Bitcoin is gradually getting more proponents as the halving event gets closer. The billionaire chairman of spaceflight company Virgin Galactic, Chamath Palihapitiya, has recently recommended that every investor should consider holding Bitcoin (BTC) as a form of crisis insurance.
While speaking on CNBC’s Squawk Box, Palihapitiya stated that he is convinced that:
“Everybody should probably have 1% of their assets in Bitcoin.”
The CEO also added that Bitcoin features a ‘fantastic hedge’ just like all other financial instruments are correlated except Bitcoin that is entirely uncorrelated. He added:
“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.”
Palihapitiya denies coronavirus is a bull catalyst
Nevertheless, the billionaire former Facebook executive rejects the latest theory that economic woes arising from the coronavirus outbreak will drive the crypto markets into a major bull trend. He commented:
“I don’t think when […] you wake up and see a coronavirus scare and the Dow down 2,000; you should not be going in and buying Bitcoin – that is an idiotic strategy.”
The ‘Bitcoin is a safe haven’ narrative currently has taken a major beating this week with Bitcoin losing around 13% in 36 hours. It seems to be following the trend set by the stock markets as a result of fears over the effect of the coronavirus.
On the contrary, gold has performed quite well in its traditional role as a haven. It has gained over 0.5% in recent days trading for $1,648.82 per ounce.
Hold some Bitcoin
However, amidst all this market noise and global economic inconsistency, Palihapitiya suggests that an excellent approach instead of trying to profit from the short term market trends is for investors to place a small percentage of their net worth into Bitcoin as ‘insurance.’
“I think a reasonable strategy is to say 1% of my net worth should be in something completely uncorrelated to the world and how the world works. You quietly over some period of time accumulate a position and then 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.”
The CEO is a longtime Bitcoin supporter while his company, Virgin Galactic, started accepting Bitcoin for its $250,000 spaceflights in November 2013. Back then, the company became one of the most high profile companies to accept Bitcoin as a form of payment.
Palihapitiya told CNBC during the interview that the company has already received 7,957 “registrations of interest” since its first flight in December 2018. These registrations amounts equate to $2.39 billion in potential ticket sales.