Warren Buffett Can Technically Buy All Circulating Bitcoin Today, But Not Really
- Because of the relative youth of Bitcoin, the market surrounding it still remains somewhat small, with a total size of $164.5 billion
- To keep this in perspective, Warren Buffett has approximately $137 billion, meaning that he is just a hair short from (theoretically) being able to buy every circulating BTC
- The math regarding this possibility is a bit deceiving, however, as it is premised on the notion that the market dynamics of supply and demand wouldn’t influence the crypto’s price
Bitcoin has seen unprecedented growth through the past decade, quickly transforming from a niche idea only known by a select few on online forums to a mainstream digital currency that is used by millions – even attracting major institutional players.
Despite the magnitude of this growth, the market surrounding the digital asset still remains relatively small.
This is clearly elucidated while looking towards its market cap as compared to the net worth of some incredibly wealthy individuals, like Warren Buffet.
Warren Buffet Could Theoretically Buy Nearly All of Bitcoin’s Circulating Supply
The benchmark cryptocurrency currently has a total market capitalization of $164.5 billion.
Although by all means this is a large number – especially for a nascent market – it is dwarfed by the magnitude of capital seen within the traditional markets.
Gold, for instance, has a market cap of around $9 trillion, while its less valuable counterpart silver has a market cap of somewhere between $500 billion and $1 trillion.
Bitcoin, however, possesses one trait that these hard assets lack: absolute scarcity. The crypto’s deflationary structure means that there will never be more than 21 million BTC in existence, whereas no one knows just how much gold and silver has yet to be discovered.
At its current size, it is possible that one single individual could – in theory – purchase all the circulating Bitcoin.
Anthony Pompliano – better known by “Pomp” on Twitter – mused this possibility in a recent tweet while pointing to investing legend Warren Buffett’s immense wealth.
“Warren Buffett has $137 billion in cash. That is almost enough to buy every Bitcoin in the circulating supply.”
Warren Buffett has $137 billion in cash.
That is almost enough to buy every Bitcoin in the circulating supply.
— Pomp 🌪 (@APompliano) May 2, 2020
Here’s Why This Isn’t a Real Possibility
Although in theory this something like this could happen, it would hinge on the fact that everyone sells their Bitcoin at the cryptocurrency’s current price – a possibility that ignores the principles of supply and demand.
Binance CEO Changpeng Zhao responded to Pomp, noting that the possibility is only true is every BTC investor decides to sell in unison – a point that Pomp noted he agrees with.
“This is where math is deceiving. It’s only true if EVERY hodler is willing to sell at the current price, which is obviously not true, as there is no 21m BTC sell wall. Alas, Mr. Buffet will only be able to buy a small portion of bitcoins, and at very high prices at that,” he explained.
This is where math is deceiving.
It's only true if EVERY hodler is willing to sell at the current price, which is obviously not true, as there is no 21m BTC sell wall.
Alas, Mr. Buffet will only be able to buy a small portion of bitcoins, and at very high prices at that. 😀
— CZ Binance 🔶🔶🔶 (@cz_binance) May 2, 2020
Nevertheless, the point that Pomp brings up does shine a light on just how small the market surrounding Bitcoin currently is, and how much room for growth it has.
Featured image from Unplash.