Berkshire Hathaway

Bitcoin market cap overtakes Berkshire Hathaway, soars past $800B

Bitcoin is now the 10th-biggest asset by market cap, following Meta (formerly Facebook) and Nvidia.

Bitcoin (BTC), the original cryptocurrency, is gaining momentum versus global large-cap stocks, overtaking the market value of American conglomerate Berkshire Hathaway.

As Bitcoin surged past $40,000 over the weekend, its market cap rose to above $780 billion, just beating out Berkshire Hathaway’s $779 billion market cap it closed the market with on Dec.

BRK.A has seen a slight decline recently, slipping around 1.3% over the past five days.

The volatility of BRK.A is nowhere near that of Bitcoin, which has surged 20% over the past month and almost 150% YTD, according to data from CoinGecko.

At the time of writing, Bitcoin’s market cap amounts to $811 billion, or 4% higher than the market value of Berkshire Hathaway.

Cryptocurrency lawyer John Deaton took to X (formerly Twitter) to comment on the news. “That’s a pretty damn big bottle of rat poison,” Deaton wrote, referring to the words of Berkshire Hathaway CEO Buffett, who famously called Bitcoin “rat poison squared” in 2018.

According to data from CompaniesMarketCap, Bitcoin is now the 10th-biggest asset by market cap, following Meta Platforms (formerly Facebook) and Nvidia, whose market value currently stands at $834 billion and $1.2 trillion, respectively.

Warren Buffett was wrong about a ‘rat poison’ Bitcoin portfolio, data shows

Warren Buffett is not a big fan of Bitcoin, and this position has cost his investment portfolio at least a 320,000% potential gain.

Legendary investor Warren Buffett sees no value in Bitcoin (BTC), infamously calling it “rat poison squared.” But data shows that adding Bitcoin to a so-called “rat poison portfolio,” an equally weighted portfolio of Berkshire Hathaway, Microsoft, JPMorgan and BlackRock stocks, would have produced much better returns for The Oracle of Omaha.

“Rat poison portfolio” with Bitcoin does better

Since 2014, allocating only 2.5% Bitcoin yearly to the rat poison portfolio increases returns by nearly 20% with reduced risks, according to independent market analyst Alpha Zeta. For now, the portfolio’s returns stand around 16%.

*Rat poison portfolio with Bitcoin allocations. Source: Alpha Zeta*

Despite Bitcoin’s notorious price volatility, Alpha Zeta noted that BTC’s correlation with the stocks of Berkshire Hathaway, Microsoft, JP Morgan and BlackRock is very low.

*Correlation between Bitcoin and Berkshire Hathaway, Microsoft, JP Morgan and BlackRock stocks since 2014. Source: Alpha Zeta*

For instance, during the 2021–2023 bear market, allocating Bitcoin to the rat poison portfolio could have negated losses by around 10%.

*Rat poison portfolio drawdown including Bitcoin’s 2.5% allocation. Source: Alpha Zeta*

In other words, BTC typically negates losses imposed by downside movements in the said stocks. Therefore, allocating a small portion of Bitcoin to the rat poison portfolio has proven to be a reasonable hedging strategy to offset potential negative returns.

Bitcoin has outperformed Berkshire Hathaway by 320,000%

Bitcoin proponents have projected it as an alternative to traditional safe-haven assets, such as gold, given the scarcity that comes with its fixed supply of 21 million BTC and increasing deflation over time.

This has attracted many people to buy Bitcoin as a way of offsetting fiat debasement and excessive money printing by central banks around the world. For instance, the number of non-zero Bitcoin addresses has grown from around 2,500 in 2009 to over 45 million in 2023, per Glassnode.

*The number of non-zero Bitcoin addresses since 2009. Source: Glassnode*

Nonetheless, Buffett has recently said that Bitcoin is a gambling token, noting that “it doesn’t have any intrinsic value […], but that doesn’t stop people from wanting to play the roulette wheel.”

