Billionaires Sell Nvidia, Buy Bitcoin ETF That Cathie Wood Thinks Could Rise Up to 3,700%
Many billionaire investors stepped in Nvidia'S (NASDAQ: NVDA) stocks as they have risen enormously in recent years. That wasn't surprising, as rising sales of artificial intelligence (AI)-focused data center GPUs made it one of the hottest growth stocks on the market.
Still, it wasn't surprising to see some of those big investors reducing their exposure to the chipmaker after its 2,100% rise over the past five years. Nvidia is still growing like crazy, but still faces longer-term challenges such as export restrictions against China, potential antitrust investigations, and competition from other AI chip makers. The macroeconomic headwinds could also ultimately cause more companies to rein in their spending on new AI software and hardware.
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According to their latest 13F filings, some billionaires have sold their Nvidia shares. Israel Englander of Millennium Management cut his holding in Nvidia by 12.5% in the third quarter of 2024. Yan Huo of Capula Management cut his holding in Nvidia by 27.7% in the third quarter.
But at the same time, these two closely watched billionaire investors increased their exposure to Bitcoin (CRYPTO: BTC) through the popular iShares Bitcoin Trust ETF (NASDAQ: IBIT). During the third quarter, Englander increased his position in the exchange-traded fund (ETF) by 12.6 million shares, while Huo picked up another 1.1 million shares.
This shift from Nvidia to Bitcoin suggests that the world's top cryptocurrency could still have room after surging more than 1,000% in the past five years. Cathie Wood, who owns Bitcoin through Ark Invest's 21Shares Bitcoin ETF(NYSEMKT: ARKB)sees the price rising from about $100,000 to $3.8 million by 2030. If that happens, these spot price ETFs could rise as much as 3,700% over the next five years. That rally would turn a modest $10,000 investment into $380,000.
Investors should take these bullish estimates with a grain of salt, as Bitcoin is still difficult to value. But let's take a look at Bitcoin's potential catalysts and why it might outperform Nvidia and other growth stocks in the long term.
Bitcoin is mined using an energy-intensive proof-of-work (PoW) method that currently requires powerful application-specific integrated circuit (ASIC) miners. There is a finite supply of 21 million Bitcoins, and 19.9 million of those coins have already been mined. Every four years, a scheduled 'halving' halves the rewards for mining Bitcoin. The most recent halving took place in April 2024 and the next one is scheduled for 2028.
This escalating difficulty will slow the rate at which new Bitcoins are mined, with the final Bitcoin expected to be mined by 2140. These qualities all make Bitcoin more similar to a precious metal like gold or silver than other cryptocurrencies that are either 'minted'. (by creating new blocks on a blockchain) or paid out as a reward via the less energy-intensive proof-of-stake (PoS) mechanism. That's why the Securities and Exchange Commission (SEC) approved the first spot price ETFs for Bitcoin last January. The SEC also states that Bitcoin is the only cryptocurrency that can be classified as a commodity.
Many Bitcoin bulls believe these strengths make it a viable replacement for gold and other commodities as a hedge against inflation. El Salvador and the Central African Republic have already attempted to adopt Bitcoin as their national currency, and other countries struggling with inflation and currency devaluation problems could follow suit. If that happens, more institutional investors are likely to increase their exposure to Bitcoin – especially through easily traded spot price ETFs – and drive its price up even further.
Bitcoin has more visible strengths than many other cryptocurrencies, but its true value is virtually impossible to determine. If it were to actually rise 3,700% over the next five years, it would likely outperform Nvidia by a wide margin – as that kind of rally would push the chipmaker's market cap from $3.3 trillion to almost $126 trillion.
Even Nvidia's most optimistic investors probably don't expect it to reach anywhere near that valuation in 2030. But with Bitcoin it's harder to say. Bitcoin's market cap would rise from $2 trillion to about $76 trillion if its price reached $3.8 million, but that appreciation could be justified if it replaces gold — which has a market cap of $18.5 trillion — as the most valuable asset in the world. So if you believe Bitcoin still has a bright future, it might be smart to follow these billionaires and nibble on their bargain price ETFs.
Consider the following before purchasing shares in iShares Bitcoin Trust:
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Nvidia. The Motley Fool has a disclosure policy.
Billionaires Sell Nvidia, Buy Bitcoin ETF That Cathie Wood Thinks Could Rise Up to 3,700% Originally published by The Motley Fool
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