By Daniel CreechJanuary 17, 2022

Billionaires are changing their minds about crypto

You may still be a skeptic when it comes to investing in cryptocurrencies. 

But that’s a good thing.

As an investor you should be skeptical when you start looking at a new idea. A solid research process involves asking questions, finding weaknesses in the story, and weighing the potential returns vs. the possible downside.

In short, you should never invest in anything you’re not comfortable with. 

But it’s also a good idea to stay open-minded and be willing to change your opinion in the future. 

Today, I’m going to share the story of three big name investors who have been skeptical about crypto in the past… but recently changed their tune on this relatively new asset class. Two of them even added crypto to their portfolios.

It’s a valuable lesson on staying open-minded… and gives us some insight into how billionaires are approaching the crypto space. 

A few months ago, Thomas Peterffy, founder and chairman of Interactive Brokers, revealed that he “put a little bit of money into crypto,” despite being skeptical about the long-term future of digital assets. 

Peterffy isn’t a crypto enthusiast. When asked for a prediction about the future, he said, “I think it can go to zero, and I think it can go to $1 million… I have no idea.” 

But he views Bitcoin and other cryptocurrencies as a hedge against the declining value of fiat (paper) money. He believes investors should have 2–3% of their portfolio allocated to crypto in case fiat money “goes to hell.”

With inflation rising to 40-year highs in 2021, it’s a solid thesis. Peterffy isn’t pounding the table about crypto, but he’s willing to be open-minded and allocate a small portion of money to this new asset class as a form of wealth protection.

It’s worth noting that his company, Interactive Brokers, began offering crypto trading in 2021 to keep up with investor demand. It’s likely this revenue stream is a small factor for his bullish attitude.

But Peterffy isn’t alone when it comes to overcoming skepticism. Ray Dalio, founder of one of the largest hedge funds in the world (Bridgewater Associates), likewise changed his tune on Bitcoin over the past year. 

In early 2020, Dalio warned that cryptocurrencies like Bitcoin were “too volatile” and “not effective” as a medium of exchange. However, in an interview last month, he said he now owns Bitcoin and Ethereum… and believes crypto should be part of a diversified portfolio.

Like Peterffy, Dalio has concerns about fiat money. He refers to cash as “the worst investment”… which is why owning a diversified portfolio of assets is the best solution.

Howard Marks, legendary investor and founder of Oaktree Capital Management, has also warmed up to Bitcoin. He previously dismissed it as something with no intrinsic value. But he regrets his earlier opinion, saying, “My initial response was a knee-jerk reaction without information and that’s not a good way to behave.”

In an interview last year, Marks clarified his stance on Bitcoin by saying:

While bitcoin doesn’t have an intrinsic value, the same can be said of the dollar and many, many other things that have value like paintings and diamonds. I’ve been more sensitized to the supply-demand case.

And like the previous two billionaires I mentioned, Marks is worried about fiat currencies. He notes that Bitcoin’s fixed supply is a major advantage vs. the U.S. dollar, which can be “printed in infinite amounts.”

I’m not pointing to these billionaire investors as folks you should follow blindly. You shouldn’t base your investment decisions on any single person… especially without doing your own research.

Nevertheless, it’s helpful to pay attention to these seasoned, successful investors. Billionaires do carry a lot of weight and for good reason—they’re great at what they do (that’s why they’re billionaires).

Each of these guys expressed a negative view of crypto in the past. However, they’ve been willing to reevaluate their opinions over time. 

The key takeaway for all investors is to be willing to change your mind. Being skeptical isn’t a bad thing. In fact, it’s prudent when investing. But don’t let it keep you on the sidelines.

Crypto is volatile. It’s risky. It’s a relatively new asset class (created in 2009). 

But it also offers investors life-changing opportunities… as well as protection against inflation and the ongoing decline in value of fiat money.

Meanwhile, Bitcoin and other cryptocurrencies continue to gain adoption. Huge amounts of money from individuals and institutions (like hedge funds and banks) are pouring into the space. And this long-term trend shows no signs of slowing down.

If you’re worried about the volatility and risk, use small position sizes. Having small exposure is better than zero exposure. That’s how billionaires like Thomas Peterffy and Ray Dalio are approaching crypto.

Daniel Creech is a Curzio Research analyst with over a decade of experience. He writes on macro trends, large- and small-cap stocks, and digital securities. He’s a regular contributor to Wall Street Unplugged, Curzio Crypto, Curzio Research Advisory, and The Dollar Stock Club.

P.S. Frank’s Crypto Intelligence portfolio is full of triple- and quadruple-digit crypto winners.

Even with the recent pullback in crypto… it’s still our top-performing portfolio—with winners as high as 3,100%-plus. 

Plus, the pullback creates a great opportunity to start building your crypto exposure.

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