More than 10% exposure to Bitcoin is ‘too dangerous’

Thomas Peterffy, president of Interactive Brokers, has expressed a cautious endorsement of Bitcoin as a component of investment portfolios.

During a Bloomberg podcast published Thursday, Peterffy suggested allocating 2% to 3% of his net worth to Bitcoin, warning that going beyond 10% could pose “too dangerous” financial risks. His comments underscore a balanced perspective, advocating for diversification while acknowledging the speculative nature of cryptocurrencies.

Peterffy’s Bitcoin Advice

The 80-year-old Hungarian-American billionaire businessman shared his personal fears about the volatile nature of digital assets and admitted to being “scared” of them. He described them as having no intrinsic value, comparing their value to that of fiat currency, which he said also has no tangible basis.

According to Peterffy, Bitcoin’s perceived value is based solely on collective belief, making it susceptible to significant price swings. He also warned against the growing trend of market participants taking excessive leverage, warning that a sudden drop in their price could lead to large-scale bankruptcies and strain financial clearinghouses.

It’s important to note that despite Peterffy’s stance, Interactive Brokers has been a player in the cryptocurrency industry since December 2017, when it introduced Bitcoin futures trading on the CBOE Futures Exchange. In September 2021, the Connecticut-based brokerage expanded its services by partnering with Paxos Trust Company, allowing clients to trade and hold cryptocurrencies such as Bitcoin, Ethereum, and Litecoin.

Peterffy’s comments align with those of other industry veterans such as Bill Miller, who recently suggested that financial advisors may soon be recommending 1% to 3% Bitcoin allocations. Miller highlighted Bitcoin’s unique economic design, which ensures that its supply remains static regardless of demand or price fluctuations, adding to its long-term investment appeal.

Businesses adopt Bitcoin for Treasury reserves

Following Donald Trump’s election victory, Bitcoin’s value broke through $100,000, fueled by expectations of a more lenient regulatory stance on the industry. Businesses have responded by adding Bitcoin to their cash reserves, challenging traditional assets as companies explore alternatives to protect against inflation.

Online streaming and video platform Rumble recently announced that its Board approved a strategy to diversify its treasury, allocating up to $20 million in excess cash to Bitcoin.

Biotech companies, including Enlivex Therapeutics, Acurx Pharmaceuticals and Hoth Therapeutics, also unveiled plans to allocate up to $1 million each in Bitcoin for their cash reserves. Similarly, Amazon shareholders have urged the tech giant to adopt Bitcoin as part of its $88 billion treasury, highlighting its inflation-hedging potential.

Globally, India’s Jetking Infotrain made history on December 9 by becoming the first Indian public company to buy Bitcoin, acquiring 12 BTC for its reserves.

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