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Virgin Galactic Chairman and Social Capital CEO Chamath Palihapitiya recently doubled-down on his advice that people should allocate at least 1% of their portfolio in Bitcoin as protection.
He believes that if the asset skyrockets in value, it would be because of rather damaging world events and the lack of proper countermeasures by governments.
Palihapitiya: BTCâs Lack Of Fundamental Correlation Is Positive
In a recent podcast, the former Facebook executive noted that the US Fed and Treasury had made several consecutive âshort-term window-dressing type of decisionsâ since the COVID-19 pandemic. By doing so, they have massively increased the credit and the debt of the country.
The extent of these actions are so severe that the US government is now âresponsible for more than 50% of the GDP,â which has changed the nationâs fundamentals:
âThis essentially makes us a quasi-communist country, a socialist country at a minimum, except without any of the benefits. You still have sky-high health care and exorbitantly high useless education. So, itâs like the worst form of socialism â dummy socialism.â
Consequently, these latest events could lead to destructive consequences for regular people, he warned. If they âhad been hard-working with their heads down, they should have an opportunity to make sure that they donât get wiped out if the government itself continues to make a string of bad decisions.â
To fight these potential consequences, Palihapitiya outlined Bitcoin and its fundamentally uncorrelated nature to that âdecision-making process and decision-making body.â
âAt the end of the day, any other asset class â equities, debt, real estate, commodities â they are all tightly-tightly coupled to a legislative framework and an interconnectedness in the financial markets that bring together many of the governments that behave in this way.â
As such, buying Bitcoin is the insurance needed to protect yourself against the unfavorable government decisions, he explained.
Chamath Palihapitiya. Source: FinancialTimes
Itâs worth noting that the prominent hedge fund manager Paul Tudor Jones III also said recently that he was purchasing BTC as insurance against the increasing inflation rates.
What Has To Happen For BTC To Succeed?
The venture capitalist reaffirmed his previous stance that people should invest at least 1% of their portfolio in the primary cryptocurrency. This time, however, he elaborated more on why and how this insurance can be protective:
âHope for that 1% goes to zero. Then you have the 99% left. But in the case that 99% goes to zero, that 1% would probably be worth 120%, and you will feel like a genius.â
Nevertheless, Palihapitiya doesnât consider the COVID-19 pandemic as the one significant event that will turn people into Bitcoin. In fact, he added that those waiting for such a âseminal eventâ actually create more speculation and raise the expectations unnecessarily, which is not healthy for the asset.
Instead, he noted that a âparade of terribles â a bunch of small things that eventually will add together to bring down the entire way we think the financial infrastructure of the world works. Historians will try to pinpoint an event, but I think it wonât be worth the time.â
If The BTC Bet Pays Off, The World Will Suffer
Palihapitiya said that once someone figures out these series of negative events, in which the world is currently in, he needs to hedge his position against them. However, if BTC is to succeed entirely, the world will be in a majorly negative state:
âQuite honestly, if your Bitcoin bet pays off, it would be cataclysmically destructive for the world. That will have enormous consequences to many people that you know and care about which were not hedged in Bitcoin.â
Although a lot of BTC proponents believe that itâs a more frictionless payment mechanism, the Social Capital CEO doesnât see it succeeding as such. He noted that other online payment processors such as Venmo, WhatsApp, and CashApp will eventually become more utilized as virtual payment options.
âThe use case for Bitcoin is to become less and less as a product and more and more as an instrument.â Palihapitiya compared it with gold, as the precious metal is indeed utilized to some extent in industrialism, but people primarily use it to hedge other parts of their investments.
âSimilarly, we will make the case item for item for the industrial value of Bitcoin. But the overwhelming use case for most people will be as a financial hedge.â
This could make BTC much easier to understand for regular people, as the majority is still getting confused by its technical aspects, he added.
Bitcoin Purchases And Other Cryptocurrencies
Palihapitiya asserted that he was introduced to the primary cryptocurrency back in 2010. Almost immediately, he bought a million bitcoins, worth about $80 at the time because âit sounded really interesting.â
Since then, he was never obsessed with how the asset has been performing price-wise. For instance, during the parabolic price increase in 2017 when BTC peaked at nearly $20,000, his family office reached out to him, but he said: âI donât want to know, just take it off the balance sheet, never look at it, and donât get psychologically affected by this number.â
Similarly, when BTC plunged a year later to $3,500, Palihapitiya reacted in the same manner, outlining that heâs in for the long-run, and short-term price fluctuations donât matter.
He has continued with his BTC accumulation throughout the years, but he prefers using the Grayscale Bitcoin Trust to avoid having to worry about any of the potential âlogistical issues.â
His opinion on the rest of the cryptocurrency market, however, is not that optimistic. When asked if he sees merit in Ethereum or any other alternative coin, he emphatically answered, âno.â
By comparing BTC with Apple and Google in their corresponding asset classes, Palihapitiya reasoned that Bitcoin will be the âcategory winnerâ of all digital currencies; hence he sees no value in investing in altcoins.
Featured Image Courtesy Of CNBC
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The post Chamath Palihapitiya: The US Has Become A Socialist Country, Buy Bitcoin To Protect Yourself appeared first on CryptoPotato.
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