However, the veteran investor continues to have exposure in the broader crypto market through his popular investments, such as Nubank, which offers crypto-related services in Latin America.

As of April 2023, Bitcoin is down nearly 60% from its record high of $69,000 in November 2021 but is up 100% so far this year.

Since its launch in January 2009, Bitcoin has outperformed Berkshire Hathaway’s portfolio by over 320,000%.

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.

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

Bitcoin’s rebound in 2023 has also seen Coinbase stock gaining over 100% year-to-date, boosting Cathie Wood’s ARK portfolio.

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.

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.

Community mocks Charlie Munger for his obsession with China’s Bitcoin ban

The online community has expressed bewilderment over how China’s crypto ban aligns with the United States’ proclaimed principles of freedom.

The cryptocurrency community has ridiculed well-known Bitcoin (BTC) critic Charlie Munger, vice chairman of Berkshire Hathaway, for calling the United States to follow in the footsteps of China and ban crypto.

In an op-ed article in The Wall Street Journal, the 99-year-old investment veteran has once again slammed crypto, calling a cryptocurrency a “gambling contract with a nearly 100% edge for the house.”

Munger also said that a cryptocurrency is “not a currency, not a commodity, and not a security,” adding that “obviously” the U.S. should enact a new federal law that would ban crypto.

According to Munger, the best way to approach crypto is to follow the example of China, which put a blanket ban on crypto in September 2021. The Berkshire Hathaway vice chairman stated:

“What should the U.S. do after a ban of cryptocurrencies is in place? Well, one more action might make sense: Thank the Chinese communist leader for his splendid example of uncommon sense.”

The community was quick to react to Munger’s latest anti-crypto arguments, with many expressing bewilderment about how measures like China’s crypto ban stack up with the United States’ proclamations that it supports freedom.

“The battle lines are being drawn. Freedom or tyranny. Non-custodial wallets are the hill we can’t surrender,” NFT APE author Adam McBride wrote on Twitter.

Others also mocked Munger for not understanding that crypto is virtually unbannable. Indeed, even after “banning” crypto in 2021, China has continued to be the second-largest Bitcoin miner in the world, and possessing crypto is apparently still legal. Moreover, the idea of lifting the crypto ban has been floating around in China for a while.

It’s sad that Charlie munger believes he’s doing something by calling for a ban. Doesn’t understand it’s math and can’t be banned. Old age deteriorates critical thinking skills.

— 941 (@level941) February 2, 2023

Given that Munger called cryptocurrency a “gambling contract,” it’s worth noting that gambling is legal under U.S. federal law, despite people losing significant money from it.

According to data from the American Gaming Association, U.S. casinos and mobile gaming apps hit a record $54.93 billion in revenue during the first 11 months of 2022. The revenues came at the cost of Americans losing more money on gambling than ever before by the first quarter of 2022.

Many European countries also allow at least some gambling, with about 420,000 British gamblers losing more than $2,000 per year.

Despite casinos causing significant losses for investors, Europe and the U.S. have not followed in the footsteps of China, which banned most forms of gambling back in 1949.

Is MATIC price about to double? Polygon’s Reddit hype pushes exchange balance to 9-month lows

MATIC price could sustain bullish momentum on cues from a mix of optimistic fundamental and technical indicators.

A sharp rebound in the Polygon (MATIC) market in the last four months has increased its price by 200% when measured from its June 2022 bottom of $0.31. And now, the token is showing signs of undergoing another major market rally.

MATIC exchange balance hits nine-month low

Notably, the MATIC supply held by all crypto exchanges fell to 802.15 million on Oct. 26, its lowest level since January 2022. The plunge came as a part of a broader downtrend that has witnessed over 600 million MATIC leaving exchanges in the last four months, data on Santiment shows.

*MATIC balance on exchanges versus price. Source: Santiment*

A declining crypto balance across exchanges is perceived as bullish by the market since traders typically withdraw their funds from trading platforms when they want to hold the tokens long-term.

