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Kevin O'Leary

Kevin O’Leary: Idiot managers always get wiped out and that’s okay

Bitcoin is held mainly by individuals, some family offices, and some hedge funds, but in the context of what can be a nothingburger.

Is Bitcoin a hedge against inflation?

So far it has not worked despite the absence of regulation, as it is not being indexed. It may be a chicken and egg conundrum, and may be more valuable than gold. However, institutions are allowed to own gold, and they own up to five percent of allocations or ETFs that track the price of gold. So we don’t know and won’t know until we let the entire free market buy Bitcoin, since we have restricted 75% of it.

75% of the market is excluded from Bitcoin. 

I am an indexer. Providing indexing services to resolve wealth funds and pension plans is one of my businesses. A famous example is a Middle Eastern nation that produces two or three hundred million dollars a day from its oil reserves. Recently, I have been asked to allocate 50 basis points to one percent using Bitcoin, although I have never done so.

If the fund is interested in Bitcoin, why is it a Burger? Its market cap is minuscule relative to what it could be, so I am a strong advocate of enacting laws that would allow me and others to index Bitcoin in order to put it into these investment indexes, which would be a tremendous boon to price appreciation and potential.

Is regulation the only factor holding Bitcoin back?

Yes, it is simply the law. Bitcoin is a proven asset, there is no doubt that there is demand for it, but you can’t generate this demand; you can’t open the demand tap without policy and regulation. 75% of the world’s invested capital is not in the hands of individuals, but of pension funds and sovereign wealth.

75% of the market is not participating; that’s the problem with Bitcoin; that’s the problem for everyone who says we don’t need to regulate cryptocurrencies; yes, we do, because we want 75% the trillions of dollars that can’t buy it now to come in and allocate to it two three three four five percent allocations to these big projects; I think that’s the potential; that’s why investors like me are spending so much time in Washington these days; it’s a great opportunity.

It’s just a matter of regulation getting us closer to widespread adoption.  

When 75% of the world’s money is tied up in sovereign and pension funds, and they’re not allowed to buy cryptocurrencies, it’s basic logic that this is terrible. If we free it up, it will be beneficial. The only way to free it up is to ensure its compliance with the law.

Since compliance departments control asset allocation, they can’t invest. There is no choice, as there is no standard, according to compliance.

What is slowing the pace of regulation in Washington?

Certainly, volatility is one of them. What happened with the Luna stablecoin was a catastrophe. Everyone who doesn’t know what they’re doing is being weeded out. That’s a positive thing. It’s tough for investors now, but that’s OK because when you take a big spatula like bankruptcy and scrape the patina off all the idiot managers, you take them out of the industry, which is good, and you’re left with much stronger management, better business models and well-funded projects, so we can move forward.

When people ask me what I think of this correction, I tell them it’s a great thing, it’s a great thing that happened here, and I’m sure there will be more corrections in the future, but those guys didn’t know what they were doing, they used too much leverage and they lost everything. This happens in all markets, including commodities, stocks and bonds. It has happened for decades in the past.

It’s good that idiot bosses are constantly being wiped out.

Source: Yahoo Finance Interview, https://www.youtube.com/watch?v=p3SRa3DEf_U

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