Warren Buffet Suddenly Backpedals on Crypto

Just a few years shy of making the remark that cryptocurrencies were “rat poison,” celebrity investor, Warren Buffet, took actions that couldn’t be any more contrary to his disparaging remarks – a $1 billion investment in a digital bank that’s at the heart of the cryptocurrency revolution. Widely heralded as the “sage of Omaha” for his uncanny ability to accurately anticipate big moves in the market, Buffet’s recent investment is likely to be interpreted as another watershed moment in the dynamic history of the cryptocurrency market, and could produce very favourable tailwinds that could wash away the market’s abysmal January losses.

Every investor seems to know of Warren Buffett, presumably because he’s one of the wealthiest people in the world. Buffett’s father was in the US. Congress, and was politically connected with financial ties. By 30, Buffet became a millionaire after demonstrating substantial prowess with mathematical formulas. Buffett purchased Berkshire Hathaway in 1965, a company that started in textiles back in 1839 but then expanded into managing investments. He converted it into the largest holding company in the world by scooping up troubled assets and restoring their health.

$1 Billion Worth of Shares Purchased

One can only imagine what the 91-year-old man with a reported net worth of nearly $110 billion has planned for a swan song once his $1 billion investment achieves its intended purpose. Buffet’s blockbuster investment was made public when his company entered an SEC filing earlier in the week. The details of the filing show that $1 billion worth of shares were purchased by the massive holding company in a Brazilian digital bank called Nubank - the largest bank of its kind in Latin America.

This wasn’t the first time Buffet has taken interest in cryptocurrency-related assets. In the summer of 2021, Buffet’s company had already established a $500 million stake in Nubank – the largest cash infusion the bank had ever received. Nubank went public in December of 2021 but, surprisingly, Nubank has been in operation since 2013. Originally aspiring to cause some havoc in the Brazilian banking market, an environment with a reputation for super-charged interest rates and shoddy customer service, Nubank offered to be the digital financial alternative that had a user-friendly app.

Huge Success for Nubank

Fast forward to the present, Nubank now offers many of the same options that any other financial institution would, including checking and savings accounts. The scope of Nubank’s services has recently expanded to include personal loans and life insurance. In terms of success, Nubank can boast about its 48 million customers spread out across Brazil, Columbia, Argentina, and Mexico. Nubank’s market capitalisation currently sits at $33 billion and has the distinction of being the largest digital bank in the world. Much of that success was surely made possible by Buffet’s earlier cash infusion.

Nubank is a fintech and does not facilitate direct trading in cryptocurrencies, but the bank does have an investment unit called NuInvest that provides a way to invest in a Bitcoin exchange-traded fund (ETF).

Any investor knows that anything Berkshire Hathaway is willing to sink a billion dollars into is worth following. It appears that fintech firms will be making headlines in 2022.