The CEO Backing Bitcoin

by | 14 Dec, 2017

Is it too late to get on the Crypto train? Palihapitiya thinks not

The CEO of California-based venture capital firm Social Capital is bullish on Bitcoin and still believes it to be a great store of value amidst an uncertain global economic outlook for the future.

Having taken a position in Bitcoin in 2012, Chamath Palihapitiya, (who recently made headlines for criticizing social media) wrote an article in 2013 imploring investors to take 1% of their net worth and invest in Bitcoin in what he termed ‘schmuck insurance’.

In this context, the word ‘schmuck’ referred to the big banks of the world like AIG, Bear Sterns and other so called ‘masters’ of the financial services universe, which had caused the meltdown in the global economy in 2008. In other words, the CEO promoted Bitcoin as an insurance policy, in case of major volatility in other asset classes and currencies which were tied to these institutions and central banks.

That was then, this is now. After such a massive change in the price of a single coin since 2013, does he still believe in its fundamental value? The answer is yes. On CNBC in December 2017, Palihapitiya said, “This is a fantastic fundamental hedge and store of value against autocratic regimes and banking infrastructure that we know is corrosive to how the world needs to work properly.”

He explained, “You cannot have central banks infinitely printing currency”. In reference to central banks stopping their quantitative easing programmes over the next few years, he said, “We’ve seen the first few chapters of this and now we have to go through this great unwind.” He added, “To have the ability to hedge that out, in a way that isn’t fundamentally correlated to the people and the infrastructure that made those decisions, I think is a smart thing.”

Is it too late to jump on the bitcoin train? He thinks not, saying, “The same way I said in 2013 to put 1% of your net worth into Bitcoin, I will put myself out there today, I think this thing is a $100,000 a coin, probably in the next 3-4 years, and I think in the next 20 years, a million dollars a coin.” Invstr CEO Kerim Derhalli is also bullish on Bitcoin calling it, “the next logical stage of the information revolution” forecasting a push to between $50,000 to $100,000 per coin.

It’s a similar optimism backed up by a recent survey which looked at over 560 American Bitcoin holders. 75% of those surveyed by online marketplace LendEDU said they would be increasing their bitcoin holdings in 2018, despite the astronomical price rise the coin already saw this year.

Palihapitiya said, “At the end of the day, this is a string of letters and numbers, that was generated on a computer that sits in a secure wallet. It truly is, in the functional utility of the world, uncorrelated to anything.”

For retail investors he said that even if you had only $100 to invest, you could put $99 of that into the S&P500 index and $1 into Bitcoin and that tiny investment would still be valuable. Why? The CEO said, “The reason that $1 is so valuable is that its fundamentally not correlated to the other $99. On the off chance that all the people that manage the $99 may not know what they are doing, the $1 may save us all.”

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Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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