American billionaire Warren Buffett makes headline news every time he buys or sells stocks. Berkshire Hathaway ditched and trimmed its positions in some stocks while adding or taking new positions in Q4 2020. The moves indicate the Berkshire CEO looks to maximize every dollar he invests.
In the cryptocurrency market, Bitcoin (BTC) continues to skyrocket in 2021. The world’s most popular digital currency has breached the US$60,000 mark. On March 13, 2021, BTC finished at US$61,243.09, or a 529.2% year-over-year increase. Despite the price going through the roof, Buffett has not touched the cryptocurrency.
In his most recent letter to Berkshire shareholders, the GOAT of investing never mentioned cryptocurrencies. Avid crypto supporters don’t like him much because he’s a vocal critic. Buffett describes Bitcoin — or cryptocurrencies in general — as a worthless and risky, speculative asset. He told CNBC in February 2019, “It’s basically a delusion.”
Alarming bull market cycle
According to BTCC exchange founder Bobby Lee, this year is a bull market for Bitcoin. He predicts the price will hit US$100,000 by summer and close the year at US$300,000. Lee warns, however, that Bitcoin could face a winter that could drag for years. The price could fall as much as 90% from its peak.
Other BTC advocates believe the remarkable run will continue as more institutional investors buy the cryptocurrency. They argue further that it could act as a hedge against inflation should it rise soon. Lee said, “I don’t know if history will repeat itself, but what we do know is that Bitcoin bull-market cycles come every four years, and this is a big one.”
Bitcoin in the mainstream
If you recall, after 2017, Bitcoin plunged below US$4,000 from $20,000 in a little over a year. Critics say it could happen again if institutional adoption is limited or weak. Three Bitcoin exchange-traded funds (ETFs), Purpose Bitcoin ETF, Evolve Bitcoin, and CI Galaxy Bitcoin ETF trade on the TSX.
Investors have a way now to invest in Bitcoin without actually holding the token. You can entrust the management and custody of the digital asset to fund managers for a minimal fee.
Hotter than BTC
If you desire a more secure option to gain access to bitcoin, consider Hut 8 Mining (TSXV:HUT). The crypto stock outperforms BTC. The current share price of $10.57 is 1,477.6% higher than it was a year ago. Had you invested $2,000 then, your money would be worth $31,552.24 today.
The Toronto-based company’s market capitalization is $1.16 billion, and it engages in industrial-scale Bitcoin mining operations. It owns and operates the 56 BlockBox and 38 BlockBox AC data centres in Medicine Hat and Drumheller, Alberta.
Hut 8 holds more self-mined Bitcoin than any other publicly traded Bitcoin miner in the world. As of February 17, 2021, the balance sheet shows 3,012 in Bitcoin holdings. It should be a tremendous advantage to investors who will use Bitcoin as a hedge against inflation. Like Bitcoin ETFs, you don’t need to create online wallets or store Bitcoin safely when you invest in Hut 8.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: short January 2023 $200 puts on Berkshire Hathaway (B shares) and long January 2023 $200 calls on Berkshire Hathaway (B shares).