Bitcoin Is Beating Warren Buffett’s 'Crypto Bet' In 2023
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Bitcoin Is Beating Warren Buffett’s 'Crypto Bet' In 2023

written by John Murphy | March 17, 2023

According to a recent analysis, Bitcoin is on track to outperform a bet made by Warren Buffett in January 2018. The chance, made by the prominent investor and CEO of Berkshire Hathaway, was a wager that the index fund tracking the S&P 500 would outperform a group of hedge funds over ten years.

Since then, the landscape of the financial world has changed significantly, with cryptocurrency emerging as a viable asset class. Now, many are looking to Buffett’s bet as a yardstick to measure the performance of Bitcoin over the next few years.

At the time of the bet, the S&P 500 had a market capitalization of around $24 trillion. In contrast, the hedge funds selected by Protégé Partners – the opposing party in Buffett’s bet – had a combined value of approximately $1.7 trillion. In comparison, Bitcoin’s market cap was around $190 billion in January 2018.

Bitcoin vs. Crypto-Exposure-The Share NOW, COIN  

On March 17, Bitcoin’s price increased by about 55% year-to-date (YTD). By comparison, Nubank is up just 26%.

Meanwhile, another crypto-exposed asset, Coinbase (COIN), saw the biggest rebound, with him over 100% year-to-date. 

Still, Buffett’s investment has outperformed COIN over the last 12 months.  

As of March 17, NU is down 38% year-on-year compared to COIN’s 61.76%, roughly matching Bitcoin’s 37% loss over the same period.  

Warren Buffett Is Sticking To Investing In Neobanks 

Buffett’s investment firm Berkshire Hathaway has purchased $1.5 billion of Nubank Class. Shares in two rounds in July 2021, and February 2022.  

The news surprised many, as Buffett is a well-known cryptocurrency commentator, and Nubank offers cryptocurrency trading services through one of its divisions called Nucripto. In May 2022, the bank announced it would allocate 1% of its net worth to Bitcoin.  

Do You Think Bitcoin Is A Better Strategy?  

Comparing Bitcoin’s price action to the market debuts of Coinbase and Nu Holdings confirms that BTC regularly outperforms not only stocks but also crypto-exposed stocks. There are exceptions, such as the Bitcoin mining stock boom of 2021.  

However, holding bitcoin year-over-year has proven to be a better strategy and may have a higher upside potential than traditional stocks.  

Surprisingly, NU has fallen over 50% since its market debut in December 2021. Since then, BTC has outperformed, with him up 44% in the same period.  

Assuming Bitcoin continues its impressive run, it is on track to outperform the S&P 500 and the hedge funds selected in Buffett’s bet.

By January 2023, the halfway point of the ten-year chance, Bitcoin’s market cap is projected to be around $2.2 trillion. The S&P 500 and hedge funds will have market caps of $38.4 trillion and $3.8 trillion, respectively.

Of course, many variables at play could impact these projections, including regulatory changes, shifts in market sentiment, and global economic developments.

Moreover, Bitcoin is notorious for its volatility, with frequent swings in price that make it difficult to predict its future performance with any degree of certainty.

Bitcoin’s recovery in 2023 has pushed Coinbase’s stock price up more than 100% year-to-date, boosting Kathy Wood’s ARK portfolio.  

In 2023, BTC is trading at around $26,562, and Kathy Wood’s investment in Coinbase (COIN) is Warren Buffett’s popular ” Finally surpassed “Crypto Bet.”