Bitcoin has cost – billionaire investor – Warren Buffett's investment portfolio about 320,000% potential gain due to his erroneous perception of it. Unfortunately, Buffett, who has never been a fan of BTC, may have gotten it wrong this time.
In 2018, he referred to BTC as "probably rat poison squared" and a "gambling token." Last year, at a shareholders meeting of Berkshire Hathaway, he said it is an unproductive asset, stating,
Whether it goes up or down in the next year or five or ten years, I don't know. But the one thing I'm pretty sure of is that it doesn't produce anything.
Data from trade analyst Alpha Zeta revealed that adding BTC to a "rat poison portfolio," a portfolio of Microsoft, Berkshire Hathaway, BlackRock stocks, and JP Morgan, would have led to a more impressive outcome for The Oracle of Omaha.
Alloting just 2.5% Bitcoin every year to the rat poison portfolio improves gain by almost 20% with lowered costs, per reports from Alpha Zeta. The portfolio's gains are at 16% for now, however.
Typically, a rat poison portfolio is a business strategy of investing only in low-cost index funds. This is because it is expected to surpass a portfolio overseen by a professional manager in the long run.
Buffett has been a staunch user of the term "rat poison portfolio," but in a somewhat derogatory manner. He has also leveled criticism against actively managed funds that do not function as expected.
In the past, he once bet $1 million that a simple low-cost S&P 500 index fund would achieve better than a batch of hedge funds over a decade. To him, a rat poison portfolio is a straightforward and cost-effective investment strategy.
Buffett's much-derided Bitcoin proves its superiority as data also showed that during the latest bear market (2021-2023), allotting Bitcoin to the rat poison portfolio could have reduced losses by 10%. This would have been an efficient hedging strategy to lessen losses.
Since its origin, BTC has always been considered a substitute for traditional assets like bonds, stocks, gold, etc. This is due to its scarcity based on its fixed supply of 21 million BTC and the Bitcoin halving every four years.
Consumers have been motivated to buy Bitcoin as it is the premier cryptocurrency and to also hedge against fiat devaluation. As a result, although it is highly volatile, the number of non-zero Bitcoin addresses has surged from 2,500 to more than 45 million from the early last decade till now.
Yet, Warren Buffet is not convinced, going by his derogatory comments in the past. However, he has invested in a famous Brazilian fintech bank – Nubank – that enables crypto-related services.
While BTC has since plummeted from its all-time high of $69,000 in 2021, it has still surpassed Berkshire Hathaway by more than 320,000%.
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