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Chamath Palihapitiya says Bitcoin is uncorrelated to financial markets, which is one reason people should invest 1% of their wealth in it.
Chamath Palihapitiya, the billionaire CEO of Social Capital and Virgin Galactic Chairman, has called Bitcoin a type of disaster insurance against governments making bad financial decisions.Â
In an interview with Unchained Podcast on June 23, Palihapitiya said hard-working people need something like Bitcoin as insurance, as the cryptocurrency is âreally fundamentally uncorrelatedâ to the consequences of legislators behaving badly.
However, the CEO pointed out that for the Bitcoin price to skyrocket at this point, things would have to go terribly wrong in the financial system, with disastrous impacts on your friends and family.  Â
âIf your Bitcoin bet pays off,â Palihapitiya said, âit will be cataclysmically destructive for the world. And thatâll have enormous consequences to many people we all know and care about who werenât hedged in Bitcoin. And so you almost donât want it to happen.â
Enough insurance to âmake you wholeâ
Palihapitiya himself invested in 2010, by buying one million Bitcoin for $80, whose value reached the billions when the token had its all-time high in December 2017.Â
No wonder the billionaire claims that Bitcoin (BTC), unlike âsecond- and third-tierâ cryptocurrencies like Ethereum (ETH), is one of the few ways to get a âmassive asymmetric payoffâ from such a small investment.Â
âYou want to be sure that a small amount of insurance can basically make you whole,â Palihapitiya said, citing a $1,000 payoff for a $1 investment as a good example. âThatâs why I just think that, you know, you should take 1% of your portfolio, put it in Bitcoin.â
âAt the end of the day, any other asset class â equities, debt, real estate, commodities â theyâre all tightly, tightly coupled to a legislative framework and an interconnectedness in the financial markets that brings together many of the governments that are sort of behaving this way.â
The billionaire has also speculated the value of Bitcoin in the future could reach millions of dollars, or drop to zero.
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