According to Wall Street experts, billionaires are selling Nvidia stocks and shifting their investments into index funds that could potentially surge by 83,000%.
Recent 13F filings reveal that two high-profile hedge fund managers sold Nvidia stocks in the second quarter and reallocated funds into the iShares Bitcoin Trust (NASDAQ: IBIT), an exchange-traded fund (ETF) that tracks Bitcoin.
David Shaw of D.E. Shaw sold 12.1 million Nvidia shares, reducing his holdings by 52%. Simultaneously, he purchased 2.4 million shares of the iShares Bitcoin Trust, increasing his position by 1,658%. Steven Cohen of Point72 Asset Management sold 409,000 Nvidia shares, reducing his holdings by 16%, and bought 1.6 million shares of iShares Bitcoin Trust, marking his entry into the cryptocurrency space.
The trades by Shaw and Cohen have drawn attention because these fund managers are not only billionaires but also hold other significant credentials. According to LCH Investments, D.E. Shaw and Point72 rank second and thirteenth among the top 20 best-performing hedge funds in history, respectively.
It is important to note that investors should not interpret their trades as a sign that Nvidia is no longer a worthwhile investment, but rather as an emphasis on the importance of portfolio diversification. While AI stocks like Nvidia may generate substantial wealth over time, cryptocurrencies like Bitcoin can also do the same. Some Wall Street experts believe that Bitcoin (and hence the iShares Bitcoin Trust) could soar by 83,000%.
Wall Street experts predict substantial gains for Bitcoin holders
Bitcoin had a strong start to the year. Its price doubled in 2023 and accelerated further in early 2024 after the U.S. Securities and Exchange Commission (SEC) approved Bitcoin ETFs for trading on U.S. exchanges. The halving event in April also provided upward momentum for Bitcoin's price.
Bitcoin reached a record high of $73,000 in March, but it pulled back after the halving event. Economic uncertainty triggered this shift in sentiment. At the beginning of the year, investors expected the Federal Reserve to cut interest rates by June, but policymakers kept rates at their highest level in 20 years.
In early August, the situation worsened when a weak jobs report reignited recession fears, leading to a stock market sell-off and the most significant cryptocurrency market sell-off since the 2022 FTX collapse. Bitcoin is currently trading at $59,000, about 20% below its March peak. However, these Wall Street experts remain highly optimistic about cryptocurrencies.
Bernstein analysts Gautam Chhugani and Mahika Sapra predict that Bitcoin will trade at $200,000 by 2025, reach $500,000 by 2029, and hit $1 million by 2033. The high-end of this forecast implies a 1,595% upside potential.
In 2023, Ark Invest released a valuation model predicting Bitcoin would reach $1.5 million per coin by 2030. However, CEO Cathie Wood revised this figure to $3.8 million during a Bitcoin conference in March, based on the expectation that institutional investors would allocate approximately 5% of their assets to Bitcoin. This forecast implies a 6,440% upside potential.
Michael Saylor, Executive Chairman of MicroStrategy, recently delivered an extremely bullish price target speech at a Bitcoin conference. He stated, "This could be a bear market scenario of $3 million or a bull market scenario of $49 million." The low end of his prediction implies a 5,085% upside potential, while the high end suggests an 83,000% upside potential.
Spot Bitcoin ETFs could unlock demand from retail and institutional investors
Bitcoin's price is influenced by supply and demand dynamics. However, Bitcoin's supply is capped at 21 million coins, making demand the critical variable.
This is where spot Bitcoin ETFs could have a significant impact. These new funds eliminate traditional friction points by allowing investors to gain Bitcoin exposure within their existing brokerage accounts.
In other words, investors no longer need a separate account with a cryptocurrency exchange or pay high fees for each transaction. Several spot Bitcoin ETFs have relatively low fee ratios. For example, the iShares Bitcoin Trust has an annual fee of 0.25%, meaning investors would pay $25 for every $10,000 invested in the fund.
By reducing friction, spot Bitcoin ETFs are attracting more retail and institutional investors to the market. According to Bloomberg's Eric Balchunas, the iShares Bitcoin Trust accumulated more assets in its first 50 trading days than any ETF in history. According to The Wall Street Journal, the fund also reached $10 billion in assets faster than any ETF on record.
However, spot Bitcoin ETFs still have a long way to go before reaching the 5% of institutional assets under management (AUM) that Cathie Wood envisions. Last year, institutional AUM totaled $120 trillion, and 5% of that figure is roughly $6 trillion. Currently, spot Bitcoin ETFs hold less than $60 billion in total assets.
Historical data suggests Bitcoin will hit new highs between April 2025 and October 2025
Bitcoin miners validate transactions by solving cryptographic puzzles and earn block rewards (newly minted Bitcoin). However, every time 210,000 blocks are added to the blockchain, the reward is cut in half. These so-called halving events occur approximately every four years, with the most recent one happening in April.
This is significant for two reasons. First, halving events mean that miners will mint fewer Bitcoins over the next four years, reducing a source of selling pressure as they sell fewer Bitcoins. Second, Bitcoin has gone through three halving cycles, and its price has always peaked 12 to 18 months afterward.
Halving Date | Peak Return | Time to Peak
November 2012 | 10,485% | 371 days
July 2016 | 3,103% | 525 days
May 2020 | 707% | 546 days
In short, historical trends suggest Bitcoin will reach new highs between April 2025 and October 2025.
A word of caution for potential investors
Past performance is never a guarantee of future returns, and investors should not take the forecasts I've discussed lightly. However, some analysts believe that the $49 million price target (implying an 83,000% increase) is unrealistic.
Furthermore, Bitcoin is a relatively new asset class, so there is limited data to predict how it will perform under different economic climates. Bitcoin has also been highly volatile in its short history, experiencing multiple drops of over 50%, with similar declines possible in the future.
Investors with a high tolerance for risk, who are willing to accept this possibility, might consider allocating a small portion of their portfolios to Bitcoin, either through direct cryptocurrency purchases or via spot Bitcoin ETFs. For now, investors should limit their exposure to 5% or less of their investable assets.
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