The MATIC chart above shows a similar albeit erratic negative correlation between its price and supply on exchanges. As a result, a period of decline in MATIC reserves at exchanges has historically coincided with an uptrend in price and vice versa.

Therefore, the latest plunge in MATIC supply across exchanges hints at more upside for the token in the coming weeks.

Reddit using Polygon to mint collectible NFT avatars

More cues for a potential MATIC price rally come from the news of Polygon’s adoption by mainstream fintech companies.

Notably, Nubank, a Brazilian neobank bank backed by Warren Buffett’s Berkshire Hathaway, picked Polygon to build its native Web3 ecosystem. Since the Oct. 20 announcement, MATIC’s price has rallied by nearly 12% and was trading for $0.95 as of Oct. 26.

Furthermore, the massive MATIC outflow from exchanges coincides with the soaring trading and sales volume of Reddit nonfungible token (NFT) avatars. These digital collectibles are minted as NFTs on the Polygon blockchain.

*Reddit NFTs sales volumes. Source: Dune Analytics*

From a technical perspective, MATIC has broken out of a bullish continuation pattern, dubbed a bull flag, whose profit target sits almost double the token’s current valuation, as shown below.

*MATIC/USD three-day price chart. Source: TradingView*

MATIC also shows similar strength against Bitcoin (BTC), according to a technical setup shared by Kaleo, an independent market analyst.

“The predominate structure is a HTF [higher timeframe] flag dating back to May of ’21 that looks ready for another leg higher,” the analyst wrote while citing the chart below.

*MATIC/BTC daily price chart. Source: TradingView*

“I’m expecting a small retrace before breaking out / continuing higher,” he added.

The MATIC/BTC setup could propel the pair to 0.000065 BTC by early 2023 versus the current price of 0.0000458 BTC, a 30% price rally.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Crypto Biz: Step aside, Warren Buffett; stablecoin issuers hold more US debt than Berkshire Hathaway

Stablecoin issuers Tether, Circle and others hold more short-term U.S. Treasury Bills than Berkshire Hathaway.

Warren Buffett raised eyebrows this week when his firm, Berkshire Hathaway, upped its exposure to United States Treasury bills. If you’re one of the few remaining bulls out there, Buffett’s flight to safety is concerning because it signals that the Oracle of Omaha would rather get a 3% yield instead of playing the stock market. If equities go belly-up in the fall, as I’ve been predicting for months, expect Bitcoin (BTC) to follow.

Looking at the numbers, Berkshire’s T-bill exposure grew to $75 billion at the end of June, up from $58.5 billion at the beginning of 2022. But, even with the 28% spike, Berkshire doesn’t hold as many T-bill investments as the leading stablecoin issuers. Stablecoins presently command a market capitalization of $153 billion, and a large percentage of their backing comes from T-bills. This is just another reminder that stablecoins are serious business.

Stablecoin issuers hold more US debt than Berkshire Hathaway: Report

Warren Buffett’s Berkshire Hathaway holds a massive amount of short-term U.S. debt. Well, stablecoin issuers hold more. According to data from JPMorgan, stablecoin issuers Tether, Circle and others hold $80 billion worth of short-term Treasury bills, compared with $74 billion for Berkshire Hathaway. These vast sums collect interest from the U.S. government, allowing holders to earn a passive income. If you’re surprised by this development, don’t be — stablecoins are a force to be reckoned with and are paving the way for mass crypto adoption.

Iconic brands including Nike, Gucci have made $260M off NFT sales

Nike, Adidas, Gucci, Dolce & Gabbana, and Tiffany & Co. — these companies have found real value and utility in nonfungible tokens (NFTs). Industry data revealed this week that these companies generated a combined $260 million in NFT sales. Nike’s revenue from NFTs amounted to a whopping $185.3 million, with volumes in secondary markets hitting nearly $1.3 billion. While nobody denies how badly the NFT market has cratered in recent months, the world’s most iconic brands have successfully incorporated novel technology into their business engagement efforts. Expect a lot more NFT-focused customer engagement in the future.

