In the first half of 2024, the billionaires listed below started positions in BlackRock's Exchange Traded Fund (ETF) that tracks the spot price of Bitcoin (CRYPTO: BTC). The fund is called the iShares Bitcoin Trust (NASDAQ: IBIT). Their positions remain small, but their ownership is still notable as they manage the three best-performing hedge funds in history as measured by net profits, according to LCH Investments.
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Ken Griffin of Citadel Advisors bought a total of 63,186 shares of the iShares Bitcoin Trust. The position represents less than a tenth of a percent of his $494 billion portfolio.
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David Shaw of DE Shaw & Company purchased a total of 2.6 million shares of the iShares Bitcoin Trust. The position represents one-tenth of a percent of his $107 billion portfolio.
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Israel Englander of Millennium Management purchased a total of 10.8 million shares of the iShares Bitcoin Trust. The position represents two-tenths of one percent of his $216 billion portfolio.
Bitcoin has more than doubled in value in the past year, and some Wall Street experts are predicting monster gains in the coming decades. According to one prediction, the price of Bitcoin will rise 73,000% by 2045, implying an equivalent gain in the iShares Bitcoin Trust. Here's what investors need to know.
Wall Street bulls think Bitcoin could rise as much as 73,000%
Bernstein analyst Gautam Chhugani estimates that Bitcoin could reach $500,000 by 2029 and $1 million by 2033, as the cryptocurrency becomes more mainstream through spot Bitcoin ETFs. The last figure in that forecast implies an upside of about 1,390% from the current price of $67,000.
Ark Invest's Cathie Wood estimates that Bitcoin could reach $3.8 million by 2030, provided institutional investors allocate “just over 5% of their portfolios to Bitcoin,” which she sees as a likely outcome. That forecast implies an upside of 5,570% from the current price.
MicroStrategy Executive Chairman Michael Saylor estimates that Bitcoin will reach $13 million by 2045, although he sees a bear-case scenario where it stops at $3 million and a bull-case scenario where it rises to $49 million. Saylor's base case implies an upside of 19,300% from the current price, but the bull scenario implies an upside of 73,000%.
These Wall Street bulls have at least one thing in common. They believe spot Bitcoin ETFs will drive demand among institutional investors. Importantly, institutions have approximately $120 trillion in assets under management. Even a small percentage of assets allocated to Bitcoin could cause its price to rise significantly.
The investment thesis for Bitcoin depends on institutional adoption
The investment thesis for Bitcoin is simple: with a supply limited to 21 million coins, its price is mainly determined by demand. Spot Bitcoin ETFs could boost demand among retail and institutional investors by eliminating traditional sources of friction associated with cryptocurrency exchanges.
To expand on this, Spot Bitcoin ETFs let investors add Bitcoin to existing brokerage accounts, eliminating the need for separate cryptocurrency exchange accounts. Additionally, spot Bitcoin ETFs are typically cheaper than trading on cryptocurrency exchanges. For example, the iShares Bitcoin Trust has an expense ratio of 0.25%, but Coinbase worldwide charges 0.6% per transaction for orders under $10,000.
In January, Ark Invest's Yassine Elmandjra listed the benefits of spot Bitcoin ETFs following their approval in January 2024 by the SEC.
First, a spot ETF provides a direct way for institutional and retail investors to gain exposure to Bitcoin without having to deal with the complexities of self-custody or other onboarding requirements. Second, spot ETFs legitimize Bitcoin as an institutional asset, which should catalyze Bitcoin's adoption and integration into traditional financial systems. Finally, spot ETFs should significantly increase Bitcoin's liquidity and trading volumes.
Wood believes that institutional investors will invest around $6 trillion in Bitcoin by 2030, while Bernstein's Chhugani estimates a slightly more conservative $3 trillion by 2033. For context, spot Bitcoin ETFs have amassed $63 billion in assets, which is about 1% of Wood's forecast. 2% of Chhugani's prediction.
However, spot Bitcoin ETFs have undoubtedly peaked in institutional interest. 13F forms show that as of the second quarter, approximately 600 institutional investors had stakes in the iShares Bitcoin Trust, up from approximately 450 in the first quarter. That figure should increase as time goes by and professional money managers become more comfortable with Bitcoin.
Bitcoin is a very risky asset that could theoretically go to zero
Time for a reality check. Investors should note that the forecasts are unreliable. There is no guarantee that Bitcoin will come anywhere close to the goals proposed by Chhugani, Wood or Saylor. In fact, there is no guarantee that Bitcoin will be worth anything at all in ten years.
The cryptocurrency has fallen by more than 50% on several occasions and similar declines are likely in the future. The cryptocurrency could theoretically drop to zero. So investors should be comfortable with the idea of losing everything before investing anything in Bitcoin, either directly or indirectly through an exchange-traded fund like the iShares Bitcoin Trust.
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Trevor Jennevine has no positions in any of the stocks mentioned. The Motley Fool holds positions in and recommends Bitcoin and Coinbase Global. The Motley Fool has a disclosure policy.
Billionaires Are Buying a BlackRock Index Fund That Could Rise Up to 73,000% According to Wall Street Experts, originally published by The Motley Fool
