Bitcoin's price has risen by 20% since its low in February. Over the last month, the price of Ethereum has increased by 14%, BNB by 13%, Cardano by 5%, XRP by 41%, and Solana by 8%.
Meanwhile, the "Sage of Omaha," Warren Buffett, is quietly warming to cryptocurrency. According to a recent Berkshire Hathaway filing, the company sold shares in legacy financials Visa and Mastercard and invested $1 billion in a crypto-friendly neo bank.
That's a significant shift in opinion for the world's most vocal crypto critic. He stated in 2020 that "cryptocurrencies basically have no value and they don't produce anything," adding, "I don't have any cryptocurrency and I never will."
That's a significant shift in opinion for the world's most vocal crypto critic. He stated in 2020 that "cryptocurrencies basically have no value and they don't produce anything," adding, "I don't have any cryptocurrency and I never will."
Buffett's U-turn points to a tipping point in institutional crypto adoption that could send crypto demand (and prices) skyrocketing in the coming years.
Extending the lens
Buffett began investing in the 1940s and has amassed a personal fortune of well over $100 billion as a result of his stock-picking abilities. The modern-day Midas and his sidekick Charlie Munger believe in "value investing," or finding attractively-priced nuggets that other investors have overlooked.
Both Buffett and Munger have previously mocked bitcoin. Buffet called it "rat poison squared," and Munger claimed that cryptocurrency trading is "just dementia."
Buffet has not directly invested in bitcoin, but he has tripled Berkshire Hathaway's investment in Nubank, Brazil's largest fintech bank, which is popular among bitcoin investors. And, of course, you wouldn't bet on a company that is heavily reliant on cryptocurrency if you weren't confident in it.
"The Nubank investment can be tagged as Buffett's way of supporting the fintech/crypto world without taking back his previous criticisms," said Greg Waisman, Co-Founder, and COO of crypto wallet service Mercuryo. Waisman went on to say that the Berkshire Hathaway CEO is now "indirectly supporting the digital currency ecosystem."
Furthermore, Buffet is not the only major investor who has changed his mind. For example, Lloyd Blankfein, a former Goldman Sachs CEO who has previously expressed skepticism about cryptos, recently stated that his position on crypto is "evolving."
The fact that these icons have come around to cryptos will most likely persuade even the most apprehensive big institutional investors to reconsider, potentially turbocharging demand.
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Potentially big tailwind
The increasingly positive attitude of institutional investors indicates that bitcoin is entering the mainstream and has the potential to challenge gold as a modern store of value. As I discussed last year, one of the most important narratives driving the price of bitcoin in the last two years has been the dethronement of gold:
"There is $650 billion in bitcoin out there." According to the World Gold Council, investors own at least $2.7 trillion in gold. If they transferred just a little more than 20% of their gold holdings to bitcoin, the cryptocurrency could double or more."
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