Innocent BenjaminAmerican Billionaire investor, Stanley Druckenmiller, who Forbes labelled as “one of the greatest investors of our generation,” has recently explained why he invested only $20 million in Bitcoin (BTC), why he is skeptical of Ethereum (ETH), and prefers to pretend that Dogecoin (DOGE) doesn’t exist at all.
“For the first move in Bitcoin, I think about $50 to $17,000; I just sat in horror. And […] I wanted to buy it every day. It was going up and even though I didn’t think much about it, I just couldn’t bear the fact that it was going up and it didn’t belong to me,” Druckenmiller said in an interview with The Hustle last week.
The Problem that Bitcoin Solves
A few years ago, Druckenmiller said that Bitcoin is a “solution in search of a problem,” and, he finally realized the problem which Bitcoin aims to solve, and that problem was called “central banks.”
“I found the problem: when we made the CARES Act and President Powell started crossing all kinds of red lines in terms of what the Fed [eral Reserve] would and would not do. The problem was that Jay Powell and the world’s central bankers were going crazy and making fiat money even more questionable than it was when I had gold,” Druckenmiller explained.
So a fellow billionaire Paul Tudor Jones called him up and said, ‘You know when Bitcoin went from $17,000 to $3000? 86 percent of the people who owned it at $17,000 never sold it.’
“Well this was huge in my mind. So here’s something with a limited supply and 86% of the owners are religious fanatics. I mean, who the heck has something between $17,000 and $3,000? And it turns out that none of the 86% sold it. Add that to this new madness phenomenon from the Central Bank,” Druckenmiller noted.
“An old elephant trying to get through a keyhole”
“Finally, I decided to buy $100 million worth of Bitcoin at around $6,200, but it ran into some trouble.” What trouble? Druckenmiller did not say.
“It took me 2 weeks to buy $20 million. I bought it all around $6,500 I think. And I said, ‘this is ridiculous.’ You know, it takes me two weeks. I can buy so much gold in 2 seconds,” he lamented.
“So like an idiot, I stopped buying it. The next thing I knew, [Bitcoin] is trading at $36,000.” Ultimately, Druckenmiller took some costs with some “of his investment in Bitcoin, but still held on to an undisclosed amount of BTC.
“My heart has never been in it. I’m a 68 year old dinosaur, but once it started moving and these institutions started improving it, I could see the old elephant trying to get through the keyhole and they can‘t get through it in time,” he argued.
Ethereum is like Yahoo, While Bitcoin Like Google
Speaking about Ethereum and other cryptocurrencies, Druckenmiller argued that it will be “very, very difficult to unseat” Bitcoin as the last store of value among assets.
“I think Bitcoin has won the store of value game because it’s a brand. It’s been around for 13-14 years, and it’s in limited supply. Is it going to be gold? I do not know. It’s absolutely safe to do a good impression for the last two years,” he said.
Nonetheless, Druckenmiller praised Ethereum’s qualities as a “trade facilitator” and the leading platform for smart contracts. The billionaire, however, said he is “a little more skeptical about whether it can hold his own.”
“It reminds me a bit of MySpace before Facebook. Or maybe a better analogy is Yahoo before Google came along. Google wasn’t much faster than Yahoo, but it didn’t have to be. All it needed was a little bit faster and the rest is history,” Druckenmiller said.
Furthermore, he argued that a completely new and better payment system could emerge in the future, and “there is a possibility that it hasn’t even been invented yet.”
As for now, Bitcoin is likely to continue to be considered a store of value similar to gold. “As long as Jay Powell keeps acting like he’s been acting, I think gold and Bitcoin, and Bitcoin appears to be high beta gold,” Druckenmiller noted.
“I Pretend that DOGE doesn’t Exist”
Dogecoin, on the other hand, doesn’t provoke any serious thinking from Druckenmiller at all. Despite numerous endorsements from billionaires such as Elon Musk or Michael Saylor, DOGE is only one part of “this wave of money in the big fool theory,” he argued.
“I don’t like putting out fires with my face. So I try to pretend that DOGE doesn’t exist. I think so little about it that it doesn’t even bother me when it goes up,” confessed Druckenmiller.
He also compared Dogecoin to booming non-fungible tokens in the sense that “it is a manifestation of the craziest monetary policy ever.”
“And I think that since there is no limit on the supply, I don’t see the usefulness of [Dogecoin] right now. When Bitcoin used to go up, it would drive me crazy because I didn’t own it. When Dogecoin goes up, I start laughing,” said Druckenmiller.
James steller
