03.06.202108:01 Forex Analysis & Reviews: Warren Buffett's 3 Principles for Working with Bitcoin

Over the past day, Bitcoin again showed no desire to trade actively. The quotes of bitcoin again all day stood around the levels of $36,000-$37,000 and only increased a little last night. Formally, bitcoin is growing, but hardly anyone can call this movement "the growth of bitcoin." From our point of view, the cryptocurrency simply continues to consolidate after the strongest fall and a corrective scenario (that is, a continuation of the fall) is still a more likely scenario. Thus, we absolutely do not expect Bitcoin to be above $42,000 per coin anytime soon. Keep in mind that after the upward trend in Bitcoin ends, the cryptocurrency usually loses up to 90% of its own value and goes into sideways movement for several years, into correction, into consolidation. From our point of view, the "bullish" trend is over, so in the next couple of years, Bitcoin is unlikely to be aimed at its highs. It should also be noted that the fundamental background for the world's first cryptocurrency has not changed at all lately. Thus, why should one expect that the demand for bitcoin will sharply increase? Investors and traders of various stripes and categories are waiting for specific data from the United States and China, where they may introduce a number of legislative initiatives that will significantly complicate the functioning of the entire cryptocurrency market in the near future, and make all cryptocurrencies much less attractive to investors.

Meanwhile, Warren Buffett, arguably the most famous investor in the world, continues to refuse any investment in Bitcoin and other cryptocurrencies. There are several reasons for this, and probably everyone should learn the principles of Warren Buffett. First, Buffett believes that bitcoin has no intrinsic value. That is, if the shares of any company reflect a certain amount of real assets and products, then any cryptocurrency is just a piece of code. In theory, its value could drop to zero. The price of bitcoin depends only on the strength of the market's belief at a given time that the cryptocurrency will continue to be bought. More from nothing. Secondly, by all indications, bitcoin is not money, since it does not perform the basic functions of money. It is, of course, possible to accumulate funds in bitcoins, but it does not save value, as it is too volatile. Also, few people use Bitcoin to settle accounts with other entities. That is, bitcoin does not function as a currency of account. Warren Buffett's third principle is not to invest in what you don't understand. The world-famous investor does not hide the fact that he does not understand the essence of bitcoin, and therefore does not buy it. At least some of Warren's principles should be heeded by many investors.

Technically, bitcoin's fuse continues to fade, and the cryptocurrency itself is trading very sluggishly. At this time, investors are in no hurry to buy bitcoins again, and miners get rid of the mined coins. The fundamental background remains unfavorable, so we believe that digital gold has more chances to return to the level of $30,500 than to rise. If bitcoin quotes manage to gain a foothold above the 38.2% Fibonacci level - $41,000, then this will slightly increase the likelihood of further growth in digital gold, but traders still need to get to this level.