News
billionaires are reaching cryptocurrency FOMO
What made billionaire investors like George Soros, Mark Cuban and others change their stance on Bitcoin and dive into the cryptocurrency market?
George Soros, Hungarian-American billionaire and legendary investor, is known for his keen financial insights and bold moves in the world of investing.
In January 2018, Soros Done made headlines at the World Economic Forum in Davos by calling Bitcoin a “bubble,” comparing the cryptocurrency frenzy to the tulip craze of the 1600s in the Netherlands.
However, in a surprising turn of events, Soros Fund Management revealed in October 2021 that it had done so risky in the world of cryptocurrencies by owning some Bitcoin.
The fund’s interest in cryptocurrencies didn’t stop there. During the first quarter of 2024, Soros Fund Management increased its stake in MicroStrategy, a company heavily invested in Bitcoin, with holdings worth more than $135 million.
How has Soros’ stance on cryptocurrencies evolved over the years, and which other billionaires have caught the cryptocurrency FOMO (fear of missing out)? Let’s go deeper into the details and find out.
From skeptic to investor: Soros’ change of position
When George Soros spoke in Davos in 2018, he was quite clear about his skepticism towards Bitcoin (Bitcoin), describing it as a classic bubble. His main concern was its volatility, which he said made it unsuitable as a currency.
“Bitcoin is not a currency,” Soros said, “because a currency is supposed to be a stable store of value, and a currency that can fluctuate 25% in a day cannot be used, for example, to pay salaries. Because wages could drop by 25% in one day.”
Despite his reservations about Bitcoin, Soros was optimistic about the underlying blockchain technology. He saw the positive potential, particularly in helping migrants keep their money safe.
Fast forward to October 2021 and Soros Fund Management revealed that it owns some Bitcoin. Dawn Fitzpatrick, CEO and chief investment officer of Soros Fund Management, said at a Bloomberg event that the fund owned “some coins… but not many.”
By December 2022, Soros Fund Management had additional thorough his involvement in the cryptocurrency industry. The fund purchased $39.6 million worth of convertible bonds in Marathon Digital Holdings, a major cryptocurrency mining company.
Convertible bonds are long-term debt instruments that can be converted into equity, demonstrating Soros’ strategic approach to gaining exposure to the cryptocurrency market.
Additionally, the fund took large positions in MicroStrategy. Soros’ 13F filings with the SEC revealed both call and put options on MicroStrategy stock, as well as nearly $200 million in MicroStrategy preferred stock.
And now, in May 2024, Soros Fund Management’s interest in MicroStrategy has grown even more, with holdings valued at more than $135 million.
This investment is notable because MicroStrategy has been a major player in the Bitcoin market, Jack over 214,000 BTC, thanks to its co-founder Michael Saylor’s aggressive Bitcoin acquisition strategy.
Mark Cuban: From Bananas to Blockchain Believer
Mark Cuban, the billionaire owner of the Dallas Mavericks, has had quite the journey with cryptocurrencies.
In 2019, during a YouTube Q&A, Cuban joked that he would “rather have bananas than Bitcoin,” ironically citing his initial skepticism.
He compared Bitcoin to baseball cards and comic books, noting that these objects, in his opinion, have no intrinsic value.
Despite its initial doubts, Cuba’s stance on cryptocurrencies began to change edit. In 2021, Cuba has become a staunch supporter of decentralized finance (DeFi) and non-fungible tokens (NFTs).
He saw the potential of smart contracts and decentralized applications (dApp) to innovate sectors that go beyond finance. As a result, its investment portfolio has grown to include projects like Polygon (MATIC), A layer 2 scalability solution for Ethereum (ET).
Cuban’s Dallas Mavericks have even started accepting Bitcoin and other crypto assets for tickets and merchandise, further solidifying its commitment to the cryptocurrency industry.
Cuba’s dedication to the cryptocurrency sector is also evident from its investment strategy. He revealed that 80% of his non-“Shark Tank” investments are focused on crypto and blockchain technology.
He sees the decentralization aspect of digital assets as the biggest draw, with a particular interest in decentralized autonomous organizations (DAO).
DAOs operate without a central authority, relying on token holders to make decisions, which Cuba finds attractive due to its democratic approach.
Today Mark Cuban is one of the most prominent billionaire supporters of blockchain technology. His journey from preferring bananas to Bitcoin to investing heavily in blockchain projects is definitely a story worth sharing.
Warren Buffett: from skepticism to strategic investments
Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, has always been known for his critical view of cryptocurrencies. In 2018, he called Bitcoin “rat poison squared,” expressing deep doubts about its value and long-term sustainability.
Buffett prefers investments in companies with tangible assets and steady cash flows, which makes the ups and downs of cryptocurrencies unattractive to him.
But despite his harsh words, Buffett’s actions tell a more nuanced story. At the end of 2021, Berkshire Hathaway made a surprising move invest $1 billion in Nubank, a cryptocurrency-friendly Brazilian digital bank.
According to a 13F filing with the SEC, Berkshire purchased 107.1 million shares of Nu Holdings at an average price of $9.38 per share.
This large investment wasn’t Buffett’s first dance with Nubank. As of early June 2021, Berkshire Hathaway had already done so poured out $500 million into Nubank during an extended Series G funding round. This round valued Nubank at $30 billion.
In December 2021, when Nubank went public, Berkshire Hathaway bought another 30 million shares for $250 million. At that point, Nubank’s value skyrocketed to $41.5 billion.
What does it mean? Buffett’s investments in Nubank suggest a careful but strategic interest in the fintech and cryptocurrency sector. While he remains cautious about investing directly in cryptocurrencies, his actions suggest a slow but steady adaptation to the changing environment.
Capitalists always dance to the beat of money
Money talks and, in the world of finance, it speaks louder than anything else. The lure of profit can turn even the staunchest skeptics into enthusiastic supporters and, occasionally, cause fervent believers to become wary critics.
Goldman Sachs is a great example. In 2018, they halted plans to open a cryptocurrency trading desk due to regulatory uncertainty and lack of institutional interest.
But in 2021, with Bitcoin surging and institutional demand growing, Goldman Sachs relaunched its cryptocurrency trading desk, which offers Bitcoin futures and non-deliverable forwards to its clients.
At the Consensus 2024 conference hosted by CoinDesk, Goldman Sachs even celebrated the success of new spot ETFs on Bitcoin.
Mathew McDermott, the investment bank’s global head of digital assets, sought SEC approval Spot ETF on BTC a “major psychological breakthrough” and celebrated their “surprising success”.
Ray Dalio, founder of Bridgewater Associates, was another notable skeptic. He initially criticized Bitcoin in September 2017 calling it was a “bubble,” claiming it was neither a good store of value nor a medium of exchange.
However, by 2021, Dalio revealed who owned some Bitcoin and called it “an incredible invention,” recognizing its potential as a hedge against inflation and currency devaluation.
But why are these capitalists so eager to embrace this new world? The answer lies in diversification and coverage.
With inflation rates hitting decade-highs and traditional assets underperforming, digital assets offer an attractive hedge against economic uncertainties.
The future of finance is written in code and blockchain, and those willing to dance to this new tune will lead the way.