Taking a page from billionaire investor Warren Buffett’s playbook, asset manager Morgan Creek Digital has challenged that its cryptocurrency index fund will outperform the S&P 500 over the next ten years. The challenge is like one issued by Warren Buffett previously, except he noted that S&P index fund would outperform the actively-managed hedge funds. Morgan Creek is betting $1 million on their theory.
The $1 Million Wager
Buffett placed a similar $1 million wager, which he went on to win in 2017 and then donated the proceeds to charity. Interestingly, Buffett is one of the staunchest critics of cryptocurrencies and even called Bitcoin “rat poison squared.”
Morgan Creek Digital is now betting that cryptocurrencies will perform better than the S&P 500 over the next ten years. The firm is calling the challenge “Buffett Bet 2.0” and is inviting any investors who believe that the S&P 500 will produce better returns than their crypto index to take the other side.
Morgan Creek Digital co-founder and partner Anthony Pompliano said that someone who has the same outlook as Buffett himself would likely take the other side of the bet. He noted that it would likely be someone who is bullish on the S&P 500 or someone who believes that cryptocurrencies are overvalued or worthless.
The Bright Side of Cryptocurrencies
Pompliano spoke to CNBC and said:
“This is a combination of our outlook not only for the upside of cryptocurrencies but also the outlook on public equities. A lot of people might look at this and just think we’re bullish on crypto — but you need to look at what asset we’re going up against. Public equities aren’t exactly at their all-time highs either.”
He talked about the recent losses in FANG stocks and other popular stocks, which have been suffering a beating recently. Facebook is leading the rest down, with a 24% year over year loss. However, the losses are dwarfed by the over 70% fall of digital currencies from their all-time highs.