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Bitcoin: More profitable than Warren Buffett's Berkshire Hathaway shares?

Mon 11 Sep 2023 ▪ 3 min of reading ▪ by Luc Jose A.
Getting informed Invest

Renowned investor Warren Buffett doesn’t like cryptocurrencies, bitcoin (BTC) included. And he’s not hiding it. On several occasions, the billionaire has explained why, in his opinion, this asset is not worth investing your money in. Yet there is evidence that the businessman has missed an opportunity to increase his fortune.

Une pièce de bitcoin et une photo de l'investisseur américain Warren Buffet séparées par trois points d'interrogation

In bief:

  • Bitcoin is emerging as a viable alternative store of value, challenging Warren Buffett’s strategy.
  • The leading cryptocurrency’s performance is outstripping that of Berkshire Hathaway, the American investor’s company.

Is bitcoin more useful than shares in Warren Buffett’s firm?

It’s no secret that billionaire Warren Buffett hates cryptocurrencies. And the reason for his dislike is simple: he believes they have no intrinsic value. The price of bitcoin (BTC) proves him right. The asset is currently worth $25,890, down 0.18% over the past week.

However, Warren Buffett’s notorious position on the relevance of bitcoin remains questionable. This can be seen by comparing the asset’s performance with that of shares in Warren Buffett’s Berkshire Hathaway company.

For example, a $1,000 cash investment in bitcoin made in early 2019 would have generated a return of $7,020. For the same investment, made two years earlier, $3,798 in profits would be generated.

These results are obtained by applying the leveraged investment strategy. Applied to Berkshire Hathaway shares, this strategy produces completely different results for the same investment made over the same periods. For example, a $1,000 investment in Berkshire Hathaway shares would have generated $5,623 in profit in 2019. This compares with just $1,998 if the amount had been invested in 2017.

In terms of capital appreciation, bitcoin (BTC) performance is more profitable than an interest in Berkshire Hathaway. That much is obvious. This begs the question: is Warren Buffett’s stance on bitcoin just posturing? An investment strategy that seems to be showing its limits.

Comparaison des performances des actions de Berkshire Hathaway à celles du bitcoin

Warren Buffett’s investment strategy at the end of its road?

The fact that bitcoin is outperforming Berkshire Hathaway shares makes sense. It means that investors increasingly see it as a viable alternative store of value. This is evidenced by its market capitalization of around $500 billion.

A figure that augurs a potential strengthening of the asset’s role on financial markets. In the meantime, given the changes the markets are undergoing, it would not be surprising to see investors adopting a cautious approach.

For them, this would mean relying on the investment philosophy advocated by Warren Buffett. A strategy focused on controlling the stakes around assets with solid earnings potential.

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Luc Jose A. avatar
Luc Jose A.

Diplômé de Sciences Po Toulouse et titulaire d'une certification consultant blockchain délivrée par Alyra, j'ai rejoint l'aventure Cointribune en 2019. Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l'économie, j'ai pris l'engagement de sensibiliser et d'informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu'elle offre. Je m'efforce chaque jour de fournir une analyse objective de l'actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.