Kevin O’Leary, also known as Mr Wonderful, from ABC’s Shark Tank, says he is ready to pour a percentage of his investment portfolio in a Bitcoin exchange-traded-fund (ETF). He discussed his position on Bitcoin on The Pomp Podcast.
My conversation with @kevinolearytv is now on YouTube.
Kevin really understands markets, investing, and alternative assets. He also finally warms up to Bitcoin and says he will buy some 🙂
Eventually they all come around! https://t.co/VXnbRl7bgg
— Pomp 🌪 (@APompliano) December 1, 2020
The Canadian investor and TV personality explain that he believes Bitcoin is too volatile and illiquid for his portfolio. He is more than willing to own a basket of cryptocurrencies in an ETF approved by the US Securities and Exchange Commission (SEC). That comes as no surprise considering that Mr. Wonderful’s company O’Shares provides ETF wealth management services.
So far, Mr. O’Leary is a notorious crypto-skeptic. He told CNBC that to him; Bitcoin is “garbage” and “worthless.” Presumably, his opinions were fuelled by the personal incident that he had with Bitcoin. He attempted to purchase a property in Switzerland, but the venture failed because “They want a guarantee that the value comes back to the US currency,” “You have to somehow hedge the risk of bitcoin. That means it’s not a real currency. That means the receiver is not willing to take the risk of the volatility it has. It’s worthless.”
So, what changed his mind?
More than anything else, it seems to be the institutional interest and support. The seal of approval from SEC seems more imminent, and that’s got O’Leary on the hook. More investors will be willing to buy into Bitcoin ETFs after getting the green light from the regulators.
“If tomorrow morning we woke up and the SEC said you could create an ETF with bitcoin, and we think bitcoin is legitimate payment system and storage of wealth, not only would it go up, you’d have a lot of people like me investing in it because I’d say ok, I’ll give it a 5% weighting,” said O’Leary.
“Give me the top 7 cryptocurrencies, put them into an ETF wrapper, and let me invest in it with liquidity so that if I want to buy a million dollars of it in the morning and sell a million dollars in the afternoon, I can do that in an ETF format,” he added.
O’Leary already has about $100 worth of Bitcoin today; however, he claims that he only did that as part of a challenge with his students from Harvard Business School.
Even though O ‘Leary says that the regulators are still squeamish about regulating Bitcoin, SEC Chairman – James Clayton said that they are working on regulations that may authorize cryptocurrency ETFs in the future.
What gives Bitcoin its edge?
The reason why Bitcoin is attractive to investors is logical. They consider Bitcoin an asset that diversifies a portfolio – which is always a plus in the financial world. They also view Bitcoin as a hedge against inflation. With talks of stimulus packages rising again and the fear of post-pandemic hyperinflation becoming more likely, people seek alternatives, and Bitcoin is slowly becoming mainstream, ramping up the demand.