Benzinga - Investor Chamath Palihapitiya might be best known for his run of SPAC deals in 2020 and 2021 and the proclamation of being the “SPAC King.” Others may know Palihapitiya for being early to huge growth opportunities such as investments in Meta Platforms, Tesla and Bitcoin.
Here’s a look back at a legendary call on an investment in Bitcoin.
What Happened: Palihapitiya said that he began investing in Bitcoin (CRYPTO: BTC) back in 2012 after getting a recommendation from a friend.
The investor said he invested $1 million initially and then added to the position after learning more.
In 2023, Palihapitiya wrote an op-ed in Bloomberg that shared advice with the public.
“Exactly a decade ago, on May 30, 2013 I wrote this Op Ed in Bloomberg arguing for everyone to put 1% of their net worth in BTC. The average price that day was $128.80,” Palihapitiya tweeted to celebrate the 10-year anniversary of his call.
The original piece from Palihapitiya shared many catalysts for Bitcoin and laid out the investment thesis.
“The opportunity here is to think constructively about a world in which money flows are more transparent (Bitcoin), easy (Bitcoin), cheap (Bitcoin) and secure (Bitcoin).”
Palihapitiya cited the 2008 financial crisis and a lack of trust in the sector since the collapse of companies like Lehman Brothers and Bear Stearns.
“The point is that this fundamental trust no longer exists; in its place, rises Bitcoin.”
At the time, Palihapitiya said Bitcoin was being used to avoid high banking fees, paying for goods and services and as a currency in areas around the world.
“Bitcoin provides a safe way for anyone, anywhere to send, receive or store his or her money.”
Palihapitiya said the same couldn’t be said for traditional banks where large banks were investing the deposits in derivatives, international banks could seize the money and the currency could be devalued by a government.
“If Bitcoin grows into something bigger – a useful reserve currency, then watch out: Its value will far exceed $400,000. I personally think that Bitcoin is already superior to gold.”
The investor recommended allocating 1% of assets into Bitcoin at the time.
Palihapitiya references “The Matrix” movie at the end of his piece saying taking the blue pill goes back to life as Neo knows it or taking the red pill to see life as it is.
“Bitcoin is a red pill. I am hopeful that Bitcoin prevails. The world needs more red pills.”
Related Link: How To Buy Bitcoin
Investing $1,000 in Bitcoin: While Bitcoin has not reached the $400,000 price target Palihapitiya laid out, the leading cryptocurrency has soared in value over the last decade.
Investors who followed Palihapitiya’s advice and put 1% of their assets into Bitcoin have been pleasantly rewarded with huge returns.
With an average price of $128.80 at the time of the op-ed, an investor could have purchased 7.7640 BTC at the time with $1,000.
The $1,000 investment would be worth a staggering $210,112.16 today based on a price of $27,062.36 for Bitcoin at the time of writing.
At its all-time high price of $68,789.63, the $1,000 allocation to Bitcoin based on Palihapitiya’s piece would’ve been worth $534,082.69.
The returns of Bitcoin over the last decade have far exceeded most assets, including the overall stock market.
The same $1,000 investment in the SPDR S&P 500 ETF Trust (NYSE: SPY) on May 30, 2013, would be worth $2,547.13 today.
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Photo: Christopher Michel via Flickr Creative Commons
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