Billionaires are selling Nvidia shares and buying an index fund that could rise as much as 77,675%, according to Wall Street experts

Artificial intelligence (AI) is one of the hottest topics on Wall Street and Nvidia it was one of the hottest stocks. Its stock price has risen 175% in the past year as the company dominates the AI ​​chip market. But AI isn’t the only trend that could turn small sums into fortunes.

Institutional investors are also betting on cryptocurrencies. The hedge fund managers listed below sold shares of Nvidia in the first half of 2024 and started positions in iShares Bitcoin Trust (IBIT -0.58%)an exchange traded fund that tracks Bitcoin (BTC 1.52%).

• Steven Cohen of Point72 Asset Management sold 3.4 million nvidia shares in the first half of 2024, reducing his stake by 63%. It also bought 1.6 million shares of the iShares Bitcoin Trust.
• Millennium Management’s Israel Englander sold 7.8 million Nvidia shares in the first half of 2024, reducing his stake by 38%. It also bought 10.8 million shares of the iShares Bitcoin Trust.
• Ken Griffin of Citadel Advisors sold 33.9 million Nvidia shares in the first half of 2024, reducing his stake by 93%. It also bought 63,186 shares of iShares Bitcoin Trust.
• David Shaw of DE Shaw & Co. sold 26.3 million shares of Nvidia in the first half of 2024, reducing its stake by 70%. It also bought 2.6 million shares of the iShares Bitcoin Trust.

These trades are particularly notable because Point72, Millennium, Citadel and DE Shaw are among the 15 best-performing hedge funds in history as measured by net since-start earnings. However, all four money managers still have exposure to Nvidia, so it would be wrong to assume they’ve completely lost faith in the AI ​​chipmaker.

Instead, the lesson here is that portfolio diversification is important, and AI is not the only way to make money in the stock market. Indeed, Wall Street experts believe Bitcoin could rise by as much as 77,675% over the next few decades, implying identical gains in the iShares Bitcoin Trust.

Wall Street pundits are predicting monstrous gains for Bitcoin

The price of Bitcoin has increased by 133% in the past year due to the excitement of spot Bitcoin ETFs and the halving event that took place in April. Bitcoin is currently trading at $63,000, but the Wall Street experts below expect that figure to rise substantially.

• Tom Lee of Fundstrat Global Advisors believes that Bitcoin could reach $500,000 by 2029. This forecast implies a 690% upside.
• Bernstein’s Gautam Chhugani and Mahika Sapra believe Bitcoin could be worth $1 million by 2033. That forecast implies a 1,485% upside.
• Cathie Wood of Ark Invest believes that Bitcoin could reach $3.8 million by 2030. This forecast implies a growth of 5,930%.
• Michael Saylor at MicroStrategy believes that the price of Bitcoin will land somewhere between 3 and 49 million dollars by 2045. This forecast implies an increase from 4,660% to 77,675%.

All four Bitcoin bulls based their predictions on two things. First, the recent approval of Bitcoin spot ETFs will increase demand, especially among institutional investors. Second, periodic halving events that limit the supply of Bitcoin will gradually reduce the selling pressure from miners.

Spot Bitcoin ETFs drive institutional demand for Bitcoin

Like any asset, the price of Bitcoin depends on supply and demand. But cryptocurrency is somewhat atypical because its supply is limited to 21 million coins, so demand is the most important variable. That’s why Bitcoin spot ETFs could have a big impact. They eliminate traditional sources of friction, such as maintaining separate accounts for stocks and cryptocurrencies and paying high fees for each transaction.

To elaborate, Bitcoin spot ETFs allow investors to add cryptocurrency exposure to existing brokerage accounts, and many of the funds have relatively low expense ratios. The iShares Bitcoin Trust charges 0.25% per year, meaning investors will pay $25 for every $10,000 invested. But Coinbase charges transaction fees between 0.4% and 0.6% for orders under $10,000. These fees are not only higher, but investors are also hit twice: once when they buy and again when they sell.

The SEC approved spot Bitcoin ETFs in January, but they’ve already made good on their promise to unlock demand. The iShares Bitcoin Trust reached $10 billion in assets faster than any other ETF in history, according to The Wall Street Journal. Additionally, we’ve already mentioned four successful hedge fund managers that hold shares of the iShares Bitcoin Trust, but 592 institutional investors reported positions in the second quarter, compared to 436 in the first quarter.

If this trend continues, Bitcoin could be worth much more in the future. I say this because institutional investors have $120 trillion in assets under management, and allocating a little more than 5% of that total to Bitcoin (or spot Bitcoin ETFs) would propel its price to $3.8 trillion. according to Cathie Wood.

History says that Bitcoin will hit a new high in 2025

Bitcoin’s supply limit is enforced by periodic halving events. Miners are rewarded with block grants (newly minted Bitcoin) when they successfully verify a transaction block, but the payout is reduced by 50% every time 210,000 blocks are added to the blockchain. This happens about once every four years.

Importantly, halving events reduce selling pressure from the mining community, simply because miners mint less Bitcoin to sell. For example, Michael Saylor estimates that the April 2024 halving event will reduce selling pressure from $12 billion per year to $6 billion per year. As a result, Bitcoin has consistently peaked 12 to 18 months after each past halving event, as shown in the chart below.

Source: Fidelity Digital Assets.

Bitcoin hit a record high of $73,000 earlier this year ahead of the halving event in April. So history says its price will break this level sometime between April 2025 and October 2025.

Investors should consider the downside before buying Bitcoin

Before putting money into Bitcoin, investors should consider two things. First, even the smartest Wall Street analyst doesn’t know the future, so predictions are simply educated guesses. There is no guarantee that Bitcoin will come close to the price targets we have discussed. Second, Bitcoin has fallen more than 50% several times in its relatively short history, and similar declines are likely in the future.

Risk-tolerant investors who are comfortable with this should consider placing a small portion of their portfolios in Bitcoin, either directly or through the iShares Bitcoin Trust. How small is a personal preference, but personally I would limit my investment to about 5% of my portfolio. Remember, Bitcoin may go to zero in the future. Don’t invest any money you are not prepared to lose.