Bitcoin's rally in 2023 has also seen Coinbase's stock gain more than 100% year-to-date, boosting Cathie Wood's ARK portfolio.
In 2023, Bitcoin (BTC) and Cathie Wood's Coinbase (COIN) investment finally outperformed Warren Buffett's popular "crypto bet" against Brazilian fintech giant Nubank (NU).
Bitcoin and crypto exposure stocks NU, COIN
As of March 17, Bitcoin's price year-to-date (YTD) is up nearly 55%. In contrast, Nubank is up just 26%. Meanwhile, another crypto asset, Coinbase stock (COIN), saw the biggest rally of the three, up more than 100% year-to-date.
Still, Buffett's investments have outperformed COIN over the past 12 months.
As of March 17, NU is down 38% year-over-year compared to COIN's 61.76%, almost equal to Bitcoin's 37% decline over the same period.
Warren Buffett is sticking to his new bank investments
Buffett's investment firm, Berkshire Hathaway, purchased $1.5 billion worth of Class A Nubank stock in two rounds in July 2021 and February 2022, respectively.
The news came as a surprise to many, as Buffett is a well-known cryptocurrency critic, and Nubank offers cryptocurrency trading services through one of its affiliates called Nucripto. In May 2022, the bank said it would allocate 1% of its net worth to Bitcoin.
"The move reinforces the company's belief in Bitcoin's current and future potential to disrupt financial services in the region," Nubank said at the time.
But according to Berkshire's latest annual earnings report, Buffett has not sold any shares despite Nubank's crypto exposure and NU's price drop.
The decision to continue holding NU in a tough market may coincide with Nubank's growth in the banking sector in Latin America.
Nu Holdings, Nubank's parent company, reported a 140% year-over-year increase in revenue and a 38% year-over-year increase in active customers in 2022.
Cathie Wood doubled down on its investment in COIN in 2023
With Coinbase's revenue down 57% year-over-year in 2022, the situation is different.
But ARK Invest CEO Cathie Wood doesn't seem worried about continuing to buy COIN shares through her ARK Next Generation Internet ETF (ARKW) and ARK Innovation ETF (ARKK) in 2023. In particular, COIN purchases account for about 30% of all shares purchased so far this year.
As a result, at the time of writing, Coinbase has become Wood's fifth-largest asset of all time, worth nearly $670 million.
Is holding Bitcoin a better strategy?
Comparing Bitcoin's price performance to the market debuts of Coinbase and Nu Holdings reaffirms that BTC regularly outperforms not only stocks, but also crypto stocks. Although there are exceptions, such as the boom in Bitcoin mining stocks in 2021.
But overall, holding Bitcoin proves to be a better strategy year over year compared to traditional stocks, and may have greater upside potential.
Notably, NU has fallen by more than 50% since its listing in December 2021. Since then, BTC has performed better, falling 44% over the same period.
NU's return since listing vs. BTC. Source: TradingView
Similarly, COIN is down 80% since its IPO in April 2021. However, in the same downcycle, Bitcoin has only fallen by about 50% and has performed better overall compared to crypto stocks such as Coinbase and Nu Holdings.