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Many billionaire investors flocked to Nvidia stock (NVDA 3. 10%) as it soared in recent years. This is not surprising, as its growing sales of artificial intelligence (AI)-oriented data center GPUs have made it one of the fastest-growing stocks on the market.
Yet it also wasn’t surprising to see some of those big investors reduce their exposure to the chipmaker after its 2,100% run over the past five years. Nvidia is still growing like a weed, but it still faces longer-term challenges like export curbs against China, potential antitrust probes, and competition from other AI chipmakers. The macro headwinds could also eventually drive more companies to rein in their spending on new AI software and hardware.
According to their most recent 13F filings, some billionaires have sold their Nvidia shares. Israel Englander of Millennium Management reduced his stake in Nvidia by 12. 5% in the third quarter of 2024. Yan Huo of Capula Managment reduced his stake in Nvidia by 27. 7% in the third quarter.
But at the same time, those two closely watched billionaire investors have greater exposure to Bitcoin (BTC 2. 32%), the popular iShares Bitcoin Trust ETF (IBIT 4. 43%). During the third quarter, Englander increased its position in the exchange-traded fund (ETF) with 12. 6 million shares, while Huo acquired another 1. 1 million shares.
This shift from Nvidia toward Bitcoin suggests the world’s top cryptocurrency might still have room to run after soaring more than 1,000% over the past five years. Cathie Wood, who holds Bitcoin through Ark Invest’s 21Shares Bitcoin ETF (ARKB 4.36%), sees its price soaring from about $100,000 to $3.8 million by 2030. If that happens, these spot price ETFs could surge by a whopping 3,700% over the next five years. That rally would turn a modest $10,000 investment into $380,000.
Investors take such bullish estimates with a grain of salt, as Bitcoin is still difficult to properly value. But let’s take a look at potential catalysts for Bitcoin and why it could outperform Nvidia and other growth stocks over the long term.
Bitcoin is mined using a power-intensive proof-of-work (PoW) method that currently requires rugged application-specific embedded circuit (ASIC) miners. The supply is limited to 21 million bitcoins, and 19. 9 million of those coins have already been mined. Every 4 years, a scheduled halving cuts bitcoin mining rewards in half. The most recent halving took place in April 2024, and the next one is planned for 2028.
This increasing difficulty will reduce the rate at which new Bitcoins are mined, and the final Bitcoin is expected to be mined until 2140. These qualities make Bitcoin more like valuable steel like gold or silver than other cryptocurrencies that already exist. be “coined. ” . (by creating new blocks on a blockchain) or paid as praise for the less energy-consuming proof-of-stake (PoS) mechanism. That’s why the Securities and Exchange Commission (SEC) approved the first spot value ETFs for Bitcoin last January. The SEC also claims that Bitcoin is the only cryptocurrency that can be classified as a commodity.
Many Bitcoin bulls, those strengths make it a viable replacement for gold and other commodities as a hedge against inflation. El Salvador and the Central African Republic have already attempted to adopt Bitcoin as their national currency, and other countries suffering from inflation and currency devaluation issues would possibly follow suit. When that happens, more institutional investors will most likely increase their exposure to Bitcoin (i. e. , through easy-to-trade spot value ETFs) and further increase its value.
Bitcoin has more visual assets than many other cryptocurrencies, but it is almost impossible to determine their actual price. If it rises 3,700% over the next five years, it will most likely outperform Nvidia by a mile, as that kind of rally would take the chipmaker’s market capitalization from $3. 3 trillion to just shy of $126 trillion. of dollars.
Even Nvidia’s most bullish investors probably don’t expect it to come anywhere close to that valuation by 2030. But with Bitcoin, it’s harder to tell. Bitcoin’s market cap would surge from $2 trillion to about $76 trillion if its price hits $3.8 million, yet that valuation might be justified if it replaces gold — which has a market cap of $18.5 trillion — as the world’s most valuable asset. So if you believe Bitcoin still has a bright future, it might be smart to follow these billionaires and nibble on its spot price ETFs.
Leo Sun has no position in any of the mentioned. The Motley Fool holds positions and recommends Bitcoin and Nvidia. The Motley Fool has a disclosure policy.
Market insight driven through Xignite and Polygon. io.