Many billionaire investors put money into Nvidia (NASDAQ:NVDA) This is because stock prices have skyrocketed in recent years. This wasn’t surprising, as a surge in sales of artificial intelligence (AI)-oriented data center GPUs has made the company one of the hottest growth stocks on the market.
But it wasn’t surprising that some of these big investors also pared back their exposure to the chipmaker, whose stock price has risen 2,100% over the past five years. Nvidia continues to grow like a weed, but still faces long-term challenges such as export restrictions to China, possible antitrust investigations, and competition from other AI chip makers. Macro headwinds could also ultimately lead more companies to curb spending on new AI software and hardware.
Image source: Getty Images.
Some billionaires are selling their NVIDIA stock, according to the latest 13F filings. Millennium Management’s Israel Englander reduced his stake in Nvidia by 12.5% in the third quarter of 2024. Capula Management’s Yan Huo reduced his stake in Nvidia by 27.7% in the 3rd quarter.
But at the same time, these two high-profile billionaire investors have increased their exposure to Bitcoin. (Cryptocurrency: BTC) Through the popular iShares Bitcoin Trust ETF (NASDAQ:IBIT). During the third quarter, Mr. Englander increased his exchange-traded fund position by 12.6 million shares as Mr. Huo raked in an additional 1.1 million shares.
This shift from Nvidia to Bitcoin suggests there may still be room for the world’s top cryptocurrency, which has soared more than 1,000% in the past five years. Cathie Wood owns Bitcoin through Ark Invest’s 21Shares Bitcoin ETF (NYSEMKT: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 rise a whopping 3,700% over the next five years. This increase would turn a modest $10,000 investment into $380,000.
Investors should take these bullish estimates with a grain of salt, as it remains difficult to properly value Bitcoin. But let’s take a look at Bitcoin’s potential catalyst and why it could outperform Nvidia and other growth stocks over the long term.
Bitcoin is currently mined using energy-intensive proof-of-work (PoW) techniques that require powerful application-specific integrated circuit (ASIC) miners. There is a limited supply of 21 million Bitcoins, of which 19.9 million have already been mined. Scheduled every four years, the “halving” reduces the reward for mining Bitcoin by half. The most recent halving occurred in April 2024, and the next halving is scheduled for 2028.
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This increased difficulty will throttle the rate at which new Bitcoins are mined, with the final Bitcoin expected to be mined by 2140. All of these properties make Bitcoin more similar to precious metals like gold and silver than other “minted” cryptocurrencies. (by creating new blocks on the blockchain) or through a less energy-intensive proof-of-stake (PoS) mechanism. That’s why the Securities and Exchange Commission (SEC) approved the first spot-price Bitcoin ETF last January. The SEC also states that Bitcoin is the only cryptocurrency that can be classified as a commodity.
Many Bitcoin bulls believe that these strengths make Bitcoin a viable alternative to gold and other commodities as a hedge against inflation. El Salvador and the Central African Republic have already tried to adopt Bitcoin as their national currencies, and other countries struggling with inflation and currency devaluation may follow suit. That could lead to more institutional investors increasing their exposure to Bitcoin, especially through easily traded spot-price ETFs, pushing its price even higher.
Bitcoin has tangible strengths over many other cryptocurrencies, but determining its true value is nearly impossible. If it truly soars 3,700% over the next five years, it could outperform Nvidia by a mile. That’s because such an increase would take the chipmaker’s market cap from $3.3 trillion to nearly $126 trillion.
Even Nvidia’s most bullish investors probably don’t expect Nvidia to approach that valuation by 2030. But in the case of Bitcoin, it’s more difficult to determine. If Bitcoin’s price reaches $3.8 million, its market capitalization will jump from $2 trillion to about $76 trillion, but if it were the world’s most valuable asset, replacing gold, which has a market cap of $18.5 trillion, The evaluation may be justified. So if you believe Bitcoin still has a bright future, you might be wise to follow these billionaires and take a bite of a Bitcoin spot price ETF.
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Leo Sun has no position in any stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and NVIDIA. The Motley Fool has a disclosure policy.
Billionaires Are Selling Nvidia and Buying a Bitcoin ETF That Cathie Wood Thinks Could soar up to 3,700% Originally published by The Motley Fool
