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Warren Buffettâs Berkshire Hathaway sold bank stocks to buy a gold mining company, which will indirectly boost the price of Bitcoin, investors say.
Berkshire Hathaway, the $503 billion conglomerate led by Warren Buffett, sold Goldman Sachs for a Canadian gold company Barrick Gold. Max Keiser, the founder of Heisenberg Capital and an early Bitcoin investor, says it could help buoy BTC to $50,000.
The quarterly shareholder filing of Berkshire Hathaway shows Buffett trimmed his position on most major banks, Fortune reported on Aug. 15. The firm sold a substantially large portion of its shares in JPMorgan Chase, Wells Fargo and PNG.
What Buffettâs decision to enter a gold position over banks shows about Bitcoin
Buffettâs decision to completely close Berkshireâs position on Goldman Sachs follows the bankâs second-ever highest quarterly trading revenue of $13.3 billion. It suggests Buffett is not comfortable in betting big on the banking industry in the long-term.
Instead, Buffett purchased a single stock in Barrick Gold, whose stock has reflected that of gold in most of 2020. The firm is a gold mining company based in Canada, which recorded a 45% increase year-to-date. Following Berkshireâs investment, the stock rose by 8.11% in after-hours trading.
Max Keiser, an avid Bitcoin investor who has invested in companies like Kraken and Bitfinex, believes Buffettâs gold investment could benefit Bitcoin. He said the positive sentiment around gold implies a higher valuation for Bitcoin, which some consider as âdigital gold.â Keiser said:
âGlobal $100 trillion fund management biz is less than 1% invested in Gold. With Buffett now moving into Gold. Expect global allocation of 5% AU min. Implies $5,000 Gold. Expect a 1% BTC global allocation ($1 trillion). This implies $50,000 for Bitcoin Expect PTJ ups to 10%.â
The weekly price chart of Bitcoin. Source: TradingView.com
A former L/S equities portfolio manager and Ikigai Fund founder Travis Kling echoed a similar sentiment. Referring to Buffettâs skeptical statement in 1998 around gold saying it doesnât have utility, Kling said:
âToday it was announced Berkshire Hathaway just bought its first gold stock ever. The reasons are self-apparent at this point. Just in case youâre wondering what the coming years are going to look like for Bitcoin, this was Buffett on gold in 1998.â
BTC has shown some correlation with the precious metal as of late
Although Bitcoin has outperformed gold since April, the price trend between gold and BTC has shown some correlation. Data from Skew show the two assets have increased in tandem throughout the past four months.
The correlation between Bitcoin and gold. Source: Skew.com
The simultaneous rally of Bitcoin and gold since the global market crash in late March hints that more investors are starting to consider BTC as a store of value.
Most recently, MicroStrategy, a $1.4 billion intelligence conglomerate, purchased $250 million worth of Bitcoin. The firm said BTC would act as the companyâs primary treasury asset, acknowledging Bitcoin as a store of value and a potential safe-haven asset.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.