Warren Buffett-Backed Digital Banks Invests in Bitcoin ($BTC), Adds Buying and Selling to Its App

Brazil’s largest digital bank Nubank, which has been backed by Berkshire Hathaway CEO Warren Buffett, has announced it’s investing 1% of its assets into bitcoin ($BTC) and adding buying and selling options for its users.

According to an announcement published by the firm, 1% of its equity will be allocated to bitcoin through its parent company Nu Holdings, which is traded on the New York Stock Exchange. The move, Nubank said, seeks to “strengthen the company’s conviction in the current and future potential of bitcoin in disrupting financial services.”

According to several reports, cryptocurrency infrastructure company Paxos will provide custody and trading services to enable Nubank’s offering. As Bitcoin Magazine reports, the use of Paxos’ services could imply users buying and selling BTC on the Brazilian digital bank may not be able to withdraw to an external wallet.

Nubank’s announcement details that the feature will be gradually rolled out, with a few percent of users now being able to buy, sell, and hold BTC on the bank’s app. The firm expects all customers to have access to the feature, which also includes buying and selling Ethereum ($ETH) over the next couple of months.

In the announcement, the firm details it is investing in Bitcoin as the flagship cryptocurrency currently commands around 40% of the space’s market share, and is considered “the most solid crypto on the market” over the weight it carries and the technology it represents.

In June 2021, Warren Buffett’s Berkshire Hathaway invested $500 million in Nubank, before acquiring an additional 30 million shares for $250 million in December as it went public. The business conglomerate recently doubled down on its Nubank bet with a $1 billion investment.

The investments mean that through Nubank’s treasury allocation Warren Buffett, who’s a well-known Bitcoin critic, now has indirect exposure to the flagship cryptocurrency. Nubank’s move comes at a time in which trading volume has been muted against fiat currencies, according to CryptoCompare’s April 2022 Exchange Review.

The muted trading volume against fiat currencies comes at a time in which around 40% of bitcoin investors are sitting on unrealized losses as the price of the flagship cryptocurrency hovers around the $30,000 mark.

According to on-chain analytics firm Glassnode, network profitability defined as a “drop in the percentage of addresses, entities and/or supply in profit,” when BTC was trading at around $33,800 between 60% and 62% of BTC investors were in a state of profit.

Bitcoin’s correlation to equities has been rising over the last few months. That rising correlation has seen analysts at Bank of America challenge BTC’s role as an inflation hedge and instead suggest it trades as a risk asset.

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DISCLAIMER
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.

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