In the past six months, Bitcoin has done better in terms of investment returns than Berkshire Hathaway, owned by the legendary Warren Buffet.
This is indicative of the fact that the cryptocurrency market has improved and is performing well with the possibility of attracting more investors.
Crypto Market Reaches $1.16 Trillion
In just a week’s time, the overall value of the cryptocurrency market went up by 26%, reaching a total of $1.16 trillion yesterday. Amongst the top twenty crypto tokens, Bitcoin had the highest increase of 31.5%.
However, there are some other altcoins that had an even greater increase of 50% and above during this time period.
There was an increase in the value of cryptocurrencies when US Federal Reserve had to provide $300 billion to banks in emergency funds.
Reportedly, a large portion of the funds went to Silicon Valley Bank and Signature Bank which were failing badly.
These funds were used to pay the depositors who did not have insurance. A remainder of the funds i.e. $153 billion was acquired through a program called the discount window.
This program lets financial institutions like banks borrow money for a period that must not exceed ninety days.
Credit Facilitation Gives a False Sense of Confidence
According to Bill Ackman who’s a billionaire investor and activist credit facilitation by the Federal Reserve gives a false sense of confidence.
In essence credit facilitation through the Fed’s resources may create a misleading sense of security for the banking industry, rather than actually protecting it.
Bill Ackman also has to his credit Pershing Square which is the hedge fund he manages.
According to Ackman the plan worth $30 billion developed by the regulators in the US to prevent a potential liquidity crisis are insufficient.
The plan brings up more doubts than solutions and lacks clarity. He believes that partial solutions are inadequate during times of uncertainty and instability, more accurately amidst crises of confidence.
Warren Buffett’s Holdings Deteriorated
During the banking emergency, Warren Buffett’s investments in the financial conglomerate Berkshire Hathaway deteriorated rapidly.
Buffet also happens to be the co-founder and the largest shareholder of the corporation which is worth $650 billion.
Bank of America stock has seen a fall of 15.5% from the beginning of the current year up to the present time.
This fall in the stocks matters to the conglomerate since it’s the largest holder of the bank. The decrease has cost Hathaway stocks worth $5.2 billion.
In the current scenario when the Bitcoin is going up, Buffet has once again made it clear that he’s not interested in the token.
Warren Buffet openly criticizes cryptocurrencies, particularly Bitcoin. He’s stated that even if the entire Bitcoin market capitalization were offered to him at a price of $1300 he still won’t be interested.
The 91-year-old billionaire, whose net worth is approximately $102 billion, has argued that Bitcoin does not produce anything of value.
He compares it to assets like farmland and residential real estate, which have practical applications and generate income.
However, the narrative is a little different now as the rat poison that Buffet once called Bitcoin is on the surge.
The price of bitcoin rose by 31.5% over the last few months while the stocks of Berkshire only rose by 5.8% in comparison. For now, the token is outperforming Buffet’s billion-dollar corporation.
Total Market Capitalization
The total market capitalization of cryptocurrencies saw a significant increase reaching the $1.6 trillion mark owing to many factors.
There are a variety of factors which include increased adoptions by the people, general market speculation, and banking system failures.
Even otherwise there has only been positive news and announcements about the crypto market generally, thereby increasing investor confidence.
However, it must be noted that this kind of market is highly volatile and is often challenged by rapid fluctuations in value.
Thus, only the coming times will tell whether this market capitalization will sustain over the long term.