$1 Million: Morgan Creek Bets Cryptos Will Outperform the S&P 500 Over the Next Decade

Morgan Creek Digital, the cryptocurrency affiliate of Morgan Creek Capital Management, a firm with $1.5 billion under management, has recently bet $1 million that bitcoin, the flagship cryptocurrency, will outperform the S&P 500 index over the next 10 years.

According to Bloomberg, Morgan Creek is challenging those who claim cryptocurrencies are worthless, or that equities are a better investment. If it loses, the firm’s partners will pay $1 million to whoever accepts the bet, and it will select one single investor for the bet. Its goal is to see the winner donate the funds to charity.

Specifically, Morgan Creek’s wager revolved around the Digital Asset Index Fund, which tracks the price performance of top cryptocurrencies like bitcoin, bitcoin cash, EOS, litecoin, and Ethereum’s ether. For the firm to win, it will have to outperform the S&P 500 over the next 10 years, starting on January 1.

The firm called the bet “Buffet Bet 2.0,” as it recreates a bet Warren Buffet did with Ted Seides, that the S&P 500 would outperform a portfolio of hedge funds. Buffet won his bet. The billionaire investor is notably a bitcoin bear, however, as he has claimed cryptos will come to a “bad ending,” and claimed it is “probably rat poison squared.”

According to Bloomberg Anthony Pompliano, a partner and the founder of Morgan Creek Digital, stated:

Bitcoin and crypto assets have been the best-performing asset for the last 10 years. They have beat the S&P 500, and we believe they will continue to do so for the next 10 years.

Speaking to CNBC Pompliano added that the bet is a “combination of our outlook not only for the upside of cryptocurrencies but also the outlook on public equities.” He noted public equities “aren’t exactly at their all time highs either,” and pointed to recent losses in FANG [Facebook, Amazon, Netflix, and Google] stocks.

The bet comes as bitcoin has been enduring a months-long bearish trend that has seen its value drop below its September 2017 low. According to CryptoCompare data, the cryptocurrency is currently trading at about $3,390 after falling 9.8% in the last 24-hour period.

Some analysts have claimed technical indicators suggest the price drop will continue in 2019. The slump just makes the bet resemble more the one Buffett was involved in, as the S&P 500 Index plummeted in 2008 and 2009 shortly after the bet was made.

Square Crypto on Hiring Legendary Bitcoin Developer Matt Corallo: ‘LET’S PARTY’

Siamak Masnavi

Square Crypto, the division of payments solutions provider Square that is focused on open source Bitcoin development, announced on Tuesday (August 20) that it had hired legendary Bitcoin developer Matt Corallo.

Square Crypto

The first mention of Square Crypto came on March 20 when Twitter and Square CEO Jack Dorsey sent out the following tweet:

In the tweets that followed, Dorsey explained the motivation for creating this new team:

  • "This will be Square’s first open source initiative independent of our business objectives. These folks will focus entirely on what’s best for the crypto community and individual economic empowerment, not on Square’s commercial interests. All resulting work will be open and free."
  • "Square has taken a lot from the open source community to get us here. We haven’t given enough back. This is a small way to give back, and one that’s aligned with our broader interests: a more accessible global financial system for the internet."

Then, on June 12, Square Crypto announced that Steve Lee, a former director at Google, had been hired to be the manager of this division:

On July 29, Lee held an Ask Me Anything (AMA) session via Square Crypto's Twitter account.

During this AMA session, the Square Crypto PM explained the focus of this group and its relation to the rest of Square: 

When asked how Square Crypto planned to support Bitcoin Core developers, Lee replied:

Lee also provided the first hint that Square Crypto would soon be hiring its first Bitcoin developer:

Matt Corallo

So, who is Matt Corallo? 

Corallo is one of the most highly respected and most prolific Bitcoin developers in the world, who has been making important contributions since May 2011. Currently, Corallo has the 6th most commits (640) in the "Open Source Bitcoin Project".

He is also a co-founder of Bloclstream, where he worked Between October 2014 and January 2017. After leaving Blockstream, he moved to Chaincode Labs, the stated mission of which is "to support and develop Bitcoin and other peer-to-peer decentralized systems."

Decrypto's Tim Copeland says that on February 7, at a meeting event in London, Corallo was introduced as “The bastard child of Satoshi," in response to which Corallo replied: "I can’t comment."

Square Crypto's Hiring of Matt Corallo

This is how Square Crypto ecstatically announced the news at 16:30 UTC on August 20:

As for the reasons for choosing Corallo to be their first full-time Bitcoin developer and how they see him helping this division of Square, they said:

This looks like a very smart move by Square, and judging by the comments on Twitter, the Bitcoin community seems to see this move as very bullish for Bitcoin and its ecosystem.

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