If the swift demise of FTX surprised a whole lot of youthful edgy investors buying on margin, Warren Buffett — the Oracle of Omaha — was not surprised. Buffett, the world’s most famous investor, once said (all the way back in 2018) about the crypto clique: “I can say almost with certainty that they will come to a bad ending.”
(Buffett’s values, elucidated below, just didn’t fit with the crypto environment.)
Sam Bankman-Fried, the charismatic CEO of FTX and the living embodiment of the crypto scene (and it is/was a scene), met that bad ending yesterday, as FTX declared bankruptcy after a rescue plan went poof.
8) And so we are where we are. Which sucks, and that's on me.— SBF (@SBF_FTX) November 10, 2022
SBF, as he’s commonly known, was frequently referred to as the “next Warren Buffett.” It is label, like the “next Michael Jordan” in basketball, that has proven repeatedly hard to live up to.
In May of 2022 at the famous annual Berkshire Hathaway shareholders meeting, Buffett said ominously that he wouldn’t buy Crypto even in a firesale. “[If you] owned all of the bitcoin in the world and you offered it to me for $25, I wouldn’t take it,” Buffett said.
Why the reluctance by the Oracle, when the perceived value of cryptocurrencies just kept rising? Isn’t rising value the goal of investing? Only if you have an exit, Buffett sagely explained.
“Because what would I do with [the bitcoin]?” he said. “I’ll have to sell it back to you one way or another. It isn’t going to do anything.” Liquidity — it’s a thing.
Buffett is known for his sagacious aphorisms and perhaps his most famous is this: “When the tide goes out, you get to see who is swimming naked.” Let’s just say there’s a very liberal dress code on Crypto Beach today.