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

September 1, 2023 Coin Telegraph

Buffett

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.

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.

Cointelegraph Markets Pro VORTECS Report Summary — 179% gains from 4 alerts

March 16, 2023 Coin Telegraph

Coin Telegraph

Cointelegraph Markets Pro’s VORTECS™ Score, NewsQuakes™, Tweet Volume and Most Active On-Chain indicators helped subscribers identify four profitable trades.

In Cointelegraph Markets Pro’s latest VORTECS™ Report, the institutional-grade crypto alerts platform displayed how its members could have captured a cumulative 179% gain by following four trades based on four different Markets Pro indicators. The report depicts trading alerts generated between Feb. 26 and March 4, 2023.

The potential gains available to Cointelegraph Markets Pro subscribers significantly outperform a simple buy-and-hold strategy during the same period, which would’ve suffered a loss of 5% holding Bitcoin (BTC) and a loss of 4% holding Ether (ETH).

Cointelegraph Markets Pro used a variety of advanced data, such as its proprietary VORTECS™ Score, NewsQuakes™, Tweet Volume and the new Most Active On-Chain indicator, to alert subscribers of the potential for price changes before they occurred.

VORTECS™ Score

SingularityNET (AGIX) — 41% gain

On Feb. 26, the asset was trading at $0.39 when Cointelegraph Markets Pro members received an alert for a high VORTECS™ Score of 87. Five days later, the price reached its weekly peak of $0.55 — an impressive increase of 41%!

AGIX is the utility token of SingularityNET, a decentralized artificial intelligence (AI) network on which participants create, share and monetize AI services at scale. AGIX is used for staking, transacting and governance on the network’s decentralized applications.

NewsQuakes™

Liquity (LQTY) — 82% gain

On Feb. 28, a NewsQuake™ alerted Cointelegraph Markets Pro members to a Binance announcement that it would list LQTY in its Innovation Zone. Just five hours later, the price skyrocketed from $1.42 to $2.58 — a remarkable rise of 82%!

LQTY is the native token of stablecoin lender Liquity. LQTY holders can stake their tokens to earn a portion of the fees generated by opening and closing loans.

Tweet Volume

The Tweet Volume indicator measures a project’s mentions and activity on the social media platform Twitter. The rationale behind using this data is that widespread, community-driven discussions can sometimes drive an asset’s price up or down.

Akropolis (AKRO) — 40% gain

*AKRO’s price chart after a 517% increase in Twitter Volume. Source: Cointelegraph Markets Pro*

The Tweet Volume Gainers chart continues to help subscribers track increases in interest and discussion — typically a bullish indication — as price movement goes hand-in-hand with Twitter hype.

AKRO appeared on the Tweet Volume Gainers chart on Feb. 27 when it was trading at $0.005. Just four days later, its price climbed to $0.007 — a 40% increase!

AKRO is the governance token of the decentralized finance protocol Akropolis, which aims to provide an independent financial ecosystem for saving and growing wealth.

Most Active On-Chain Activity

As mentioned in a recent article about the Cointelegraph Markets Pro 2.0 update, the new Most Active On-Chain data shows users the five tokens with the largest increases in the number of active addresses on-chain in the last 24 hours versus a rolling average of the last 30 days.

Yearn.finance (YFI) — 16% gain

*Most Active On-Chain data from Feb. 27. Source: Cointelegraph Markets Pro*

On Feb. 27, YFI topped the Most Active On-Chain Chart, showing Cointelegraph Markets Pro subscribers that it was the token that saw the biggest increase in active addresses on Polygon. At the time it was trading at $9,448, but four days later the price rose over 16% to $10,998!

How to reap the benefits of Cointelegraph Markets Pro

These gains, which cumulatively add up to 179%, occurred over the week of Feb. 26 and March 4, 2023. It’s perhaps too idealistic to assume that subscribers captured all of this value, but even those who captured a fifth of it would’ve earned almost a 35% return.

This isn’t the first time Cointelegraph Markets Pro has produced weekly returns like these, in fact, it is a regular weekly occurrence. During the week of Feb. 19 – 25, the institutional-grade platform used these same four indicators to alert subscribers to potential gains of over 64%.

Another important note — the alerts for each of these moves were triggered before the move actually occurred. It’s easy to spot ideal entry opportunities in hindsight, but Cointelegraph Markets Pro uses institutional-grade technology to help traders spot these opportunities in real-time, often before they happen.

There’s a catch though; only Cointelegraph Markets Pro subscribers are privy to these alerts.

For those tired of sitting on the sidelines while other crypto traders lock in gains, there’s only one place to go.

See how Cointelegraph Markets Pro delivers market-moving data before this information becomes public knowledge.

Cointelegraph is a publisher of financial information, not an investment adviser. We do not provide personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risk including the risk of permanent and total loss. Past performance is not indicative of future results. Figures and charts are correct at the time of writing or as otherwise specified. Live-tested strategies are not recommendations. Consult your financial adviser before making financial decisions.

All ROIs quoted are accurate as of March 16th, 2023…

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