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Shifts in Billionaire Investments: From Nvidia to Bitcoin
Many billionaire investors loaded up on Nvidia‘s (NASDAQ: NVDA) stock as it soared over the past few years. That wasn’t surprising, since its soaring sales of artificial intelligence (AI)-oriented data center GPUs turned it into one of the market’s hottest growth stocks.
However, it also wasn’t unexpected to see some of those large investors reduce their stakes in the chipmaker after its remarkable 2,100% increase over the last five years. Nvidia continues to grow rapidly, but longer-term challenges loom, including export restrictions against China, potential antitrust investigations, and growing competition from other AI chip manufacturers. These macroeconomic headwinds might eventually push more companies to limit their investments in new AI software and hardware.
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According to their latest 13F filings, some billionaires have been selling their Nvidia shares. Millennium Management’s Israel Englander cut his position in Nvidia by 12.5% in the third quarter of 2024. Capula Management’s Yan Huo reduced his stake in Nvidia by 27.7% during the same period.
Simultaneously, these notable investors increased their positions in Bitcoin (CRYPTO: BTC) via the popular iShares Bitcoin Trust ETF (NASDAQ: IBIT). In the third quarter, Englander added 12.6 million shares to his investment in the ETF, while Huo bought an additional 1.1 million shares.
This movement from Nvidia toward Bitcoin implies that the world’s leading cryptocurrency could continue to rise after its impressive growth of over 1,000% in the last five years. Cathie Wood, who holds Bitcoin through Ark Invest’s 21Shares Bitcoin ETF (NYSEMKT: ARKB), predicts the price soaring from around $100,000 to an astounding $3.8 million by 2030. Should this happen, these spot price ETFs could jump by a staggering 3,700% within five years, transforming a modest $10,000 investment into $380,000.
Investors need to approach these optimistic forecasts with caution, as accurately valuing Bitcoin remains a challenge. Nonetheless, it is worth examining Bitcoin’s potential drivers and its chances to outperform Nvidia and other growth stocks in the long run.
Why Bitcoin Could Be a Strong Investment
Bitcoin is mined through an energy-demanding proof-of-work (PoW) method, requiring specialized application-specific integrated circuit (ASIC) miners. There is a capped supply of 21 million Bitcoins, with 19.9 million already mined. Approximately every four years, a “halving” occurs, which cuts Bitcoin mining rewards in half. The most recent halving took place in April 2024, while the next is set for 2028.
This increasing difficulty will slow the production of new Bitcoins, with the final coin expected to be mined by 2140. Due to these characteristics, Bitcoin is often viewed as akin to precious metals like gold or silver, unlike other cryptos that can either be “minted” by generating new blockchain blocks or awarded through a less energy-intensive proof-of-stake (PoS) system. This unique position led the Securities and Exchange Commission (SEC) to approve the first Bitcoin spot price ETFs last January, as it considers Bitcoin to be the only cryptocurrency eligible for commodity classification.
Many Bitcoin advocates argue that these fundamental attributes make it a reliable alternative to gold as a hedge against inflation. El Salvador and the Central African Republic have already made moves to adopt Bitcoin as their national currency, and other nations facing inflation and currency depreciation might follow suit. Such developments could draw more institutional investors into Bitcoin, particularly through accessible spot price ETFs, driving the price higher.
Can Bitcoin Truly Outperform Nvidia in the Long Run?
While Bitcoin has more evident strengths compared to numerous other cryptocurrencies, determining its actual value is incredibly challenging. Should it rise by 3,700% over the next five years, it would likely surpass Nvidia by a significant margin—this increase would elevate Nvidia’s market cap from $3.3 trillion to nearly $126 trillion.
Even the most optimistic Nvidia investors probably don’t foresee such a valuation by 2030. In contrast, the potential valuation of Bitcoin might seem plausible. If Bitcoin’s price reaches $3.8 million, its market cap could increase from $2 trillion to around $76 trillion. This valuation could be justified if Bitcoin takes gold’s place as the most valuable asset, given that gold holds a market cap of approximately $18.5 trillion. Thus, if you believe Bitcoin’s future shines bright, it may be wise to follow these billionaires and consider investing in its spot price ETFs.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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