Why This Billionaire Wants Bitcoin to Fall

In an interview on Bill Maher’s Club Random podcast, famed billionaire investor Mark Cuban, worth around $6.25 billion today, aired his grievances about gold, how Bitcoin (BTC -0.52%) is better, and why he hopes Bitcoin falls even further. 

During the podcast, the two dished opinions back and forth about the timeless asset, with Cuban saying at one point that “if you own gold you’re dumb.” He also said that although both Bitcoin and gold are stores of value, the world’s first cryptocurrency is more attractive for many reasons.

Gold vs. digital gold

He started off his argument discussing why gold in its physical form is so different from gold purchased through stocks or exchange-traded funds (ETFs). He said that, unlike Bitcoin, gold can be confiscated and if things really “went to hell in a hand basket,” gold could be stolen right out of your hands. He also pointed out that unlike Bitcoin, which is divisible into any quantity, shaving off a piece of gold to purchase goods or services is cumbersome.

The conversation then moved to the topic of non-physical gold in the form of equities. Cuban claimed that this form of gold is just a bunch of “digital transactions,” just like Bitcoin. The billionaire’s point was that gold purchased through equities is no more tangible than Bitcoin. He surmised that both share the same quality in that people purchase gold and Bitcoin due to their perception of the idea that each holds some sort of intrinsic value that can store and protect their wealth, but the argument that one is more “real” than the other is a misconception.

When cornered about whether there’s anything backing Bitcoin, Cuban pointed out that stocks are no different than Bitcoin. They both aren’t tangible, but that doesn’t mean they aren’t valuable. He said, “the price of a share of stock that doesn’t pay a dividend is worth what somebody will pay for it” — just like Bitcoin and gold. His analogy also trumps the argument that is often brought up that you can’t physically hold a Bitcoin. One could say the same for stock in a company.

He summed up his argument about Bitcoin with a surprising wish — that Bitcoin fall even more. Down more than 70% during the past year, Bitcoin has been in the midst of a major slump since hitting an all-time high of nearly $70,000 in November 2021.

Cuban has publicly acknowledged that he owns Bitcoin, which would seem counterintuitive to hoping that an investment would decrease in value. However, his reasoning is based on his conviction that Bitcoin will eventually rise as demand for the asset increases. He said he hopes “Bitcoin goes down a lot further so I can buy some more.”

Why Bitcoin?

To understand why Cuban favors Bitcoin over gold, we can look at another interview he did with Kitco News in 2019. In it, Cuban said that he prefers Bitcoin to gold because there’s a set limit to its total supply.

Bitcoin’s code caps the supply at 21 million bitcoins. By comparison, miners constantly add to the gold supply, which has no hard ceiling as Bitcoin does.

Due to this, there are few other assets in the world like Bitcoin that can benefit from such a strictly finite supply. At the same time, the rate at which new Bitcoins are entering the market is slowing. Therefore, there’s a real possibility that Bitcoin will continue to rise in price over the long term as demand increases.

RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

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