Warren Buffet changes his mind about Bitcoin
The famous American investor has changed his mind about Bitcoin. In the past, he was fiercely opposed to cryptocurrency. He didn't find it tangible, and preferred shares of big companies with promising prices.
Recently, his investment fund sold part of its Visa and Mastercard shares. He then subsequently proceeded to purchase Nubank shares. Nubank is Brazil’s largest fintech (finance and technology) bank. But it is also the most popular among Bitcoin investors.
We thus discover on February 14, that he bought $1 billion worth of Nubank shares at the end of 2021. He also withdrew $1.8 billion worth of Visa shares and $1.3 billion. Mastercard shares. So we understand that the most famous of American investors sensed a change. Here are the points we will discuss together:
- Buffet ‘s strategy
- The end of sales for bitcoin ?
- The exponential evolution of cryptocurrency
W. Buffet is known to be very cautious in his investments, especially regarding speculative bubbles. But he is also known for making the right trades at the right time. Thus, this veritable wolf of Wall Street already had in his possession $500 million worth of Nubank stock in July 2021. Which in December of the same year represented a profit of $150 million.
The Impossible Bitcoin/Buffet Relationship Made Real
From the height of his 91 years, he had a disdainful look at Bitcoin. Digital assets were nothing but hot air to him. Nevertheless, the success of fintech companies, and their growth, allowed him to overcome his disgust. Currently, the fastest-growing banks are those with a foothold in crypto.
This is the case of this bank in Brazil which in 2020 bought Eazynvest. The latter is a trading platform that has developed a BTC tracker. This makes investing in cryptocurrency more accessible to the uninitiated. This ETF is on the second oldest Brazilian stock exchange. Globally, crypto investments doubled in 2021, from $35 billion to $80 billion. (All crypto-related investments are counted)
Buffet is therefore despite himself determined to follow this development closely, as evidenced by his portfolio. Let’s see what he’s hiding from us…
His (Hidden) Love For BTC
As you will have understood, even if he is quite hostile to the concept of decentralized currency, he is a catalyst for it. Indeed, Nubank is not the first company to deal with the crypto it acquires. Other companies in which he owns part of the capital are already interested in it. Thus Emily Portney, the chief financial officer of Bank of New York Mellon Corp noted that “digital assets could become a “significant source of revenue” for investment banking firms as bitcoin investment vehicles become more widespread.”
A representative from Valkyrie Investments predicted an increase in capital flows into crypto-asset-related investment vehicles, saying they have become a “phenomenon that is starting to take off”, before commenting:
“If you look at the inflows from a volume perspective, not only have they been flat, even with the price corrections bitcoin is notoriously famous for, but you see a lot of institutions jumping in.”
US Bancorp, Bank of America, BNY Mellon also shared their interest in crypto. Greg Waisman, the co-founder of the Mercuryo crypto wallet, explains the following:
“Investment in Nubank can be seen as Buffet’s way of supporting the fintech and cryptocurrency world without backtracking on his past criticisms […]. Even indirect exposure can only increase the positive sentiment that could push more investors into this space.”
So we can say that the future of crypto is bright. For the past few months, more and more large institutions have been proclaiming their effort to get into crypto. Once we get rid of any financial cutthroat cliche, a massive influx of users will emerge. Remember that the investment curve in the field is exponential. Perhaps it is no longer crazy to imagine DeFi being more highly valued than traditional finance? In the meantime one thing is certain, the influence of Wall Street is a double-edged sword. For the long-term consequences, we’ll let time tell us.