It’s always good to know what the smartest people on Wall Street are up to these days. That’s why it’s worth checking out its recent 13F filings with the Securities and Exchange Commission (SEC). This application is required for all companies and individuals with assets under management (AUM) of more than $100 million. Checking out what billionaires are buying and selling can often give you a very good idea of where they see the market moving next.
Based on these filings, it appears more billionaires are selling NVIDIA. (NASDAQ:NVDA) and buy bitcoin (Cryptocurrency: BTC) Instead. Let’s take a closer look.
Billionaires and Bitcoin ETF
The entry into Bitcoin began in January, as soon as the new Spot Bitcoin Exchange Traded Fund (ETF) was launched. Suddenly, institutional investors had a quick and convenient way to access the crypto asset class. There was certainly quite a bit of buzz and hype about the new Spot Bitcoin ETF in early 2024, but it wasn’t until the first round of 13F filings were released in May that we knew exactly how much money these fund managers had. I didn’t have a clear idea of what I was buying.
That’s when Millennium Management LLC caught the attention of Bitcoin investors. Israel Englander’s hedge fund has invested more than $2 billion in new Bitcoin ETFs, leading Bloomberg to declare him the “King of Bitcoin ETF Holders.” Other top Bitcoin buyers include Digital Currency Group, Susquehanna International Group (SIG), Jane Street Group, and DE Shaw.
At the same time, many prominent billionaires are selling Nvidia. For example, in the second quarter of 2024, Stanley Druckenmiller, George Soros, Lee Ainslie, and David Tepper were some of the big names selling Nvidia.
Bitcoin’s long-term growth potential
So the big question is why would a billionaire sell Nvidia and buy Bitcoin? The most likely answer is that the value of NVIDIA stock has soared over the past two years, and some investors are looking to cash out their profits and invest that money elsewhere. Talk of an “AI bubble” has been gaining momentum recently, and that may also be influencing investors’ views on NVIDIA.
And that’s why Bitcoin looks so attractive right now. Bitcoin is trading nearly 15% below its all-time high and has still underperformed Nvidia this year, but it still has impressive upside potential. For example, investment firm Bernstein believes Bitcoin could reach $200,000 by the end of next year. At the current price of $63,000, you’ll get more than a 3x return on investment in a very short period of time.
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In the long term, Bitcoin’s prospects are even more impressive. Ark Invest’s Cathie Wood has set a 2030 price target for Bitcoin at $1 million. She then increased that goal to $3.8 million based on all the new money flowing into the Bitcoin ETF. and billionaire Michael Saylor, founder and executive chairman of MicroStrategy Inc. (NASDAQ:MSTR)believes Bitcoin could eventually reach $13 million by 2045.
Bitcoin and downside risk protection
Bitcoin has much more potential than just its huge upside potential. It is increasingly seen as a long-term store of value, similar to gold. This makes them particularly attractive assets to hold during times of economic, political, and geopolitical uncertainty. So if you think the economy is going to collapse, or if you think regional tensions will escalate in some parts of the world, it might make sense to move your funds into Bitcoin.
That’s exactly what billionaire Stanley Druckenmiller told investors at the end of 2023. He likened Bitcoin to gold as a “brand” that can be trusted when the market is down. Other billionaires, including Paul Tudor Jones and Mark Cuban, have also spoken out about Bitcoin’s potential to protect against downside risk.
This kind of thinking may help explain why the billionaire hedge fund manager is one of Bitcoin’s biggest buyers. That is, they want to hold assets that help them avoid political and economic uncertainty. If you read the daily news headlines, you’ll see why there’s so much to be nervous about right now.
Nvidia or Bitcoin?
Keep in mind “Nvidia or Bitcoin?” It may be a false dichotomy. The real answer may be “both.” In other words, it’s better to consider both for your long-term investment portfolio, rather than choosing between the two.
Interestingly, the correlation between Nvidia and Bitcoin is still very high. At the time of the Bitcoin halving in April, the correlation was 0.80. Therefore, the two assets are moving almost in parallel. If Nvidia goes up, Bitcoin is likely to go up as well (and vice versa).
At the end of the day, you need to consider the entire portfolio and how adding or removing different assets will affect it in terms of diversification and overall risk exposure. If you’re currently biased towards Nvidia, you may want to consider investing in Bitcoin.
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Dominique Basurto has a position in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and NVIDIA. The Motley Fool has a disclosure policy.
Billionaires are selling their Nvidia stock and buying up the cryptocurrency instead The original article was published by The Motley Fool
