders are not selling their coins. CryptoQuant data reveals that long-term investors' movement over the past week has been lower than average. Using the Binary Coin Days Destroyed (Binary CDD), a powerful tool for identifying the spending behaviors of long-term investors, CryptoQuant pointed out that this category of investors is reluctant to sell their assets. Their motive to hold is stronger than market sentiment.
These investors believe in Bitcoin’s potential and are determined to hold on for as long as possible. Bitcoin enthusiasts tout it as digital gold. This comparison to physical gold is not so far-fetched, considering that they are both viewed as a hedge against inflation, have a finite supply, and act as a store of value.
Gold is traditionally viewed as one of the best inflation hedges due to its performance during the 1980s. The core themes that drove up gold's price were the same as the ones currently fueling Bitcoin's adoption. Raging inflation, global geopolitical tensions, and a lack of faith in government-issued fiat currencies.
While Bitcoin has not existed as long as gold and therefore lacks historical data, its impressive performance in the last 13 years is a testament to its massive potential. The increasing influx of large institutional investors into the space is also solid evidence that they are seeing it as a better inflation hedge than gold. Despite trading down recently, Bitcoin markets have actually remained surprisingly robust. Hence, investors could view the recent price drops as an opportunity to accumulate further BTC.
About VYSYN Ventures
VYSYN Ventures is a longstanding venture capital company that specializes in funding and supporting disruptive startups in the blockchain and cryptocurrency industry. We have provided early-stage support to several projects that have grown USD market capitalizations of hundreds of millions and even billions. Our incubation program focuses on providing capital allocation, versatile marketing support, and tech assistance.