Bitcoin

Warren Buffett Invests $1 Billion in Bitcoin-Enabled Neobank, Ditches Visa and Mastercard Stocks

Warren Buffett Invests $1 Billion in Bitcoin-Enabled Neobank, Ditches Visa and Mastercard Stocks

Warren Buffett’s Berkshire Hathaway has sold some of its Visa and Mastercard holdings and increased its exposure to Nubank, Brazil’s largest fintech bank, also popular among Bitcoin investors in the country.

In a securities filing at the end of February 14, the industrial conglomerate disclosed which he bought $1 billion of Nubank Class A shares in the fourth quarter of 2021. On the other hand, he sold $1.8 billion and $1.3 billion of Visa and Mastercard shares , respectively, signaling a move away from credit companies to gain exposure to their fintech rivals.

Buffett, the so-called “Oracle of Omaha”, is popular for his cautious approach to investing, especially in the hottest sectors of the market such as fintech. The seasoned investor had also downplayed the importance of emerging decentralized financial solutions like Bitcoin (BTC), ridiculing it as an asset that “creates nothing”.

But Berkshire’s new stake in Nubank shows that Buffett has recently mellowed into fintech. In detail, the firm had invested $500 million in the startup in July 2021. Its return on said investment amounted to $150 million in December 2021 after Nubank entered the New York Stock Exchange (NYSE) .

So far, Buffett has shown no intention of selling his position in Nubank.

The Buffett-Bitcoin Connection

Buffett’s additional investment in Nubank shows his recognition of the fintech sector’s underlying theme, the digitalization of financial services, as well as his willingness to partner with companies involved in the cryptocurrency industry.

In detail, Easynvest, a trading platform acquired by Nubank in September 2020, has been actively offering a Bitcoin exchange-traded fund (ETF) since June 2021. Double QBTC11, the ETF is backed by QR Asset Management and is listed on the B3 exchange, the second oldest stock exchange in Brazil.

So, it looks like Nubank, which remains exposed to the emerging crypto sector through Easynvest, could use the additional revenue opportunities to benefit its main investor, Warren Buffett, despite his view that Bitcoin is a “rat rat squared.” “.

This is mainly due to the growth of crypto-related investment products in 2021. Notably, their number doubled during the year, from 35 to 80, according to data from Bloomberg Intelligencewhile total valuations of the assets they held reached $63 billion from $24 billion at the start of 2021.

Cash flow to crypto funds doubled in 2021. Source: Bloomberg Intelligence

Emily Portney, chief financial officer of Bank of New York Mellon Corp. – another company in Buffett’s investment portfolio – Noted that digital assets could become a “significant source of revenue” for investment banks as Bitcoin investment vehicles become more common.

Related: Bitcoin’s 30% recovery in two weeks has brought BTC whales back into accumulation mode

Meanwhile, Leah Wald, managing director of crypto-asset manager Valkyrie Investments, predicted an increase in capital flows into crypto-related investment vehicles, saying they have become a “phenomenon that is starting to take off. “, before commenting:

“If you look at the entries from a volume perspective, not only have they been flat even with the price corrections that Bitcoin is notoriously famous for, but you see many institutions stepping in.”

Buffett’s portfolio is full of crypto-loving companies

While Buffett may not invest in Bitcoin directly, he is already gaining indirect exposure as his portfolio companies make inroads into the crypto space.

For example, in October 2021, just a month before Bitcoin hit its all-time high of $69,000, the fifth largest US bank US Bancorp launched a cryptocurrency custody service for its institutional investment managers, noting that they have witnessed an increase in demand from their “fund service clients” over the past few years.

Similarly, in another announcement made in October 2021, Bank of America launched a cryptocurrency research initiative, citing “growing institutional interest”.

Months before, BNY Mellon announced that it would hold, transfer and issue Bitcoin and similar cryptocurrencies for its asset management clients.

“Investment in Nubank can be labeled as Buffett’s way of supporting the fintech/crypto world without repeating his past criticisms,” Greg Waisman, co-founder and COO of crypto wallet service Mercuryo, said, adding that the Berkshire boss is now indirectly “the digital currency ecosystem”.

“Even indirect exposure can only increase the positive sentiment that could push more investors into the space.”

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.

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.