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Billionaire Warren Buffett Fumbles $40,000,000,000 After Dumping Apple, Bank of America, Wells Fargo, JPMorgan Chase and Goldman Sachs Early: Report

Billionaire Warren Buffett Fumbles ,000,000,000 After Dumping Apple, Bank of America, Wells Fargo, JPMorgan Chase and Goldman Sachs Early: Report

Billionaire Warren Buffett has now missed about $40 billion in gains after selling huge quantities of Berkshire Hathaway’s assets early, according to a new report. The famed investor reduced Berkshire’s positions by a net $127 billion in 2024, reports Barron’s, making headlines for dumping approximately $100 billion of Apple shares and $10 billion of Bank […]

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3 reasons why Bitcoin (BTC) struggles to hold $64.5K

Bitcoin lost momentum as weak macroeconomic data, fear of a stock market correction, and worries over the upcoming US elections impacted investor sentiment.

Bitcoin (BTC) price surged by 8.2% over the seven days leading up to Sept. 25, rising from $59,886 to $64,816. However, the $64,500 resistance level proved more challenging than expected. This same level was last tested a month prior, on Aug. 25. Weak macroeconomic data contributed to a decreased risk appetite among investors, but other factors also played a role in sparking a Bitcoin price correction on Sept. 25.

According to Yahoo Finance, the median new home sales price in the United States fell 4.6% year-over-year in August, following the fastest price increases since early 2022. Home prices have now declined for seven consecutive months, marking the longest stretch of declines since 2009. Notably, housing inventory remains near record highs, with 467,000 completed homes currently available for sale.

US new home sales, thousands. Source: Continuum Economics

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Bitcoin continues to outperform Warren Buffett’s portfolio, and the gap is set to widen

Spot and levered Bitcoin positions have outperformed Berkshire Hathaway stock performance since early 2019. It is time for Warren Buffett to buy Bitcoin?

Warren Buffett, the renowned investor and chairman of Berkshire Hathaway, celebrated his 93rd birthday on Aug. 30. Throughout his lengthy career, he has adhered steadfastly to a value investing strategy that bears some resemblance to the "buy and hold" approach often associated with cryptocurrencies. 

However, Buffett’s focus is on assets with strong earnings potential, and investing in companies and sectors where he and his team possess a deep understanding of the associated risks, competition, and advantages.

The question is whether such a laser-eyed strategy can outperform Bitcoin (BTC) in the long run. Moreover, investors should question why one of the greatest stock pickers of all time currently holds cash and short term bonds as the second largest position in his portfolio.

An interesting example of this approach is Berkshire Hathaway's largest holding, Apple (AAPL) shares. The company initially acquired these shares in early 2016 when the company was already valued at over $500 billion, so they were far from being early investors. Notably, Berkshire Hathaway continued to add to its AAPL investment in 2022, even though the stock had rallied over 500% since their initial purchase. This illustrates Buffett's commitment to long-term investment strategies, regardless of recent price movements.

Buffet downplays non-productive commodities as a store of value

In a February 2012 shareholder letter, Berkshire Hathaway expressed concerns about the devaluation of paper currency and discussed the limitations of gold as a store of value. They argued that gold lacks practical utility, with demand for industrial and jewelry purposes falling short of production, and its price is largely driven by fear-driven sentiment which leads to only temporary price increases. In contrast, investments in productive companies generate substantial dividends and returns.

Berkshire Hathaway also noted that regardless of whether the future currency is based on gold, seashells, or paper, people will always be willing to exchange a portion of their income for goods and services.

Regrettably for Buffett, Bitcoin’s price surged by 683% in the 12 months following his critical comments on the viability of non-productive commodities as a store of value. Moreover, on a 4-year horizon, Bitcoin's gains amounted to a staggering 9,014%.

To compare the performance of Berkshire Hathaway's stock holdings to Bitcoin, considering Buffett's focus on earnings and yield, which is fundamentally different from the characteristics of commodities like gold or Bitcoin, we calculated Berkshire Hathaway's stock performance using a factor of 3 to simulate a leveraged position.

Berkshire (BBRK.B) by a factor of 3 vs. Bitcoin/USD index (orange). Source: TradingView

If an individual had invested $1,000 in Bitcoin (spot) and initiated a leveraged long position in Berkshire Hathaway shares in early 2019, they would have observed a return of $7,020 in BTC compared to $5,623 in Buffett's holding company.

Berkshire (BBRK.B) by a factor of 3 vs. Bitcoin/USD index (orange). Source: TradingView

Similarly, for an investment starting in 2017, it would have resulted in $3,798 in BTC, as opposed to $1,998 using the leveraged long strategy in Berkshire Hathaway's shares.

The apparent inconsistency in Buffett's strategy is bullish for Bitcoin

It's important to note a potential loophole in Buffett's investment thesis: Berkshire Hathaway is currently maintaining a record-high $147 billion in cash equivalents and short-term investments, representing 18.5% of the company's total market capitalization. This raises questions about whether they are waiting for better entry points into selected stocks or if they deem the 5.25% returns on fixed-income investments to be satisfactory.

