Chamath Palihapitiya, venture capitalist and chairman of spaceflight company Virgin Galactic, believes that everyone should allocate a small portion of their assets to Bitcoin.
In an interview on CNBC’s Squawk Box, the 43-year-old billionaire says everyone should have one percent of their investment portfolio in the largest cryptocurrency by market cap because it is not at all correlated with other financial assets.
“Everybody should have one percent of their assets in Bitcoin, specifically.
When you see the amount of leverage the financial industry is running, and you think about all these dislocations and all these exogenous things that are happening that you can’t predict, there’s a lot of risk to the downside, and it will be great that an average individual citizen of any country in the world has an uncorrelated hedge. Every financial instrument is correlated.”
Amid the coronavirus scare that is causing a bloodbath in both the US stock market and BTC, Palihapitiya explains that while the cryptocurrency is a good hedge against traditional assets, investing in Bitcoin is not an event-driven strategy.
“I don’t think when you wake up and you see a coronavirus scare, and the Dow down 2,000 – you should not be going in and buying Bitcoin. That is an idiotic strategy.
I think a reasonable strategy is to say ‘one percent of my net worth should be in something that is completely uncorrelated to the world and how the world works.’”
Palihapitiya says he views investment in Bitcoin as a form of insurance that grows in value over time.
“You quietly, over some number at a time, accumulate a position, and then you just never look at it again, and hope that that insurance under the mattress never has to come due. But if it does, it will protect you because by then, that thing will be hundreds of thousands or millions of dollars a coin.”
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