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Crypto Index Will Outperform the SPX in 10 Years

Maya Mandzikasvili | Dec. 7, 2018
Crypto Index Will Outperform the SPX in 10 Years

December 07, 2018 | AtoZ Markets -Recently, the crypto-focused institutional asset Morgan Creek Digital issued a $1 million bet against the S&P 500 (SPX) stock market index. The press release states, that the crypto fund has issued a wager that its Digital Asset Index Fund –– a basket of ten major crypto assets –– will outperform the SPX over the next 10 years, starting Jan.1, 2019.

Warren Buffet Bet 2.0. 

S&P 500, or just S&P, is an American stock market index based on the market capitalization of 500 large companies having common stock listed on the New York Stock Exchange or the Nasdaq Stock Market. Morgan Creek Digital is betting that an index fund containing Bitcoin, Ethereum, Bitcoin cash, Monero, EOS, Litecoin, Zcash, Dash, Iota and NEM will outperform the S&P 500 over the next ten years.

According to the official note, the aforementioned crypto-focused asset manager is challenging any professional investor or firm that believes cryptocurrencies are “worthless” or that public equities are a better bet to prove their belief with a long-term bet against the Digital Asset Index Fund, a crypto index fund managed by Bitwise Asset Management.

As the media resources state, the Morgan Creek Digital bet will be structured like the famous Warren Buffett bet. The latter began in 2008 when the billionaire investor and prominent crypto critic wagered $1 million that investing in an S&P 500 index fund would see a greater result than investing in hedge funds over a ten year period. Ten years later , when Buffett won his bet , he donated the gains to charity. The same action will be expected from the winner of the new bet which Morgan Creek Digital initiated. 

Morgan Creek Digital Co-Founder Trusts in Cryptos

Anthony Pompliano, a co-founder and a partner at Morgan Creek Digital in his interview with the U.S. media outlet outlined that the new challenge could highlight the performance of crypto markets for many people. Pompliano told media that the firm is confident in cryptocurrencies’ performance outlook across the next 10 years, at least compared to ordinary shares. In order to justify the bet, Pompliano has also reportedly pointed to recent losses of FANG –– a group of high-performing tech stocks in the U.S. market, namely Facebook, Amazon, Netflix, and Google. Facebook is currently down 24 percent loss year over year, as the media reports.

Morgan Greek Digital co-founder made a similar observation about the performance of traditional stocks in a tweet last month, stating that FANG stocks were down 20-40 percent from their all-time highs, while the Dow Jones Industrial Average (DOW) had its “worst Thanksgiving week since 2011.”

On contrary to the common shares, Pompliano expressed his trust in cryptos in his recent post outlining how bitcoin’s fundamentals would support its growth as an asset class, noting that while the post references bitcoin specifically, his team holds similar views on the crypto space as a whole. These fundamentals include the fact that the number of wallets and nodes supporting the network continue to grow, according to the post. “The likely candidate will believe strongly in public equities or be very bearish on crypto assets,” Pompliano said Thursday. The bet will begin on Jan. 1, 2019 and conclude in 2029 – should any investors take Morgan Creek up on their proposition. 

Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.