billionaires catching up to crypto FOMO

What drove billionaire investors like George Soros, Mark Cuban and others to change their stance on Bitcoin and dive into the crypto market?

Hungarian-American billionaire and legendary investor George Soros is known for his sharp financial predictions and bold moves in the investment world.

In January 2018, Soros made headlines at the World Economic Forum in Davos by calling Bitcoin a “bubble” and likening the crypto craze to the tulip mania in the Netherlands in the 1600s.

However, in a surprising development, Soros Fund Management announced that it entered the crypto world by owning some Bitcoin in October 2021.

The fund’s interest in crypto did not end there. In the first quarter of 2024, Soros Fund Management increased its stake in MicroStrategy, which is heavily invested in Bitcoin and has assets of over $135 million.

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

From skeptic to investor: Soros’ changing stance

When George Soros spoke in Davos in 2018, he made his skepticism towards Bitcoin (BTC) quite clear, describing it as a classic bubble. His main concern was volatility, which he believed 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 to pay wages, for example, because wages can fall 25 percent in a day.”

Despite his reservations about Bitcoin, Soros was optimistic about the underlying blockchain technology. He saw its positive potential, especially in helping immigrants keep their money safe.

By October 2021, Soros Fund Management revealed that it owned some Bitcoin. Soros Fund Management CEO and chief investment officer Dawn Fitzpatrick noted at the Bloomberg event that the fund “has some coin holdings, but not a lot.”

As of December 2022, Soros Fund Management has further deepened its participation in the crypto industry. The fund purchased $39.6 million worth of convertible bonds from leading crypto mining company Marathon Digital Holdings.

Convertible bonds are long-term debt instruments that can be converted into shares and demonstrate Soros’ strategic approach to expanding into the crypto market.

Additionally, the fund held large positions in MicroStrategy. Soros’s 13F filings with the SEC revealed approximately $200 million of MicroStrategy preferred stock, as well as call and put options on MicroStrategy shares.

And now, as of May 2024, Soros Fund Management’s interest in MicroStrategy has grown even more, with the value of its assets exceeding $135 million.

This investment is notable because MicroStrategy has become a major player in the Bitcoin market, holding 214,000 BTC thanks to its co-founder Michael Saylor’s aggressive Bitcoin purchasing strategy.

Mark Cuban: from bananas to blockchain belief

Mark Cuban, the billionaire owner of the Dallas Mavericks, has embarked on quite a journey with cryptocurrencies.

During a Q&A session on YouTube in 2019, Cuban humorously expressed his initial skepticism, saying he would “rather eat a banana than Bitcoin.”

He compared Bitcoin to baseball cards and comic books, emphasizing that these items have no real value in his opinion.

Despite his initial skepticism, Cuban’s attitude towards crypto began to change. By 2021, Cuban had become a strong supporter of decentralized finance (DeFi) and non-fungible tokens (NFTs).

He saw the potential of smart contracts and decentralized applications (dApps) to innovate in industries beyond finance. As a result, its investment portfolio has grown to include projects like Polygon (MATIC), a layer 2 scaling solution for Ethereum (ETH).

Cuban’s Dallas Mavericks began accepting Bitcoin and other crypto assets for tickets and merchandise, further strengthening its commitment to the crypto space.

Cuban’s commitment to the crypto industry is also evident from his investment strategy. He revealed that 80% of his investments outside of “Shark Tank” are focused on crypto and blockchain technology.

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

DAOs operate without a central authority and rely on token holders to make decisions; Cuban finds this appealing for its democratic approach.

Today, Mark Cuban is one of the most prominent billionaire proponents of blockchain technology. His journey from choosing 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 expressed deep skepticism about Bitcoin’s value and long-term sustainability, calling it “rat poison squared.”

Buffett prefers to invest in tangible assets and companies with stable cash flows, making the wild ups and downs of cryptocurrencies unappealing to him.

But despite his harsh words, Buffett’s actions tell a more nuanced story. In late 2021, Berkshire Hathaway made a surprising move by investing $1 billion in cryptocurrency-friendly Brazilian digital bank Nubank.

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

This big investment wasn’t Buffett’s first dance with Nubank. In early June 2021, Berkshire Hathaway transferred $500 million to Nubank during the extension of its Series G financing round. In this round, Nubank was valued at $30 billion.

When Nubank went public in December 2021, Berkshire Hathaway bought another 30 million shares for $250 million. At this point, Nubank’s value skyrocketed to $41.5 billion.

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

Capitalists always dance to the rhythm of money

Money talks, and it speaks louder than anything else in the financial world. The allure of profit can turn even the staunchest skeptics into enthusiastic supporters and sometimes cause ardent believers to become cautious critics.

Goldman Sachs is the best example of this. They halted their plans to open a crypto trading desk in 2018 due to regulatory uncertainty and lack of institutional interest.

But by 2021, as Bitcoin accelerated and institutional demand increased, Goldman Sachs relaunched its crypto trading desk offering clients Bitcoin futures and non-deliverable futures.

At the Consensus 2024 conference hosted by CoinDesk, Goldman Sachs even celebrated the success of its new spot Bitcoin ETFs.

Mathew McDermott, the investment bank’s global head of digital assets, called the SEC’s approval of spot BTC ETFs a “major psychological milestone” and celebrated their “astonishing success.”

Bridgewater Associates founder Ray Dalio was another notable skeptic. He first criticized Bitcoin in September 2017, calling it a “bubble” and stating that Bitcoin was neither a good store of value nor a medium of exchange.

But by 2021, Dalio announced that he owned some Bitcoin, calling it a “great invention” and recognizing Bitcoin’s potential to hedge against inflation and currency devaluation.

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

With inflation rates reaching decades-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 who want to keep up with this new tune will lead the way.