Billionaires sell Nvidia shares and buy an index fund whose price could rise by as much as 77,675%, according to Wall Street experts

Artificial Intelligence (AI) is one of the hottest topics on Wall Street, and NVIDIA has been one of the hottest stocks. Its share price has risen 175% in the last year as the company dominates the AI ​​chip market. But AI is not the only trend that could make fortunes with small sums of money.

Institutional investors are also betting on cryptocurrencies. The hedge fund managers listed below sold Nvidia shares in the first half of 2024 and opened positions in iShares Bitcoin Trust (IBIT -1.83%)an exchange-traded fund that Bitcoin (BTC 0.94%).

• Steven Cohen of Point72 Asset Management sold 3.4 million Nvidia shares in the first half of 2024, reducing his holdings by 63%. He also bought 1.6 million shares of the iShares Bitcoin Trust.
• Israel Englander of Millennium Management sold 7.8 million shares of Nvidia in the first half of 2024, reducing his stake by 38%. He also bought 10.8 million shares of the iShares Bitcoin Trust.
• Ken Griffin of Citadel Advisors sold 33.9 million shares of Nvidia in the first half of 2024, reducing his holdings by 93%. He also bought 63,186 shares of the iShares Bitcoin Trust.
• David Shaw of DE Shaw & Co. sold 26.3 million shares of Nvidia in the first half of 2024, reducing his holdings by 70%. He also bought 2.6 million shares of the iShares Bitcoin Trust.

These transactions are particularly notable because Point72, Millennium, Citadel and DE Shaw are among the 15 best-performing hedge funds in history based on net gains since inception. However, all four money managers still have exposure to Nvidia, so it would be wrong to assume that they have completely lost their faith in the AI ​​chipmaker.

Rather, the lesson here is that portfolio diversification is important and AI is not the only way to make money in the stock market. In fact, Wall Street experts believe Bitcoin could rise as much as 77,675% in the coming decades, meaning identical gains for the iShares Bitcoin Trust.

Wall Street experts predict huge gains for Bitcoin

The Bitcoin price rose 133% in the past year due to the enthusiasm for spot Bitcoin ETFs and the halving event that took place in April. Bitcoin is currently trading at $63,000, but the Wall Street experts listed below expect this amount to rise significantly.

• Tom Lee of Fundstrat Global Advisors believes that Bitcoin could reach $500,000 by 2029. This prediction represents an upside potential of 690%.
• Gautam Chhugani and Mahika Sapra of Bernstein believe that Bitcoin could be worth a million dollars by 2033. This prediction represents an upside potential of 1,485%.
• Cathie Wood of Ark Invest believes that Bitcoin could reach $3.8 million by 2030. This prediction represents an upside potential of 5,930%.
• Michael Saylor at MicroStrategy believes that the Bitcoin price will be somewhere between $3 million and $49 million by 2045. This prediction implies an upside potential of 4,660% to 77,675%.

All four Bitcoin bulls based their predictions on two things. First, the recent approval of spot Bitcoin ETFs will increase demand, especially among institutional investors. Second, the periodic halving events that limit Bitcoin supply will gradually reduce the selling pressure from miners.

Spot Bitcoin ETFs drive institutional demand for Bitcoin

As with any asset, Bitcoin's price depends on supply and demand. However, the cryptocurrency is a bit atypical because its supply is capped at 21 million coins, so demand is the most important variable. That's why spot Bitcoin ETFs could have a big impact. They eliminate traditional friction points, like maintaining separate accounts for stocks and cryptocurrencies and paying high fees for each transaction.

To be more specific, spot bitcoin ETFs allow investors to add cryptocurrency exposure to existing brokerage accounts, and many of the funds have relatively low expense ratios. The iShares Bitcoin Trust charges 0.25% per year, meaning investors pay $25 for every $10,000 invested. But Coinbase charges transaction fees ranging from 0.4% to 0.6% for orders under $10,000. Not only are these fees higher, but investors are also charged twice: once when buying and again when selling.

The SEC approved spot bitcoin ETFs in January, but they've already delivered on their promise to spur demand. The iShares Bitcoin Trust reached $10 billion in assets faster than any other ETF in history, according to the Wall Street Journal. In addition, I've already mentioned four successful hedge fund managers who own shares of the iShares Bitcoin Trust, but 592 institutional investors reported positions in the second quarter, up from 436 in the first quarter.

If this trend continues, Bitcoin could be worth a lot more in the future. I say this because institutional investors manage $120 trillion in assets, and if you put just over 5% of that amount into Bitcoin (or spot Bitcoin ETFs), the price would rise to $3.8 million, according to Cathie Wood.

History says Bitcoin will hit a new high in 2025

Bitcoin's supply limit is enforced through regular halving events. Miners are rewarded with block subsidies (newly minted bitcoins) when they successfully verify a block of transactions, but the payout is reduced by 50% every time 210,000 blocks are added to the blockchain. This happens roughly every four years.

Importantly, halving events reduce selling pressure from the mining community simply because miners are minting fewer bitcoins to sell. For example, Michael Saylor estimates that the April 2024 halving event will reduce selling pressure from $12 billion per year to $6 billion per year. Accordingly, Bitcoin has historically consistently peaked 12 to 18 months after each halving event, as shown in the chart below.

Source: Fidelity Digital Assets.

Bitcoin hit a record high of $73,000 earlier this year, ahead of the halving event in April, so history says its price will surpass that level sometime between April 2025 and October 2025.

Investors should consider the disadvantages before buying Bitcoin

Before investors put money into Bitcoin, they should consider two things. First, not even the smartest Wall Street analyst knows the future, so predictions are just educated guesses. There is no guarantee that Bitcoin will come anywhere close to the price targets I've discussed. Second, Bitcoin has fallen more than 50% several times in its relatively short history, and similar price declines are likely in the future.

Risk-tolerant investors who can handle this should consider investing a small portion of their portfolio in Bitcoin, either directly or through the iShares Bitcoin Trust. How small is a personal preference, but I would personally limit my investment to around 5% of my portfolio. Remember, Bitcoin could potentially fall to zero in the future. Don't invest a single cent that you are not prepared to lose.