Bitcoin is a “fantastic hedge” according to Chamath Palihapitiya, the chairman of Virgin Galactic.

During his interview with CNBC’s “Squawk Box” on Wednesday, the billionaire investor said, “everybody should have 1% of their assets in bitcoin specifically.”

The founder of investment firm Social Capital also said Berkshire Hathaway chairman Warren Buffett “is completely wrong and outdated” for saying the bitcoin has zero value.

The long term bitcoin critic has called the digital asset a “rat poison” in the past and that he doesn’t own bitcoin or any other cryptocurrency and he never will.

1% net worth should be in completely uncorrelated asset

The bitcoin proponent first shared these views in 2013 and has stuck to them since. With the amount of leverage the financial industry is running and all the dislocations and exhaustion happening makes it hard to predict that there’s a lot of risk to the downside. In that condition, it would be great for an average individual citizen of any country in the world to have an uncorrelated hedge, said Palihapitiya.

“I don’t think when you wake up and see a coronavirus scare and the Dow down 2,000, you should not be going in and buying bitcoin. That is an idiotic strategy,” Palihapitiya said.

The “reasonable strategy is to say 1% of my net worth should be in something completely uncorrelated to the world and how the world works. You quietly over some period of time accumulate a position and then just never look at it again and hope that that insurance under the mattress never has to come due. But, if it does, it will protect you.”

But will it remain uncorrelated?

But will bitcoin remain uncorrelated if “all other risk assets if shit really hits the fan,” is what analyst Ceteris Paribus wonders. In its decade long history, bitcoin has lived in one type of world that involved constant quantitative easing (QE) with no financial crisis.

Bitcoin has been uncorrelated to other assets in a particular environment but such assets can converge during the time of crises, argues the analyst.

As we already saw this week, unlike gold, bitcoin didn’t rise but took a beating just like stocks. This means the digital asset is still perceived as risk and this correlation may further “increase with other risk assets (stocks) in a true time of panic.”