Nike’s NFT-related projects have made over $185M in revenue, positioning it as the biggest earning brand from NFTs.@DuneAnalytics dashboard by @nlevine19. pic.twitter.com/UDD90kz8Af

— NFTgators (@NFTgators) August 22, 2022

DBS bank reports 4x growth in Bitcoin buys on DDEx exchange in June

Are savvy investors quietly buying the Bitcoin dip using trading platforms developed by major banks? Data from DBS Bank suggests so. The bank’s DDEx exchange saw a massive influx of buyers in June, as investors looked to capitalize on plunging BTC and Ether (ETH) prices. In fact, between April and June, BTC buy orders on the exchange rose by a factor of four. Whether these buyers become diamond-handed hodlers or speculators is yet to be seen. But, in the depths of crypto winter, it’s a positive sign nonetheless.

Bug bounty quadruples for Ethereum network — Up to $1M payouts ahead of Merge

With excitement and trepidation in full swing ahead of Ethereum’s highly anticipated Merge, the foundation behind the smart contract platform has announced a $1 million bounty program to incentivize white hats to uncover “critical bugs” on the blockchain. The bounty program reflects the high-stakes nature of the upcoming Merge, which is tentatively scheduled for Sept. 15. If you’re an ETH holder, all you need to do is sit back and relax — and keep a close eye on scams.

Don’t miss it! What crashed the crypto relief rally?

What looked like a promising relief rally quickly turned sour last week, as Bitcoin plunged from a high near $25,000 all the way back to $21,000. Where does crypto go from here? In this week’s Market Report , I sat down with fellow analysts Marcel Pechman and Benton Yaun to discuss the recent price movements in the market. I also warned about September and October being volatile months for traditional finance — and hence crypto. You can watch the full replay below.

Crypto Biz is your weekly pulse of the business behind blockchain and crypto delivered directly to your inbox every Thursday.

Warren Buffett pivots to U.S. Treasuries — a bad omen for Bitcoin’s price?

Berkshire Hathaway now allocates 60% of its cash portfolio to T-bills, leaving individual investors with the potential to mirror a similar strategy.

Warren Buffett has put most of Berkshire Hathaway’s cash in short-term U.S. Treasury bills now that they offer as much as 3.27% in yields. But while the news does not concern Bitcoin (BTC) directly, it may still be a clue to the downside potential for BTC price in the near term.

Berkshire Hathaway seeks safety in T-bills

Treasury bills, or T-Bills, are U.S. government-backed securities that mature in less than a year. Investors prefer them over money-market funds and certificates of deposits (COD) because of their tax benefits.

Berkshire’s net cash position was $105 billion as of June 30, out of which $75 billion, or 60%, was held in T-bills, up from $58.53 billion at the beginning of 2022 out of its $144 billion total cash reserves.

The move is likely a response to bond yields jumping massively since August 2021 in the wake of the Federal Reserve’s hawkish policies aimed at curbing inflation, which was running at 8.4% in July.

For instance, the three-month U.S. T-bill returned a 2.8% yield on Aug. 22 compared to a near-zero yield a year ago. Similarly, the yield on U.S. one-year T-bill climbe from zero to 3.35% in the same period.

*U.S. 3-month and 1-year bond yield versus BTC/USD daily timeframe chart. Source: TradingView*

Meanwhile, non-yielding assets like gold and Bitcoin have dropped roughly by 2.5% and 57% since August 2021. The U.S. stock market benchmark S&P 500 likewise saw a decline, losing nearly 7.5% in the same period.

Such a difference in performance presents T-bills as an ultra-safe alternative for investors when compared to gold, Bitcoin and stocks. Buffett’s T-bill strategy suggests the same, namely a bet on more downside for risk-on assets in the near term — particularly as the Fed gears up for more rate hikes.

“Buffett is a value investor, so he won’t allocate much when the equity markets are as overvalued as they have been for the last five years,” said Charles Edwards, founder of quantitative crypto fund Capriole Investments.

