Legendary investor Warren Buffett has built Berkshire Hathaway Inc BRKBRK into one of the most valuable companies in the world through a series of acquisitions and investments over the years, making the man known as the “Oracle of Omaha” one of the most followed stock pickers.
Buffett’s investments have paid off, with Berkshire Hathaway recently joining the $1 trillion market capitalization club. Investors who bought Berkshire Hathaway shares or followed Buffett's stock picks have done quite well over the years.
One area where following Buffett wouldn’t have paid off for investors is cryptocurrency.
What Happened: Leading cryptocurrency Bitcoin BTC/USD hit new all-time highs of $73,750.07 in March.
While Bitcoin is down from all-time highs, the leading cryptocurrency is up 42.8% year-to-date in 2024 and up over 130% in the last year, moves celebrated by the crypto community.
One person likely not celebrating the move is Buffett, who is among the leading vocal critics of the cryptocurrency sector.
Buffett’s bearish take on Bitcoin led him to previously be labeled as Bitcoin’s enemy number one by entrepreneur Peter Thiel.
In January 2018, Buffett warned investors about investing in cryptocurrency.
“In terms of cryptocurrencies, generally, I can say with almost certainty that they come with 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 months later, Buffett took his feelings on Bitcoin further during an interview with CNBC.
Buffett also reiterated the thoughts of the late Berkshire Vice Chairman Charlie Munger that Bitcoin is “rat poison.” He later told CNBC anchor Becky Quick that cryptocurrency is “probably rat poison squared.”
The legendary investor has not bought cryptocurrencies directly and continues to speak out against the sector. Benzinga previously reported that Buffett and Berkshire are shareholders in Nu Holdings NU, a crypto-friendly digital bank in Brazil. Nu Holdings has also launched several cryptocurrency products.
Nu Holdings also said previously it would allocate a portion of its cash to Bitcoin.
At the time of writing, Bitcoin has a market capitalization of $1.3 trillion. Berkshire Hathaway is valued at around $992 billion. Bitcoin is currently worth more than Buffett’s company.
Here’s a look at how investors in Bitcoin would have done since Buffett’s comments.
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Investing $1,000 in Bitcoin: While Buffett said he wouldn’t invest in Bitcoin and used the “rat poison squared” comparison, others may have disagreed and 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 $6,600.38 today, based on a price of $65,740.81 for Bitcoin at the time of writing. This represents a return of 560.0% since Buffett’s comments.
For comparison, a $1,000 investment in Berkshire Hathaway could have bought 0.0034 BRK-A shares at the same time. The $1,000 investment would be worth $2,348.18 today, up 134.8%.
A $1,000 investment in the SPDR S&P 500 ETF Trust SPY, which tracks the S&P 500 Index, could have bought 3.75 shares of the popular ETF at the time of Buffett’s comments. The $1,000 investment would be worth $2,192.06 today, up 119.2%.
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.
Buffett has said he wouldn’t touch Bitcoin even if it hit $25 per coin. However, those who bought the apex crypto when the legendary investor made his statement would be glad that they did.
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This article was previously published by Benzinga and has been updated.
Image created using artificial intelligence via Midjourney.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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