Over the years, investor Warren Buffett has been known for spotting value stocks that could go up over time, leading to strong returns for Berkshire Hathaway Inc (NYSE:BRK-A)(NYSE:BRK-B), where he serves as chairman.
One sector that Buffett has mostly avoided is cryptocurrency. Here's a look at Buffett's thoughts on cryptocurrency and how investors may have wanted to avoid the Oracle of Omaha's advice in this particular case.
What Happened: While many analysts and financial experts have pointed to the value of Bitcoin BTC/USD increasing over time, Buffett has been among the leading vocal critics of the cryptocurrency sector.
Buffett's bearish take on Bitcoin led him being labeled as Bitcoin enemy number one by entrepreneur Peter Thiel previously.
In January 2018, Buffett warned investors about investing in cryptocurrency.
"In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending," Buffett said at the time. "If I could buy a five-year put on every one of the cryptocurrencies, I'd be glad to do it but I would never short a dime's worth."
A few month later, Buffett took his feelings on Bitcoin further during an interview with CNBC.
Reiterating Berkshire Vice Chairman Charlie Munger’s thoughts that Bitcoin is “rat poison,” Buffett told CNBC anchor Becky Quick that the cryptocurrency is “probably rat poison squared.”
Buffett has said that he wouldn’t buy Bitcoin even if it dropped to $25.
While the billionaire investor has not bought cryptocurrencies and has continued to speak out against them, he does own shares of a company that has bet on Bitcoin and other leading cryptocurrencies.
As Benzinga previously reported, Buffett and Berkshire Hathaway are shareholders in Nu Holdings NU, a Latin American digital bank. Nu Holdings is a crypto-friendly bank and has launched several cryptocurrency products along with allocating a portion of its cash to Bitcoin.
Related Link: EXCLUSIVE: Scaramucci On What Warren Buffett Gets Wrong About Bitcoin, Doesn’t Understand ‘The Whole History Of Money’
Investing $1,000 in Bitcoin: While Buffett said he wouldn’t invest in Bitcoin even if it hit $25, some investors have chosen to allocate a portion of their investments or holdings in the leading cryptocurrency.
Bitcoin traded between $9,695.12 and $9,964.50 on May 5, 2018 — the day of Buffett’s “rat poison squared” comment.
An investor could have purchased 0.1004 BTC at the coin’s high price of that day.
The $1,000 investment would be worth $4,180.80 today based on a price of $41,641.46 for Bitcoin at the time of writing. This represents a return of 318.1% since Buffett’s comments.
For comparison, shares of Berkshire Hathaway are up 84.3% over the same time period, based on a starting price of $294,720 each and a price of $542,127 at the time of writing.
The SPDR S&P 500 ETF Trust SPY, which tracks the S&P 500 Index, is up 71.1% over the same time period, based on a starting price of $266.89.
As investors can see, Bitcoin has outperformed both the S&P 500 and Berkshire Hathaway since Buffett’s now famous quote about the leading cryptocurrency.
While Buffett has said he wouldn’t touch Bitcoin even if it hit $25 per coin, those who bought the apex crypto when the legendary investor made his statement would be glad that they did.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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