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

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

In January 2018, Soros done made headlines at the World Economic Forum in Davos calling Bitcoin a “bubble,” comparing the crypto frenzy to the tulip mania of the 1600s in the Netherlands.

However, in a surprising turn of events, Soros Fund Management revealed in October 2021 that it had ventured in the crypto world by owning some Bitcoins.

The fund’s interest in crypto didn’t stop there. During the first quarter of 2024, Soros Fund Management increased its stake in MicroStrategy, a company heavily invested in Bitcoin, with holdings valued at 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 delve into the details and find out.

From skeptic to investor: Soros’s change of position

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

“Bitcoin is not a currency,” Soros said, “because a currency must 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 wages can fall by 25% in one day.”

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

Fast forward to October 2021, Soros Fund Management revealed that it owned some Bitcoin. Dawn Fitzpatrick, CEO and chief investment officer at Soros Fund Management, said at a Bloomberg event that the fund held “some coins… but not many.”

As of December 2022, Soros Fund Management has more in-depth its involvement in the crypto sector. The fund purchased $39.6 million in convertible debentures from Marathon Digital Holdings, a leading crypto mining company.

Convertible debentures are long-term debt instruments that can be converted into shares, showing Soros’ strategic approach to gaining exposure to the crypto 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 further, with stakes valued at more than $135 million.

This investment is notable because MicroStrategy has been a major player in the Bitcoin market, containment more than 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 quite the journey with cryptocurrencies.

In 2019, during a YouTube Q&A session, Cuban famously joked that he “would prefer bananas to 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 crypto began to to change. In 2021, Cuban became a vocal advocate of decentralized finance (DeFi) and non-fungible tokens (NFTs).

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

Cuban’s Dallas Mavericks have even started accepting Bitcoin and other crypto assets for tickets and merchandise, further cementing their commitment to the crypto space.

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

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

DAOs operate without a central authority, relying 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 long-term value and sustainability.

Buffett prefers investments in companies with tangible assets and stable cash flows, which makes the ups and downs of cryptocurrencies unattractive to him.

But despite his harsh words, Buffett’s actions tell a more nuanced story. In late 2021, Berkshire Hathaway made a surprising move to investing US$1 billion in Nubank, a cryptocurrency-friendly Brazilian 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 large investment was not Buffett’s first dance with Nubank. In early June 2021, Berkshire Hathaway had already spilled US$500 million for Nubank during an extension of the Series G financing round. This round valued Nubank at US$30 billion.

In December 2021, when Nubank went public, Berkshire Hathaway purchased another 30 million shares for US$250 million. At that point, Nubank’s value skyrocketed to US$41.5 billion.

What does that mean? Buffett’s investments in Nubank suggest a careful yet 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 tune of money

Money talks and, in the world of finance, it speaks louder than anything else. The lure of profit can turn even staunch skeptics into enthusiastic supporters and, on occasion, cause ardent believers to become cautious critics.

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

But in 2021, as Bitcoin rose and institutional demand grew, Goldman Sachs Relaunched its crypto trading desk, offering Bitcoin futures and non-deliverable forwards to its clients.

At the Consensus 2024 conference organized by CoinDesk, Goldman Sachs even celebrated the success of new Bitcoin ETFs in sight.

Mathew McDermott, the investment bank’s global head of digital assets, weighed in on the SEC’s approval of Spot BTC ETFs a “major psychological turning point” and celebrated its “astonishing success”.

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

However, in 2021, Dalio revealed that he owned some Bitcoins and called them “quite an invention,” recognizing their 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 coverage.

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

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

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