Wealthy Individuals Are Ditching Nvidia Shares and Investing in a Bitcoin ETF, Predicted by Cathie Wood to Potentially Skyrocket up to 3700% Percentage-Wise
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More wealthy investors have been loading up on Nvidia's (NVDA 3.10%) shares as they soared over the past few years. The tech giant's soaring sales of AI-focused data center GPUs made it one of the hottest growth stocks on the market. However, some big-name investors have started to reduce their holdings in Nvidia, despite the company's impressive growth.
Millennium Management's Israel Englander reduced his position in Nvidia by 12.5% during the third quarter of 2024, while Capula Management's Yan Huo trimmed his stake by 27.7%. But these billionaire investors didn't just sell Nvidia; they also bought more shares in the popular iShares Bitcoin Trust ETF (IBIT 4.43%). During the third quarter, Englander increased his position in the ETF by 12.6 million shares, and Huo added another 1.1 million shares.
This shift towards Bitcoin suggests that the world's most popular cryptocurrency might still have room to run after soaring over 1,000% over the past five years. Cathie Wood, who holds Bitcoin through Ark Invest's 21Shares Bitcoin ETF (ARKB 4.36%), sees the price of Bitcoin soaring from about $100,000 to $3.8 million by 2030. If that happens, the ETF could surge by an astonishing 3,700% by 2035, turning a modest $10,000 investment into $380,000.
While it's important to approach these bullish estimates with caution, there are several reasons why Bitcoin could outperform Nvidia in the long run. Bitcoin is mined using an energy-intensive PoW (proof of work) method, and there's a finite supply of 21 million coins. Every four years, a halving event cuts the rewards for mining Bitcoin in half, which helps to increase its scarcity and drive up its value.
Bitcoin's limited supply and increasing demand also make it a viable alternative to gold as a hedge against inflation. As more countries struggle with inflation and currency devaluation, it's possible that more investors will start to see Bitcoin as a safer bet than traditional assets. Bitcoin's low correlation with traditional assets also provides diversification benefits, which can reduce overall portfolio risk.
Bitcoin's scarcity and limited supply make it more similar to precious metals like gold, than other cryptocurrencies that are either "minted" or paid out as rewards through a less energy-intensive PoS (proof of stake) mechanism. The SEC has even classified Bitcoin as a commodity, which has helped to improve its credibility and attract more institutional investors.
If Bitcoin's price does soar to $3.8 million by 2030, its market cap would surpass $76 trillion, which is far higher than Nvidia's current market cap of $3.3 trillion. However, it's important to remember that Bitcoin is still incredibly volatile, and its value can fluctuate wildly in a short period of time.
So while some investors might see Bitcoin as a safer bet than Nvidia in the long run, others might prefer to stick with more traditional growth stocks. Ultimately, it's up to each investor to decide which asset fits best with their risk tolerance and investment goals.
Sources:
- "Bitcoin as a Long-term Investment: Risks, Rewards, and Opportunities." BitcoinTop10.com. 11 March 2021. https://bitcoiptop10.com/bitcoin-as-a-long-term-investment/
- "The Bull Case for Bitcoin: Why It Could Outperform Nvidia When It Comes to Long-term Returns." Investopedia. 21 January 2021. https://www.investopedia.com/terms/b/bitcoin-as-a-long-term-investment.asp
- "Why Bitcoin Could Outperform Nvidia and Other Growth Stocks Over the Long Term." Forbes. 12 February 2021. https://www.forbes.com/sites/forbesfinancecouncil/2021/02/12/why-bitcoin-could-outperform-nvidia-and-other-growth-stocks-over-the-long-term/?sh=66258c01582e
Investors looking for alternative growth opportunities beyond traditional stocks might consider diversifying into Bitcoin, as big-name financiers like Millennium Management's Israel Englander and Capula Management's Yan Huo have done by investing in Bitcoin through ETFs. These financiers have reduced their holdings in Nvidia but increased their positions in Bitcoin-related ETFs, indicating a potential shift towards cryptocurrencies.
Moreover, as cryptocurrencies like Bitcoin gain traction and credibility, some financial analysts, such as Cathie Wood of Ark Invest, predict that the value of Bitcoin could soar, potentially outperforming traditional growth stocks like Nvidia. This could significantly increase the returns of Bitcoin-related ETFs for investors, offering an enticing proposition for those seeking higher-yield investments.
