Billionaires catch up on crypto FOMO

What prompted billionaire investors like George Soros, Mark Cuban and others to change their stance on bitcoin and dive into the cryptocurrency market?

George Soros, the Hungarian-American billionaire and legendary investor, is known for his keen financial insights and bold moves in the world of investing.

In January 2018, Soros bitcoin-is-a-typical-bubble/?sh=46f044d129d0″ target=”_blank” rel=””>made headlines at the World Economic Forum in Davos by calling bitcoin a “bubble,” comparing the cryptocurrency frenzy to the tulip mania of the 17th century in the Netherlands.

However, in a surprising turn of events, Soros Fund Management revealed in October 2021 that it had bitcoin-ceo-confirms.html” target=”_blank” rel=””>risky in the world of cryptocurrencies by owning some bitcoin.

The fund's interest in cryptocurrencies didn't stop there. During the first quarter of 2024, Soros Fund Management increase his stake in MicroStrategy, a company heavily invested in bitcoin, with stakes worth more than $135 million.

How has Soros' stance on cryptocurrencies evolved over the years and which other billionaires have caught crypto FOMO (fear of missing out)? Let's dig into the details and find out.

From skeptic to investor: Soros's change of position

When George Soros spoke at Davos in 2018, he was quite clear about his skepticism towards bitcoin (btc), describing it as a classic bubble. His main concern was its volatility, which in his opinion made it unsuitable as a currency.

“bitcoin is not a currency,” Soros said, “because a currency is supposed to be a stable store of value, and a currency that can fluctuate 25% in a day cannot be used, for example, to pay salaries. Because salaries could drop 25% in one day.”

Despite his reservations about bitcoin, Soros was optimistic about the underlying blockchain technology. He saw the potential for him to do good, particularly to help immigrants keep their money safe.

In October 2021, Soros Fund Management revealed that it owned some bitcoin. Dawn Fitzpatrick, CEO and chief investment officer of Soros Fund Management, stated at a Bloomberg event that the fund owned “some coins… but not many.”

As of December 2022, Soros Fund Management had more deepened their participation in the crypto sector. The fund purchased $39.6 million in convertible bonds in Marathon Digital Holdings, a prominent crypto mining company.

Convertible debentures are long-term debt instruments that can be converted into equity, showing Soros' strategic approach to gaining exposure to the cryptocurrency market.

Additionally, the fund acquired large positions in MicroStrategy. Soros' 13F filings with the SEC revealed call and put options on MicroStrategy stock, as well as nearly $200 million in MicroStrategy preferred stock.

And now, in May 2024, Soros Fund Management's interest in MicroStrategy has grown even more, with stakes valued at more than $135 million.

This investment is notable because MicroStrategy has been a major player in the bitcoin market, holding over 214,000 btc, thanks to its co-founder Michael Saylor's aggressive bitcoin acquisition strategy.

Mark Cuban: from bananas to blockchain believer

Mark Cuban, the billionaire owner of the Dallas Mavericks, has had a great journey with cryptocurrencies.

In 2019, during a YouTube Q&A, Cuban joked that he would “rather eat bananas than bitcoin,” humorously citing his initial skepticism.

He compared bitcoin to baseball cards and comic books, emphasizing that these items, in his opinion, had no intrinsic value.

Despite his initial misgivings, Cuban's stance on cryptocurrencies began to change. By 2021, Cuban had become a strong supporter of decentralized finance (DeFi) and non-fungible tokens (nft).

He saw the potential for smart contracts and decentralized applications (dApps) to innovate industries beyond finance. As a result, his investment portfolio grew to include projects like Polygon (MATIC), a Layer 2 scaling solution for ethereum (eth).

Cuban's Dallas Mavericks even began accepting bitcoin and other crypto assets for tickets and merchandise, further cementing their commitment to the crypto space.

Cuban's dedication to the cryptocurrency industry is also evident in his investment strategy. He revealed that 80% of his non-“Shark Tank” investments focus on crypto and blockchain technology.

He sees the decentralization aspect of digital assets as the biggest draw, with a particular interest in decentralized autonomous organizations (DAOs).

DAOs operate without a central authority and rely on token holders to make decisions, which Cuban finds attractive for its democratic approach.

Today, Mark Cuban is one of the most prominent billionaire advocates of blockchain technology. His journey from preferring bananas over bitcoin to investing heavily in blockchain projects is definitely a story worth sharing.

Warren Buffett: from skepticism to strategic investments

Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, has always been known for his critical view of cryptocurrencies. In 2018, he called bitcoin “rat poison squared,” expressing deep doubts about its value and long-term sustainability.

Buffett prefers to invest in companies with tangible assets and steady cash flows, which makes the ups and downs of cryptocurrencies unappealing to him.

But despite his harsh words, Buffett's actions tell a more nuanced story. At the end of 2021, Berkshire Hathaway made a surprising move by crypto-bank/” target=”_blank” rel=””>invest One billion dollars in Nubank, a Brazilian crypto-friendly digital bank.

According to a 13F filing with the SEC, Berkshire purchased 107.1 million shares of Nu Holdings at an average price of $9.38 per share.

This big investment wasn't Buffett's first dance with Nubank. As of early June 2021, Berkshire Hathaway had already spill 500 million dollars in Nubank during an extension of the Series G financing round. This round valued Nubank at 30 billion dollars.

In December 2021, when Nubank went public, Berkshire Hathaway crypto-friendly-nubank-12533352.htm” target=”_blank” rel=””>bought another 30 million shares for $250 million. At that time, Nubank's value skyrocketed to $41.5 billion.

What does it mean? Buffett's investments in Nubank hint at a careful but strategic interest in the fintech and crypto space. While he remains cautious about investing directly in cryptocurrencies, his actions suggest a slow but steady adaptation to the changing environment.

Capitalists always dance to the sound of money.

Money talks, and in the world of finance it talks more than anything else. The lure of profits can turn even the staunchest skeptics into enthusiastic supporters and sometimes turn fervent believers into cautious critics.

Goldman Sachs is an excellent example. In 2018, they paused their plans to open a cryptocurrency trading desk due to regulatory uncertainty and lack of institutional interest.

But by 2021, as bitcoin surged and institutional demand grew, Goldman Sachs bitcoin-boom-2021-03-01/” target=”_blank” rel=””>relaunched its cryptocurrency trading desk, which offers bitcoin futures and non-deliverable forwards to its clients.

At the Consensus 2024 conference hosted by CoinDesk, Goldman Sachs even celebrated the bitcoin-etfs-astonishing-success-says-goldman-exec-1851509596″ target=”_blank” rel=””>success of new bitcoin spot ETFs.

Mathew McDermott, global head of digital assets at the investment bank, called the SEC's approval of btc spot ETFs a “major psychological turning point” and celebrated their “astonishing success.”

Ray Dalio, founder of Bridgewater Associates, was another notable skeptic. He initially criticized bitcoin in September 2017. bitcoin-is-bubble.html” target=”_blank” rel=””>vocation a “bubble,” stating that it was neither a good store of value nor a medium of exchange.

However, for 2021, Dalio bitcoin-one-hell-of-an-invention” target=”_blank” rel=””>revealed who owned some bitcoin and called it “a great invention,” recognizing its potential as a hedge against inflation and currency devaluation.

But why are these capitalists so eager to embrace this new world? The answer lies in diversification and hedging.

With inflation rates reaching multi-decade highs and traditional assets underperforming, digital assets offer an attractive hedge against economic uncertainties.

The future of finance is being written in code and blockchain, and those willing to dance to this new tune will lead the way.