Bitcoin has had a terrible year , falling more than 80% and dragging down the entire cryptocurrency market by over $700 billion , but that's not stopping its most faithful supporters betting it's going to rise over the long term. Bitcoin and cryptocurrency asset manager Morgan Creek Digital reckons its Digital Asset Index Fund, which tracks 10 major cryptocurrencies including bitcoin, ethereum, bitcoin cash, and litecoin, will outperform the S&P 500 (SPX) over the next 10 years.
Anthony Pompliano, co-founder and partner at Morgan Creek Digital, is so confident of bitcoin's future that his firm is willing to put up a $1 million wager that these cryptocurrencies will prove to be a better investment than the biggest U.S. stocks and shares — if anyone is willing to take Morgan Creek on.
The bitcoin price has been heavily sold off so far this year, with many expecting it not to recover to its all-time highs. Getty
The bitcoin investing firm has branded the challenge “Buffett Bet 2.0" in reference to the legendary investor Warren Buffett’s famous $1 million bet that the S&P 500 would outperform a selection of hedge funds over 10 years. Buffett was proven right last year, a decade on from the wager.
Morgan Creek partners are personally funding their side of the bet and won't be using cash from the fund, though have not put in place any guarantees they will follow through with the bet if they can find a taker. Pompliano has reportedly said the plan is for the proceeds of the wager to be donated to charity, no matter which side wins.
Morgan Creek is betting on bitcoin amid one of the cryptocurrency's worst ever sell-offs, a rout that has hit the wider market and been labeled "crypto winter."
The bitcoin price today fell to its lowest this year , losing 5% over the last 24 hours and taking it to $3,560 —a far cry from the near $20,000 it was 12 months ago.
The bitcoin price peaked late last year after an epic bull run. CoinDesk
"This is a combination of our outlook not only for the upside of cryptocurrencies but also the outlook on public equities," Pompliano told CNBC. "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."
U.S. stocks have been falling recently as the oil price sinks and concerns over global growth mount. Others are worried U.S. president Donald Trump could ramp up a trade war with China, adding costs to companies.
Worryingly for Morgan Creek, however, one of the biggest-ever bets on bitcoin looks close to losing.
A call option on the bitcoin price of $50,000, purchased for almost $1 million on LedgerX’s trading platform just days after bitcoin peaked a year ago, is about to expire. For the contract to retain any value when it expires on December 28, bitcoin would need to rally some 1,200%, according to a Bloomberg report .
Morgan Creek, co-founded by former chief investment officer of the University of North Carolina’s endowment Mark Yusko, created its index fund with Bitwise, a U.S. provider of index and beta crypto asset funds....