This scenario highlights that even the most accomplished stock market investor may have reservations about deploying their cash. It also prompts questions about whether some of the funds currently on the sidelines, including the $5.6 billion in money market funds, might seek alternative forms of protection if inflation makes a resurgence.

Bitcoin may not be a perfect store of value, and its volatility has been a subject of concern. However, it's essential to acknowledge that Bitcoin has yet to face a global economic recession, making it premature to pass definitive judgment.

Additionally, the consistent outperformance of Bitcoin's price compared to Berkshire Hathaway shares suggests that investors are increasingly viewing it as a viable alternative store of value.

In light of this, Berkshire Hathaway's substantial cash position serves as a potential cautionary note for those skeptical about Bitcoin. With Bitcoin market's total capitalization currently standing at $500 billion, it signals a significant and untapped potential for it to play in the financial landscape.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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Buffett and Ackman take opposing sides on Treasury yields — What does it mean for Bitcoin?

Two investment moguls are betting on different directions for inflation and Treasury yields, with potentially negative impacts on Bitcoin.

Warren Buffett and Bill Ackman are two of the most successful investors in the world, but they have taken opposing views on the bond market in recent months.

Buffett has been buying short-term Treasury bills, while Ackman has been shorting long-term Treasury bonds. Could both of these investors be right?

Buffett is the chairman and CEO of Berkshire Hathaway, one of the world’s largest investment holding companies. Buffett’s worth is estimated to be over $100 billion. Ackman is an American hedge fund manager, activist investor and the founder and CEO of Pershing Square Capital Management, a hedge fund with over $20 billion in assets under management.

U.S. Treasury 1-year yield vs. 20-year yield. Source: TradingView and Cointelegraph

There is the possibility that short-term and long-term interest rates will move in different directions. For example, if the Federal Reserve raises short-term rates in an effort to combat inflation, long-term rates could fall. This would be good for Buffett, who is buying short-term bonds, but bad for Ackman, who is shorting long-term bonds.

Another possibility is that Buffett and Ackman are simply taking different views on the risk of inflation. Buffett believes that inflation is not a major threat and that short-term Treasury bills offer a safe haven from market volatility. Ackman, on the other hand, believes that inflation is a serious risk and that long-term Treasury bonds are overvalued.

Buffett and Ackman will both probably get what they want

There is a possibility that Buffett and Ackman are both right, at least in the short term, meaning it is possible that both short-term rates and long-term rates rise. This would happen if the Federal Reserve raises interest rates in an effort to combat inflation but the market does not believe that the Fed will be able to raise rates enough to significantly slow down inflation.

In this scenario, Buffett would benefit from his short-term Treasury bill investment, while Ackman would benefit from his short position on long-term Treasury bonds. This possibility is supported by the fact that the correlation between bond and stock prices has neared a record high in recent months.

S&P 500 correlation to the U.S. 10-year Treasury yield (50 days). Source: TradingView

This means that as bond prices fall, stock prices are likely to rise, likely because investors are selling bonds and buying stocks in anticipation of higher interest rates.

When geniuses fail — Could both investors be wrong?

Of course, it is also possible that both Buffett and Ackman will be wrong. That is, it is possible that short-term and long-term rates will move in the same direction. This would happen if the market believes that the Fed will be able to raise rates enough to significantly slow down inflation. In this scenario, both Buffett and Ackman would likely lose money on their respective investments.

Only time will tell how this debate will play out, and there is no easy answer to the question of who is right. Investors should consider the different investment strategies that Buffett and Ackman use. Buffett is a value investor, while Ackman is a short-seller. These different strategies could also have a significant impact on the performance of their respective investments.

What about the impact on crypto markets?

The U.S. Treasury curve, specifically the spread between the one-year and 20-year note, has significant implications for the broader financial ecosystem, which can indirectly influence the sentiment of Bitcoin (BTC) investors.

A steepening curve, where long-term rates rise faster than short-term rates, often signals expectations of future economic growth and the possibility of rising inflation. In this environment — if both Buffett and Ackman are wrong — Bitcoin could be touted as a hedge against inflation, boosting its attractiveness.

For Bitcoin investors, a flattening curve — meaning both Buffett and Ackman are right — indicates concerns about future economic growth and increased uncertainty and volatility in traditional markets. This would push investors to reduce exposure to cryptocurrencies given that most consider it a speculative asset.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Crypto Kidnapping: Tourist Held Captive, Forced to Transfer $250K in USDT

Musk Trolls Buffett With Fake Quote on Twitter, Then Deletes It

Musk Trolls Buffett With Fake Quote on Twitter, Then Deletes ItElon Musk went after Bitcoin hater Warren Buffett recently, sharing what looked like a bullish crypto quote attributed to the billionaire investor. The tech entrepreneur, whose comments on social media have been moving crypto markets this year, later removed the post with the obviously fake Buffett statement. Elon Musk Finds Buffett’s ‘Best Financial Advice’ Tesla […]

Crypto Kidnapping: Tourist Held Captive, Forced to Transfer $250K in USDT