Warren Buffett

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.

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.

Warren Buffett-backed neobank picks Polygon for Web3 token — MATIC price eyes 100% rally

MATIC has painted a bull flag setup with a profit target sitting nearly 100% higher than its current price.

The price of Polygon’s MATIC (MATIC) coin could double by the end of 2022 or early 2023 due to a mix of extremely bullish fundamental and technical indicators.

Polygon wins high-profile clients

MATIC rose by nearly 6.5% four days after Nubank, a Brazilian fintech company backed by Warren Buffett’s Berkshire Hathaway and Softbank, confirmed that it selected Polygon’s “Supernets technology” for its blockchain and digital token, dubbed Nucoin.

“Nubank plans to airdrop the digital token to its customers in the first half of 2023,” the official announcement read, adding:

“These tokens will serve as the basis for its customers loyalty rewards program and will have benefits such as discounts and other advantages.”

#Polygon is taking @Nubank from #Web2 ➡️ #Web3!

In a strategic partnership with Polygon, Nubank is launching its own chain using #PolygonSupernets & thus its digital token Nucoin #onPolygon

This move will open the gateway for 70 mn+ Nubank users to the #Web3 space pic.twitter.com/Fu06Vi7IpV

— Polygon – MATIC (@0xPolygon) October 19, 2022

As a result of the rally, MATIC was changing hands for $0.90 on Oct. 24, its highest level in three weeks.

Polygon Supernets is an enterprise-level solution that removes the complexity of blockchain development for companies looking to build their native chains. Interestingly, before Nubank, gaming company GameSwift employed the product to launch its custom blockchain.

The growing demand for Polygon products may bring a similar boom for its native token, MATIC, which serves as a utility and staking asset within the Polygon blockchain ecosystem.

MATIC eyes bull flag breakout

The Nubank news surfaces as MATIC paints what appears to be a bullish continuation pattern on its lower-timeframe chart.

Dubbed a “bull flag,” the pattern emerges when the price consolidates inside a parallel, descending channel after a strong move upward. As a rule, it resolves after the price breaks out of the range to the upside and rises by as much as the previous uptrend’s height.

*MATIC/USD 3-day chart featuring bull flag breakout setup. Source: TradingView*

Therefore, MATIC’s breakout above the flag’s upper trendline could have it test $1.85 as its primary upside target. In other words, it could see a 100% price rally by the end of 2022 or at the beginning of 2023.

Conversely, a pullback from the flag’s upper trendline could lead MATIC toward the lower trendline near $0.67.

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.