Bitcoin Struggles After Warren Buffett Says It's

Bitcoin prices have been trying to breach the $10,000 mark after falling close to $6,000 at the beginning of April. Things were looking promising, and cryptocurrency supporters were on the edge of their seats waiting for Bitcoin to break back into the five-digit-range until two of the most popular billionaires in the nation took turns dissing Bitcoin and cryptocurrency in general.

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Warren Buffet appeared on CNBC this week and didn’t mince words telling host Becky Quick that bitcoin is “probably rat poison squared.” The Berkshire Hathaway Chairman and CEO didn’t stop there, he went on to say that bitcoin was a non-productive asset.

"When you’re buying nonproductive assets, all you’re counting on is the next person is going to pay you more because they’re even more excited about another next person coming along," he said on CNBC’s "Squawk Box" following Berkshire’s annual shareholder meeting. He finished by saying that he believed the cryptocurrency would come to a bad end.

Buffet isn’t alone in his criticism either. Bill Gates, the Co-Founder of Microsoft, added this during the interview:

"As an asset class, you’re not producing anything and so you shouldn’t expect it to go up. It’s kind of a pure ‘greater fool theory’ type of investment. I would short it if there was an easy way to do it."

The comments caused a stir in the cryptocurrency market, even as Bitcoin has gained more legitimacy. There is even talk that JP Morgan will open a cryptocurrency trading desk in the near future.

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Buffett and Gates aren’t the only possible explanation for the drop in bitcoin prices, there is also some speculation that the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission which meet this week are negatively affecting prices. There is concern that the SEC will issue negative comments about the emerging currencies after the meeting.

According to a report from the Wall Street Journal, senior SEC and CFTC officials will be discussing whether securities laws should apply to cryptocurrencies. That doesn’t only affect bitcoin, it would affect ether, the second largest cryptocurrency as well.

It’s much more likely that possible commentary from the SEC is having the most impact on the market as all cryptocurrencies were trading down on Monday. CFTC Chairman J. Christopher Giancarlo has already made his thoughts on the matter clear, describing cryptocurrency as part currency, part security, and part digital coin.

“Bitcoin and a lot of its other virtual currency counterparts really have elements of all the different asset classes, whether they’re meeting payment, whether it’s a long-term asset,” he told CNBC. “We see elements of commodity in it that are subject to our regulations.” He also asserted that bitcoin might be best suited to a long-term buy and hold strategy, like gold.

There hasn’t been any news following the rumored SEC meeting with the CFCT which the Wall Street Journal reported. In fact, the reports concerning the “imminent” crackdown on cryptocurrencies were almost exclusively filed by the Wall Street Journal. It’s true that the SEC has created a cryptocurrency task force, but there’s no indication at the time that any regulations are soon going to be announced.

Ultimately regulation of the new currency will depend largely upon Congress addressing the matter. As for the stability of bitcoin and others? For now, it’s a waiting game, as more major firms add trading desks, the legitimacy of bitcoin will cease to be questioned. Buffett has famously said he missed the boat, and due to his own "stupidity" didn’t invest in Amazon, it’s possible he’s repeating that mistake with bitcoin.