Meanwhile, Andrew Bary, an associate editor at Barron’s, underscored the market’s potential to tail Buffett’s strategy, saying:

“Individual investors may want to consider following Buffett’s lead now that they are yielding as much as 3%.”

Bitcoin: safe-haven or risk-on?

Positive-yielding debts risk are dampening the demand for other potential safe-havens, Bitcoin included. In other words, increasingly risk-averse investors could be opting for assets that offer fixed yields over those that don’t.

The performance of Bitcoin-focused investment funds in August supports this argument with capital outflows for three weeks in a row, including a $15.3 million exit in the week ending Aug. 19.

Overall, these funds have lost $44.7 million on a month-to-date basis, according to CoinShares’ weekly report. In total, digital asset investment products, including BTC, have witnessed month-to-dat outflows totaling $22.2 million.

Does that mean Bitcoin will continue to lose its sheen against positive-yielding U.S. government debts? Edwards does not agree.

“Allocation to treasuries and other low-yield cash products is really a decision that needs to be made case-by-case depending on an individual’s goals and risk appetite,” he explained, adding:

“In the short-term, there are times it makes sense to hedge against Bitcoins volatility with cash, the best cash being the US Dollar. But, in the long-term, I think all fiat currencies tend towards zero against Bitcoin.

Edwards also points out that Buffett’s long-term strategy remains largely risk-on. Notably, Berkshire deployed 34% of its cash holdings to buy equities in May and that over 70% of its portfolio is still made up of risk-on assets.

“Looking at Buffett’s 75% risk allocation; and knowing that Bitcoin has been the best performing asset of all asset classes in the last decade, having the highest risk-adjusted returns, I know where I would be putting my money,” he add.

Buffett’s portfolio, however, will likely continue to eschew direct BTC investment as the “oracle of Omaha” remains a fierce critic. In February 2020, he said that it “does not create anything,” adding:

“I don’t own any cryptocurrency. I never will… You can’t do anything with it except sell it to somebody else.”

Earlier this year, however, Buffett’s Berkshire Hathaway increased exposure in a Bitcoin-friendly neobank while reducing its stake in Visa and Mastercard.

Warren Buffett pivots to US Treasurys — A bad omen for Bitcoin price?

Berkshire Hathaway now allocates 60% of its cash portfolio to T-bills, leaving individual investors with the potential to mirror the strategy.

Warren Buffett has put most of Berkshire Hathaway’s cash in short-term United States Treasury bills, now that they offer as much as 3.27% in yields. But while the news does not concern Bitcoin (BTC) directly, it may still be a clue to the downside potential for its price in the short term.

Berkshire Hathaway seeks safety in T-bills

Treasury bills, or T-bills, are U.S. government-backed securities that mature in less than a year. Investors prefer them over money-market funds and certificates of deposit because of their tax benefits.

The move is likely a response to bond yields jumping massively since August 2021 in the wake of the Federal Reserve’s hawkish policies aimed at curbing inflation, which was running at 8.4% in July.

For instance, the three-month U.S. T-bill returned a 2.8% yield on Aug. 22 compared with a near-zero yield a year ago. Similarly, the yield on the U.S. one-year T-bill climbed from zero to 3.35% in the same period.

Meanwhile, non-yielding assets like gold and Bitcoin have dropped roughly by 2.5% and 57%, respectively, since August 2021. The U.S. stock market benchmark S&P 500 likewise saw a decline, losing nearly 7.5% in the same period.

Such a difference in performance presents T-bills as an ultra-safe alternative for investors compared with gold, Bitcoin and stocks. Buffett’s T-bill strategy suggests the same, namely a bet on more downside for risk-on assets in the near term — particularly as the Fed gears up for more rate hikes.

“Buffett is a value investor, so he won’t allocate much when the equity markets are as overvalued as they have been for the last five years,” Charles Edwards, founder of quantitative crypto fund Capriole Investments, told Cointelegraph.

