Morgan Creek’s “Buffet 2.0”
In 2007, Berkshire Hathaway’s Warren Buffet issued a $1 million bet against asset manager Protégé Partners on the premise that the S&P 500 would outperform a group of hedge funds over a 10-year period ending in 2017. Buffet was proven right over the course of the wager, with the S&P 500 returning an average of 7.1 percent annual compounded returns, as against the hedge fund basket, which only returned an average of 2.2 percent.
Morgan Creek is trying to demonstrate its faith in the power and future of cryptocurrency and blockchain technology with a similar wager set to expire in 2028. Apart from publicly displaying its confidence in crypto, the purpose of the bet is also to draw attention to the fact that amidst all the publicity about the crypto bear market, equity assets are also performing relatively poorly. Indeed Pompliano recently pointed out on his twitter account that the S&P 500 recorded more than $755 billion of losses in just a few hours on December 4, which is more than the entire crypto market has lost all year.
Writing on Twitter on Saturday, Pompliano revealed that over seven days after opening the challenge, the company has not found anyone willing to take up the opposite position. This he said, is proof that while conventional market participants regularly criticise crypto for a range of reasons including falling prices and volatility, they do not actually believe their own criticism enough to put money behind it.
The tweet read:
CCN earlier reported that Pompliano predicted a bitcoin price bottom at an 85 discount to its all time high, which comes to about $3,000. At press time, bitcoin was holding steady at about $3,306. In his opinion, this represents a fair correction for a market that became overvalued during its bull run in December last year. After the price floor is established according to him, bitcoin and crypto in general will experience another surge, driven this time by the utility of cryptocurrency and blockchain technology as a transaction settlement layer with the world’s most advanced security framework.
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