Warren Buffett’s Crypto Bet Is Failing Against Bitcoin: Here’s How

Paigambar Mohan Raj
Source: U.Today

Bitcoin (BTC) has risen by almost 55% since the beginning of the year. Meanwhile, Coinbase (COIN) stock is up by over 100% in the same time frame. On the other hand, Warren Buffett-backed Nubank has gained only 26% since January 2023, far shy of Bitcoin’s (BTC) gains. Buffet’s cryptocurrency bets seem to be taking a back seat this year.

Cathie Wood, the founder, and CEO of Ark Invest has invested heavily in Coinbase stocks. It appears that Wood has made better bets in the cryptocurrency space, compared to the veteran trader and investor.

Did Warren Buffett make a bad bet against Bitcoin?

Although Buffett’s bet is down since January of this year, during the past 12 months, his Nubank investment has performed better than COIN. Compared to COIN, which is down 61.76% as of March 17, Nubank is down 38% year over year as of that date. The Warren Buffett-backed bank almost equally matches Bitcoin’s (BTC) 37% losses over the same time frame.

According to Berkshire’s most recent annual results report, Buffett has not sold a single share. This is despite Nubank’s exposure to cryptocurrencies and the decrease in NU’s price. The choice to hold onto NU despite the challenging market is probably related to Nubank’s expansion in the Latin American banking industry. The parent firm of Nubank, Nu Holdings, announced a strong 2022 with a 140% increase in yearly revenue growth. Moreover, the firm reported a 38% yearly increase in active clients.

In two consecutive rounds in July 2021 and February 2022, Buffett’s investment company Berkshire Hathaway paid $1.50 billion for class-A Nubank stock. Many were surprised by the revelation because Buffett is a well-known opponent of cryptocurrencies. The bank announced in May 2022, that it will devote 1% of its net assets to Bitcoin (BTC).

Is BTC still better than stocks?

By comparing the price performance of Bitcoin (BTC) with the market debuts of Coinbase and Nu Holdings, it is witnessed that BTC consistently outperforms both stocks and stocks with crypto exposure. Holding Bitcoin has proven to be a stronger strategy than traditional stocks year over year.

Interestingly, NU has declined by more than 50% since December 2021, when it first entered the market. Bitcoin has now fared better, declining by 44% over the same time frame.

At press time, Bitcoin (BTC) was trading at $26,211, up 6% in 24 hours, while the Warren Buffett-backed Nubank was trading at $4.61 up 3.83% today. Coinbase stock on the other hand was trading at $67.78, up by 5.12% at press time.