Oaktree Capitalâ€™s Howard Marks has warmed up to bitcoin. He admitted that he had a knee-jerk reaction to the cryptocurrency and dismissed it too soon. Since then, the price of bitcoin has risen tenfold as demand for the cryptocurrency soars among retail and institutional investors.
Howard Marks Changes Stance on Bitcoin
Howard Marks, co-founder and co-chairman of Oaktree Capital Management, talked about bitcoin during an interview with CNBC last week.
As institutional investors become increasingly interested in bitcoin and major companies have announced their investments in the cryptocurrency, Marks said: â€œIâ€™m opening my mind on bitcoin. I was â€˜knee-jerkâ€™ skeptical.â€ He clarified:
The Oaktree Capital founder similarly told The Korea Economic Daily on March 15 that back in 2017, when bitcoin rose in popularity, he was â€œvery dismissive of it because it doesnâ€™t have intrinsic value.â€ He added that he has been studying and found that â€œpeople make the case for bitcoin â€¦ on the basis of supply and demand.â€
He noted that the supply of bitcoin is fixed, â€œunlike the dollar, which can be printed in infinite amounts,â€ adding that â€œthe demand [for bitcoin] is growing because more people are interested in it.â€ However, he pointed out that â€œitâ€™s a little circular because people want it because itâ€™s going up in price and itâ€™s going up in price because people want it. Thatâ€™s circular.â€
Exploring â€œindependent reasons why people want it,â€ Marks named some benefits of bitcoin. â€œThe argument is that itâ€™s very useful to be able to trade instantaneously, you can trade 24 hours â€¦ seven days a week.â€ He compared it to banks, stating that with banks you canâ€™t send a wire any time. In addition, he said: â€œItâ€™s confidential. Nobody knows about your holding but you, the government canâ€™t know, etc. Nobody can steal it from you. Itâ€™s better than an emerging market currency.â€ He concluded:
He then pondered if those reasons are enough to justify the price of bitcoin. He noted that the price of BTC was about $5,000 when he dismissed it in 2017, and now itâ€™s above $50,000. â€œSo the people who bought it at $5,000, so far they look right,â€ he said.
Currently, the price of bitcoin stands at $56,106 according to markets.Bitcoin.com. This represents a 1,022% increase from its price when Marks dismissed it.
Meanwhile, a growing number of institutions are getting into bitcoin. Elon Muskâ€™s Tesla, for example, has invested $1.5 billion in the cryptocurrency and recently began accepting BTC as a means of payment for its cars. Goldman Sachs has relaunched its BTC trading desk after seeing huge demand for bitcoin from institutions. Morgan Stanley recently said it will offer wealthy clients access to bitcoin funds. There are now three bitcoin ETFs trading in Canada and major firms, including Fidelity and JPMorgan, have applied with the U.S. Securities and Exchange Commission (SEC) to launch bitcoin-based products.
Commenting on his initial, dismissive reaction to bitcoin, Marks admitted, â€œnow Iâ€™ve learned how much I donâ€™t know, so you shouldnâ€™t talk about things you donâ€™t know about.â€ He reiterated:
What do you think about Howard Marksâ€™ new bitcoin stance? Let us know in the comments section below.
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