Meanwhile, Andrew Bary, an associate editor at Barron’s, underscored the market’s potential to tail Buffett’s strategy, saying:

“Individual investors may want to consider following Buffett’s lead now that they are yielding as much as 3%.”

Bitcoin: Safe haven or risk-on?

The risks of positive-yielding debts are dampening the demand for other potential safe havens, Bitcoin included. In other words, increasingly risk-averse investors could be opting for assets that offer fixed yields over those that don’t.

The performance of Bitcoin-focused investment funds in August supports this argument, with capital outflows for three weeks in a row, including a $15.3 million exit in the week ending Aug. 19.

Does that mean Bitcoin will continue to lose its sheen against positive-yielding U.S. government debts? Edwards disagrees.

“Allocation to Treasurys and other low-yield cash products is really a decision that needs to be made case-by-case depending on an individual’s goals and risk appetite,” he explained, adding:

“In the short-term, there are times it makes sense to hedge against Bitcoin’s volatility with cash, the best cash being the U.S. dollar. But in the long term, I think all fiat currencies tend toward zero against Bitcoin.”

Edwards also pointed out that Buffett’s long-term strategy remains largely risk-on. Notably, Berkshire deployed 34% of its cash holdings to buy equities in May, and over 70% of its portfolio is still made up of risk-on assets.

“Looking at Buffett’s 75% risk allocation and knowing that Bitcoin has been the best-performing asset of all asset classes in the last decade, having the highest risk-adjusted returns, I know where I would be putting my money,” he added.

Buffett’s portfolio, however, will likely continue to eschew direct BTC investment, as the “Oracle of Omaha” remains a fierce critic. In February 2020, he said that it “does not create anything,” adding:

“I don’t own any cryptocurrency. I never will. […] You can’t do anything with it except sell it to somebody else.”

Earlier this year, however, Buffett’s Berkshire Hathaway increased itsexposure to a Bitcoin-friendly neobank while reducing its stake in Visa and Mastercard.

Stablecoin issuers hold more US debt than Berkshire Hathaway: Report

Tether, Circle and other stablecoin firms held $80 billion worth of short-term U.S. government debt as of May 2022, more than owned by Warren Buffett’s Berkshire Hathaway.

Stablecoin issuers like Tether (USDT) and Circle have accumulated a significant share in the United States Treasury market, outperforming major traditional finance players.

Various stablecoin providers collectively held $80 billion worth of short-term U.S. government debt as of May 2022, according to a study by the investment bank JPMorgan released on Aug. 16.

Tether, Circle and other stablecoin firms accounted for 2% of the total market for the U.S. Treasury bills, holding a bigger share of T-bills than totally owned by Warren Buffett’s investment giant Berkshire Hathaway.

Stablecoin issuers have also outperformed offshore money market funds (MMF) and prime market MMFs in terms of their Treasury-bill investment proportion, according to the data.

*U.S. Treasury bill investor composition. Source: JPMorgan*

Considered to be low-risk assets, Treasury bills are debt instruments that are commonly used by companies as a cash equivalent on corporate balance sheets. Tether pledged to buy U.S. Treasury bills while cutting reliance on commercial paper earlier this year.

The move came amid uncertainty surrounding algorithmic stablecoins sparked by TerraUSD (formerly UST) losing its U.S. dollar peg in May 2022.

In contrast to algorithmic stablecoins, which rely on algorithms and smart contracts to support their U.S. dollar backing, asset-backed stablecoins like USDT and USDC are designed to guarantee the 1:1 peg by holding cash and common cash equivalents. At the time of writing, USDT’s market capitalization amounts to $67.6 billion, while USDC’s market value is $52.4 billion, according to data from CoinGecko.

As previously reported, USDC has seen notable growth in market cap, while Tether’s market dominance has been dropping since May. “Market confidence in Tether as a stablecoin has been gradually eroding, with the events over the past few months accelerating that dynamic,” JPMorgan said. According to the bank, one of the primary drivers behind the shift has been the “superior transparency and asset quality of USD Coin’s reserve assets.”