Market Analysis

In 2023, Bitcoin (BTC) and Cathie Wood’s Coinbase investment are finally outperforming Warren Buffett’s popular “crypto bet” in Brazil’s fintech giant Nubank.

Bitcoin vs. crypto-exposure stocks NU and COIN

As of March 17, Bitcoin’s price is up nearly 55% year-to-date (YTD). In comparison, Nubank — trading as NU — has risen only 26%. Meanwhile, another crypto-exposure stock, Coinbase — trading as COIN — has seen the biggest rebound of the three, rising over 100% YTD. 

Nevertheless, Buffett’s investment has fared better than COIN over the past 12 months.

As of March 17, NU is down 38% year-over-year compared with COIN’s 61.76%, nearly equal to Bitcoin’s 37% losses in the same period.

Warren Buffett sticks by his neobank investment

Buffett’s investment firm, Berkshire Hathaway, purchased $1.5 billion worth of class-A Nubank stock in two separate rounds in July 2021 and February 2022.

The news came as a surprise to many, as Buffett is a well-known cryptocurrency critic and Nubank offers crypto trading services via its Nucripto wing. In May 2022, the bank said that it would allocate 1% of its net assets to Bitcoin.

“This move reinforces the company’s conviction in Bitcoin’s current and future potential in disrupting financial services in the region,” Nubank said at the time.

But despite Nubank’s crypto exposure and NU’s price decline, Buffett has not sold a single share, according to Berkshire’s latest annual earnings report.

The decision to keep holding NU through a rough market likely coincides with Nubank’s growth in the Latin American banking sector.

Nu Holdings, the parent company of Nubank, reported a solid 2022 with 140% year-on-year growth in revenue and a 38% year-over-year rise in active customers. 

Cathie Wood doubles down on COIN in 2023

The same cannot be said about Coinbase’s earnings in 2022 with its 57% drop in year-over-year revenue.

Related: Crypto acted as safe haven amid SVB and Signature bank run: Cathie Wood

But ARK Invest CEO Cathie Wood appears unfazed and is continuing to buy COIN shares via her ARK Next Generation Internet ETF (ARKW) and ARK Innovation ETF (ARKK) in 2023. The COIN buys, in particular, account for roughly 30% of all the stock purchased so far this year.

As a result, Coinbase has become Wood’s fifth-largest holding on record, worth nearly $670 million at the time of writing. 

Holding Bitcoin a better strategy?

Comparing Bitcoin’s price performance with the market debut of Coinbase and Nu Holdings reaffirms that BTC not only regularly outperforms stocks in general but also crypto-exposure stocks — although exceptions have been seen, such as with the Bitcoin mining stock boom in 2021. 

But overall, holding Bitcoin is proving to be a better strategy year-over-year, and likely with more upside potential, than traditional stocks. 

Notably, NU has dropped by more than 50% since its market debut in December 2021. Since then, BTC has fared better with a 44% decline in the same period. 

Similarly, COIN is down 80% since its initial public offering in April 2021. The same down-cycle, however, has seen Bitcoin only losing around 50%, emerging as a better performer overall against crypto-exposure stocks such as Coinbase and Nu Holdings.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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