Forbes – Investing Information and Investing News –”,”description”:”Forbes is a leading s

&l;p&g;&l;img class=&q;dam-image getty size-large wp-image-849890494&q; src=&q;×0.jpg?fit=scale&q; data-height=&q;655&q; data-width=&q;960&q;&g; Philanthropist Warren Buffett. Photo by Daniel Zuchnik/WireImage

Bitcoin has been on a upward move since April 12 when it hit a recent low of $6,850. Tom Lee, Head of Research at Fundstrat, had postulated that at least part of the weakness in Bitcoin and other cryptocurrencies in March and the first two weeks of April had been due to &l;a href=&q;;&g;investors selling them to raise cash to pay for 2017 gains&l;/a&g;.

It got as high as $9,950 on Saturday, May 5, but later in the day it started moving lower which seemed to be about the same time that Warren Buffett and Charlie Munger at the Berkshire Hathaway&a;rsquo;s shareholder meeting made multiple statements denigrating it. Bitcoin fell to around $9,600 Saturday evening, with another leg down to $9,350 on Sunday afternoon. It has fallen as low as $9,250 on Monday morning with a small rebound to $9,350.

&l;img class=&q;size-full wp-image-11941&q; src=&q;; alt=&q;Bitcoin one month price chart&q; data-height=&q;464&q; data-width=&q;1174&q;&g; Bitcoin one month price chart

&l;strong&g;Bullish news flow last week&l;/strong&g;

There was some bullish information flow last week, which helped Bitcoin move from $9,000 to its $9,950 peak on Saturday. The news items included &l;a href=&q;; target=&q;_blank&q;&g;CFTC Chairman Christopher Giancarlo&l;/a&g; saying Bitcoin is &a;ldquo;part currency, part security and part digital coin,&a;rdquo; and that it may be better suited for a long-term buy and hold strategy vs. a form of payment. He added that Bitcoin has aspects that it is a virtual asset like gold, only that it is digital.

There were also reports that &l;a href=&q;; target=&q;_blank&q;&g;Goldman Sachs will open a Bitcoin trading desk&l;/a&g;, even though it is a bit unsure how much demand there will be. These are additional indications that Bitcoin and cryptocurrencies could become an &l;a href=&q;;&g;appropriate investment for a much wider range of individuals and organizations&l;/a&g;.


&l;strong&g;The Oracle of Omaha weighed in, again&l;/strong&g;

On Saturday Warren Buffett and Charlie Munger, the chairman &a;amp; CEO and vice chairman of Berkshire Hathaway, respectively, held the company&a;rsquo;s annual meeting. It appropriately gets tens of thousand of people to attend with thousands more watching a video stream of it.

Buffett and Munger have previously stated negative views on Bitcoin and cryptocurrencies with Buffett saying, &q;&l;a href=&q;; target=&q;_blank&q;&g;I can say almost with certainty that they will come to a bad ending&l;/a&g;,&a;rdquo; and Munger&a;nbsp;&l;a href=&q;; target=&q;_blank&q;&g;describing the digital currency&l;/a&g; as &a;ldquo;noxious poison.&a;rdquo; Munger added that &a;ldquo;the Bitcoin craze to be totally asinine.&a;rdquo; You can really tell how he feels about it by these comments:&a;nbsp;&a;ldquo;I detested it the moment it was raised. It&a;rsquo;s just disgusting&q; and, &a;ldquo;Our government&a;rsquo;s more lax approach (vs. China) to it is wrong. The right answer to something like that is to step on it hard.&a;rdquo;

They reiterated their feelings on Saturday with Buffett saying that Bitcoin &a;ldquo;&l;a href=&q;; target=&q;_blank&q;&g;is probably rat poison squared&l;/a&g;.&a;rdquo; Munger had a number of negative statements about Bitcoin and cryptocurrencies with one of the more colorful ones being,&a;nbsp;&a;ldquo;It&a;rsquo;s like someone else is trading turds and you decide I can&a;rsquo;t be left out.&a;rdquo;&l;/p&g;

I don&a;rsquo;t have an exact time when Buffett and/or Munger made their statements, but the chart below shows Bitcoin starting to fall around 1 p.m. Central Time on Saturday. It would not surprise me if this was around the time or soon thereafter that they gave their opinions.

&l;img class=&q;size-full wp-image-11939&q; src=&q;; alt=&q;Bitcoin 4 day price chart&q; data-height=&q;421&q; data-width=&q;1192&q;&g; Bitcoin 4 day price chart

Monday &l;a href=&q;; target=&q;_blank&q;&g;on CNBC Buffett added&l;/a&g;, &q;The asset itself is creating nothing. When you&s;re buying nonproductive assets, all you&s;re counting on is the next person is going to pay you more because they&s;re even more excited about another next person coming along.&q; This is the same argument that he has stated about why he &l;a href=&q;;&g;doesn&a;rsquo;t believe in gold as an investable asset&l;/a&g;.&a;nbsp;Munger added that Bitcoin is &a;ldquo;Worthless artificial gold.&a;rdquo;

In at least one way I believe Buffett and Munger will be correct. While we are in the early innings of the cryptocurrency phenomenon, applications could be developed to take them beyond being a store of wealth or facilitate illegal transactions. However, since there are now more than 1,600 different cryptocurrencies out in the ether, &l;a href=&q;;&g;there will be a shakeout and most of them will disappear&l;/a&g;.

&l;strong&g;Could Berkshire eventually buy Bitcoin?&l;/strong&g;

It is very, very low odds that as long as Buffett, 87 years old, and Munger, 94 years old, are involved with Berkshire that they would ever invest in a cryptocurrency. However, Buffett has turned some control of what Berkshire invests in to Todd Combs and Ted Weschler, two of Berkshire&a;rsquo;s portfolio managers, and eventually (unfortunately) Buffett and Munger won&a;rsquo;t be with us.

A parallel example of Berkshire not buying Bitcoin is Buffett&a;rsquo;s long-time avoidance of not investing in technology companies. That changed with its purchase of IBM stock (which has not done well) to &l;a href=&q;;&g;making Apple the largest public stock it owns&l;/a&g; and about 20% of its public stock holdings.

It would be very ironic if at some point in the future that Bitcoin, or other cryptocurrencies, become established enough that Berkshire actually invests in them.&l;/p&g;