Bitcoin is beating Warren Buffett’s ‘crypto bet’ in 2023

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In 2023, Bit­coin (BTC) and Cathie Wood’s Coin­base (COIN) invest­ment are final­ly out­per­form­ing War­ren Buf­fet­t’s pop­u­lar “cryp­to bet” in Brazil’s fin­tech giant Nubank (NU). 

Bitcoin vs. crypto-exposure stocks NU, COIN

As of March 17, Bit­coin’s price is up near­ly 55% year-to-date (YTD). In com­par­i­son, Nubank has risen by only 26%. Mean­while, anoth­er cryp­to-expo­sure asset, name­ly Coin­base stock (COIN), has seen the biggest rebound of the three, ris­ing over 100% YTD. 

BTC/USD and COIN ver­sus NU year­ly per­for­mance. Source: TradingView

Nev­er­the­less, Buf­fet­t’s invest­ment has fared bet­ter than COIN over the past 12 months.

As of March 17, NU is down 38% year-over-year com­pared to COIN’s 61.76%, near­ly equal to Bit­coin’s 37% loss­es in the same period.

Warren Buffett sticks by his neobank investment

Buf­fet­t’s invest­ment firm Berk­shire Hath­away pur­chased $1.50 bil­lion worth of class‑A Nubank stock in two sep­a­rate rounds in July 2021 and Feb­ru­ary 2022.

The news came as a sur­prise to many since Buf­fett is a well-known cryp­tocur­ren­cy crit­ic, and Nubank offers cryp­to trad­ing ser­vices via one of its wings called Nucrip­to. In May 2022, the bank said that it would allo­cate 1% of its net assets to Bitcoin. 

“This move rein­forces the company’s con­vic­tion in Bitcoin’s cur­rent and future poten­tial in dis­rupt­ing finan­cial ser­vices in the region,” Nubank said at the time.

But despite Nubank’s cryp­to expo­sure and NU’s price decline, Buf­fett has not sold a sin­gle share, accord­ing to Berk­shire’s lat­est annu­al earn­ings report.

The deci­sion to keep hold­ing NU through a rough mar­ket like­ly coin­cides with Nubank’s growth in the Latin Amer­i­can bank­ing sector.

Nu Hold­ings, the par­ent com­pa­ny of Nubank, report­ed a sol­id 2022 with 140% year-on-year growth in rev­enue and a 38% year-over-year rise in active customers. 

Cathie Wood doubling down on COIN in 2023

The same can­not be said about Coin­base’s earn­ings in 2022 with its 57% drop in year-over-year revenue. 

Relat­ed: Cryp­to act­ed as safe haven amid SVB and Sig­na­ture bank run: Cathie Wood

But ARK Invest CEO, Cathie Wood, appears unfazed by con­tin­u­ing to buy COIN shares via her ARK Next Gen­er­a­tion Inter­net ETF (ARKW) and ARK Inno­va­tion ETF (ARKK) in 2023. The COIN buys, in par­tic­u­lar, account for rough­ly 30% of all the stock pur­chased so far this year.

COIN weight across ARK ETFs port­fo­lios. Source: Ark Invest

As a result, Coin­base has become Wood’s fifth-largest hold­ing on record worth near­ly $670 mil­lion at the time of writing. 

Holding Bitcoin a better strategy?

Com­par­ing Bit­coin’s price per­for­mance with the mar­ket debut of Coin­base and Nu Hold­ings reaf­firms that BTC not only reg­u­lar­ly out­per­form stocks, but also cryp­to-expo­sure stocks. Although excep­tions have been seen, such as with the Bit­coin min­ing stock boom in 2021. 

But over­all, hold­ing Bit­coin is prov­ing to be a bet­ter strat­e­gy year-over-year, and like­ly with more upside poten­tial, than tra­di­tion­al stocks. 

Notably, NU has dropped by more than 50% since its mar­ket debut in Decem­ber 2021. Since then, BTC has fared bet­ter with a 44% decline in the same period. 

NU’s returns since mar­ket debut vs. BTC. Source: TradingView

Sim­i­lar­ly, COIN is down 80% since its IPO in April 2021. The same down-cycle, how­ev­er, has seen Bit­coin only los­ing around 50%, emerg­ing as bet­ter per­former over­all against cryp­to-expo­sure stocks such as Coin­base and Nu Holdings.

This arti­cle does not con­tain invest­ment advice or rec­om­men­da­tions. Every invest­ment and trad­ing move involves risk, and read­ers should con­duct their own research when mak­ing a decision. 

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