In the year 2023, Bitcoin (BTC) and Cathie Wood’s Coinbase investment are outperforming Warren Buffett’s popular “crypto bet” in Brazil’s fintech giant Nubank. As of March 17, Bitcoin’s price is up nearly 55% year-to-date (YTD). In comparison, Nubank, trading as NU, has risen only 26%, while Coinbase, trading as COIN, has seen the biggest rebound of the three, rising over 100% YTD.
Comparing Bitcoin’s performance with the market debut of Coinbase and Nu Holdings reaffirms that Bitcoin not only regularly outperforms traditional stocks but also crypto-exposed stocks, although there have been exceptions, such as the Bitcoin mining stock boom in 2021.
But overall, holding Bitcoin is proving to be a better strategy year-over-year, with more upside potential than traditional stocks. For instance, NU has dropped by over 50% since its market debut in December 2021, whereas Bitcoin has fared better with a 44% decline in the same period. Similarly, COIN is down 80% since its initial public offering in April 2021. However, Bitcoin has only lost about 50%, emerging as a better performer overall against crypto-exposed stocks.
Buffett sticks by his neobank investment
Buffett’s investment firm, Berkshire Hathaway, purchased $1.5 billion worth of class-A Nubank stock in two separate rounds in July 2021 and February 2022. The news came as a surprise, as Buffett is a well-known cryptocurrency critic, and Nubank offers crypto trading services via its Nucripto wing. In May 2022, the bank said that it would allocate 1% of its net assets to Bitcoin.
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 hold 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. Buffett, who is known for his value investing approach, evidently viewed Nubank as an attractive investment opportunity, even with its crypto exposure, due to its growth potential.
Cathie Wood doubles down on COIN in 2023
Despite Coinbase’s earnings decline in 2022, with its 57% drop in year-over-year revenue, ARK Invest CEO Cathie Wood continues to buy COIN shares via her ARK Next Generation Internet ETF (ARKW) and ARK Innovation ETF (ARKK) in 2023. The COIN purchases account for roughly 30% of all stocks purchased so far this year.
As a result, Coinbase has become Wood’s fifth-largest holding on record, worth nearly $670 million at the time of writing. Wood has shown confidence in Coinbase’s long-term potential in the cryptocurrency market, with the company poised to benefit from the growing adoption of cryptocurrencies and blockchain technology.
Holding Bitcoin – a better strategy?
Comparing Bitcoin’s performance with Nubank and Coinbase shows that holding bitcoin is proving to be a better strategy year-over-year than investing in crypto-exposed stocks or traditional stocks. However, as with any investment, there are risks involved, and readers should conduct their research before making any decisions.
Bitcoin has a long history of price volatility, resulting in steep drops in value. Recently, it experienced a sharp decline from its all-time high of nearly $70,000 in November 2021. Nevertheless, Bitcoin has constantly recovered from such declines, making it an excellent long-term investment for many investors.
In conclusion, both Warren Buffett and Cathie Wood have taken different investment approaches, with Buffett investing in Nubank and Wood investing in Coinbase. However, holding Bitcoin has proven to be a better long-term investment strategy in comparison. As such, investors must weigh their investment goals, risk tolerance, and market outlook when deciding where to invest their money.
