Billionaire is selling Nvidia and buying Bitcoin ETF that Cathie Wood thinks could surge to 3,700%
Billionaire is selling Nvidia and buying Bitcoin ETF that Cathie Wood thinks could surge to 3,700%
Many billionaire investors are buying NVIDIAof (NASDAQ: NVDA) Shares have soared over the past few years. That's not surprising, as soaring sales of its data center GPUs for artificial intelligence (AI) have made it one of the hottest growth stocks on the market.
However, it's no surprise that some big investors are reducing their exposure to the chipmaker after its stock gained 2,100% over the past five years. Nvidia is still growing like a weed, but it still faces long-term challenges such as export restrictions to China, potential antitrust investigations and competition from other AI chipmakers. Macro headwinds may also ultimately prompt more companies to rein in spending on new AI software and hardware.
Image source: Getty Images.
According to the latest 13F filings, some billionaires have been selling their Nvidia shares. Millennium Management's Israel Englander reduced his holdings in Nvidia by 12.5% in the third quarter of 2024. Capula Managment's Yan Huo reduced his holdings in Nvidia by 27.7% in the third quarter.
But at the same time, these two high-profile billionaire investors have increased their investment in Bitcoin (Cryptocurrency: BTC) by popular iShares Bitcoin Trust ETF (NASDAQ:IBIT). In the third quarter, England increased its holdings in exchange-traded funds (ETFs) by 12.6 million shares as Huo bought an additional 1.1 million shares.
This shift away from Nvidia and towards Bitcoin suggests that the world’s top cryptocurrency may still have room to rise after surging more than 1,000% over the past five years. Cathie Wood, holds Bitcoin via Ark Invest 21 Bitcoin ETFs(NYSE: ARKB)Its price is expected to soar from about $100,000 to $3.8 million by 2030. If that happens, these spot price ETFs could soar 3,700% over the next five years. This rally would turn a modest $10,000 investment into $380,000.
Investors should take these optimistic estimates with a grain of salt, as Bitcoin remains difficult to value correctly. But let's take a look at Bitcoin's potential catalysts and why it could outperform Nvidia and other growth stocks over the long term.
Bitcoin is mined using the energy-intensive Proof-of-Work (PoW) method, which currently requires powerful application-specific integrated circuit (ASIC) miners. Bitcoin has a limited supply of 21 million coins, of which 19.9 million have been mined. Every four years, a scheduled “halving” cuts the reward for mining Bitcoin in half. The most recent halving occurred in April 2024, and the next halving is expected in 2028.
Escalating difficulty will inhibit the rate at which new Bitcoins are mined, with the final Bitcoins expected to be mined in 2140. These qualities all make Bitcoin more similar to precious metals like gold or silver than other “minted” cryptocurrencies. (by creating new blocks on the blockchain) or paid as rewards through the less energy-intensive Proof-of-Stake (PoS) mechanism. That’s why the U.S. Securities and Exchange Commission (SEC) approved the first Bitcoin spot price ETFs last January. The SEC also stated that Bitcoin is the only cryptocurrency that can be classified as a commodity.
Many Bitcoin bulls believe these advantages make it a viable alternative to gold and other commodities as a hedge against inflation. El Salvador and the Central African Republic have already tried adopting Bitcoin as their national currency, and other countries facing inflation and currency devaluation may follow their lead. When that happens, more institutional investors are likely to increase their exposure to Bitcoin—especially through easily traded spot-price ETFs—and push its price higher.
Bitcoin has clear advantages over many other cryptocurrencies, but its true value is almost impossible to determine. If it does soar 3,700% over the next five years, it could far outperform Nvidia, as the rebound would push the chipmaker's market cap from $3.3 trillion to nearly $126 trillion.
Even Nvidia's most optimistic investors probably don't expect its valuation to be anywhere near that level by 2030. But for Bitcoin, it’s even harder to say. If Bitcoin hits $3.8 million, its market capitalization will soar from $2 trillion to about $76 trillion, but that estimate would be significant if it replaces gold, which has a market capitalization of $18.5 trillion, as the world's most valuable asset. The value may be reasonable. So if you believe Bitcoin still has a bright future, it might be wise to follow in the footsteps of these billionaires and eat into its spot price ETFs.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions and recommendations on Bitcoin and Nvidia. The Motley Fool has a disclosure policy.
Billionaire Is Selling Nvidia, Buying Bitcoin ETF Cathie Wood Thinks Could Surge 3,700% Originally Posted by Motley Fool
