If Bitcoin is ‘rat poison’ then cash is the rat, veteran investor

Two years after famous investor Warren Buffett called “probably rat poison squared,” financial analyst Bill Miller has come out to agree with him but in a different way. In his 2020 fourth-quarter market letter, Miller affirmed that Bitcoin could indeed be a rat poison but if it were, then cash is the rat. He said:

Warren Buffett famously called bitcoin “rat poison.” He may well be right. Bitcoin could be rat poison, and the rat could be cash.

Taking his words literally, Miller is saying that Bitcoin could mean the death of fiat currencies.

In his letter, Miller explained how each new year comes with several financial predictions. However, financial forecasts can be useless. For instance, no one predicted the unexpected effects of the COVID-19 pandemic. According to Miller, predictions are beneficial when the rationale behind them is taken into account.

Speaking on Bitcoin, he praised the asset’s performance in 2020 and opined that it was only at the beginning of its adoption cycle. He said:

Its market capitalization is greater than JP Morgan and greater than Berkshire Hathaway (NYSE:) and yet it is still very early in its adoption cycle […]If inflation picks up, or even if it doesn’t, and more companies decide to diversify some small portion of their cash balances into bitcoin instead of cash, then the current relative trickle into bitcoin would become a torrent.

While Buffett may have repeatedly called Bitcoin a bubble and a gamble, several public listed companies are rushing to accumulate the asset. MicroStrategy and Square, for instance, diversified their portfolio to include Bitcoin in the second half of 2020.

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