Bitcoin Approaches $12K as Buffett Reveals His Gold Investments

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Bitcoin was close to hitting $12,000 in the early weekend session as Warren Buffett legitimized his fears of fiat inflation.

The veteran investor’s $506.23 billion conglomerate, Berkshire Hathaway Inc., integrated Barrick Gold Corp. to its portfolio in the second quarter. It bought 20.9 million shares, which makes 1.2 percent of the gold mining company’s total stock, via his two portfolio managers, Todd Combs or Ted Weschler.

The high-profile purchase appeared despite Mr. Buffett’s earlier criticism of gold that he considered non-productive. Nevertheless, the perceived safe-haven asset proved to be one of the higher profit makers in 2020, beating all the top Wall Street indexes with its 26 percent YTD gains.

One of the Warren Buffett's earlier comments on Gold
One of the Warren Buffett’s earlier comments on Gold

Gold’s profits followed a substantial decline in the US dollar index and Treasury bond yields. Investors feared that there would be a rise in the inflation rate as long as the Federal Reserve keeps its coronavirus stimulus package in place. That includes an open-ended bond purchasing program and near-zero interest rates.

As a result, they increased their holdings in gold and gold-backed assets. The involvement of Berkshire Hathaway into the precious metal industry simply validated the inflationary pressure.

Bitcoin Awaits Breakout

Bitcoin, an offbeat cryptocurrency, surged by more than 200 percent from its mid-March nadir against a similar market outlook. Investors increased their bids for the scarce asset against the Fed’s relentlessly dovish policies.

Only recently, public firm MicroStrategy reallocated $250 million of their cash reserves to Bitcoin. Before that, billionaire hedge fund manager Paul Tudor Jones had also allocated 1-3 percent of his net portfolio to Bitcoin Futures.

Top crypto commentators saw Mr. Buffett’s inclination towards gold as a bullish sign for Bitcoin. Ikigai founder Travis Kling said in his tweet hat the cryptocurrency has a great future ahead, pointing to how even gold skeptics had to change their mind against the ongoing stimulus period.

bitcoin, cryptocurrency, btcusd, btcusdt, xbtusd
Bitcoin chart on TradingView.com showing BTCUSD eyeing a retest of $12K

Bitcoin did not react to the Buffett news immediately. Nevertheless, the cryptocurrency was trading just about hundred dollars below $12,000, a resistance level it has repeatedly failed to breach to the upside.

Bulls remain convinced about a stupefying rally, however. Prominent YouTuber Carl noted that Bitcoin could easily hit $20,000 in the coming sessions – based on its growing adoption on a macroeconomic scale. Another analyst, Rekt Capital, built his prediction on a similar upside scenario, stating:

“Earlier this week, BTC Weekly closed above $11,400-$11,600 for the first time since late Nov’ 2017. Now BTC is trying to turn this area into new support for the first time since early Dec’ 2017. Get ready for the next move.”

 

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