Palantir’s Surge and Wall Street’s Shift to Bitcoin Investments

Palantir Technologies has propelled the S&P 500 upward in 2024, with shares climbing 283% so far this year. This rise stems from the company’s strong revenue growth and its influential role in the artificial intelligence (AI) sector.

However, AI isn’t the only focus for Wall Street investors. Notably, several hedge fund managers sold off their Palantir shares in the third quarter, opting instead to invest in the iShares Bitcoin Trust (NASDAQ: IBIT), which follows Bitcoin’s market price (CRYPTO: BTC).

• Israel Englander of Millennium Management divested 4.4 million Palantir shares, slashing his stake by 90%. He acquired 12.6 million iShares Bitcoin Trust shares, boosting his position by 116%.
• Steven Schonfeld of Schonfeld Strategic Advisors sold his entire 60,384-share position in Palantir. He also increased his iShares Bitcoin Trust holdings by 30% through the purchase of 1.2 million shares.
• Jeff Yass of Susquehanna International sold 277,273 Palantir shares, reducing his stake by 28%. Meanwhile, he acquired 1.8 million iShares Bitcoin Trust shares, a remarkable 563% increase.

Englander’s trades are particularly interesting since he manages the second-most profitable hedge fund in history, as reported by LCH Investment. The iShares Bitcoin Trust now represents the eighth-largest position in his portfolio, excluding options contracts.

This trend illustrates the importance of portfolio diversification rather than avoiding artificial intelligence investments. Bitcoin has more than doubled in value this year alone, with many experts predicting that it could be worth much more in the next ten to twenty years.

Could Bitcoin Prices Skyrocket by 54,300%?

Bitcoin has surged 35% in the past month, fueled by enthusiasm surrounding the U.S. Presidential election. With Donald Trump potentially returning for a second term, Republicans are likely to control both chambers of Congress.

Some analysts believe this Republican success could lead to more favorable cryptocurrency policies, including the establishment of a strategic Bitcoin reserve. Furthermore, the anticipated launch of spot Bitcoin ETFs could increase demand, pushing prices up significantly.

• Gautam Chhugani, an analyst at Bernstein, predicts Bitcoin could reach $1 million by 2033, suggesting a near 1,000% rise from its current $90,000 price.
• Cathie Wood, CEO of Ark Invest, projects Bitcoin might hit $3.8 million by 2030, a potential 4,100% increase.
• MicroStrategy Executive Chairman Michael Saylor estimates Bitcoin’s value could range from $3 million to $49 million by 2045, indicating an increase of 3,200% to 54,300% over the next two decades.

While these price targets sound promising, investors should approach them cautiously. Nevertheless, the iShares Bitcoin Trust merits closer examination given these expectations.

Image source: Getty Images.

The Case for Bitcoin and Spot ETFs: A Potential Game Changer

The basic principle behind Bitcoin’s value is supply and demand. Since only 21 million Bitcoin can ever be mined, as demand increases, its price is likely to rise. Spot Bitcoin ETFs could significantly influence this demand.

These funds eliminate the need for complicated cryptocurrency exchange accounts and high fees, making Bitcoin more accessible. According to a Pew Research survey, 63% of U.S. adults lack confidence in cryptocurrency’s safety, highlighting the need for legitimate investment avenues like spot ETFs.

Moreover, spot Bitcoin ETFs open doors for institutional investors, who control around $120 trillion in assets. A fraction of that investment in Bitcoin could lead to substantial price increases. For example, Cathie Wood suggests Bitcoin could touch $3.8 million if institutions allocate just over 5% of their assets to it in the coming years.

Despite being in its early stages, approval of spot Bitcoin ETFs has already spurred demand. After receiving SEC approval in January, spot Bitcoin ETFs became the most successful ETF launch ever, according to Gautam Chhugani. Notably, the iShares Bitcoin Trust achieved $10 billion in assets faster than any other ETF on record, as reported by The Wall Street Journal.

Prospective Bitcoin Investors Should Exercise Caution

While spot Bitcoin ETFs may drive future price increases and diversify portfolios amid elevated stock valuations—such as Palantir—investors should remember that cryptocurrency remains highly volatile.

Over the last decade, Bitcoin has experienced drops exceeding 30% in price on six occasions, typically requiring more than a year to recover. Such volatility may occur again, and investors must be prepared for these fluctuations before committing funds to Bitcoin or spot Bitcoin ETFs.

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Trevor Jennewine has positions in Palantir Technologies. The Motley Fool has positions in and recommends Bitcoin and Palantir Technologies. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.