Why Billionaire Investors Are Shifting Their Money From Nvidia (NVDA) to Bitcoin (BTC)

Until recently, billionaire investors appeared to have little or no interest in buying Bitcoin (BTC 2.87%). But that seems to be changing in 2024.

Recently, several billionaire hedge fund managers have shifted a small portion of their portfolios into Bitcoin (BTC 2.87%). This move coincides with the launch of spot Bitcoin ETFs earlier this year, making it easier for these investors to gain exposure to the digital asset.

As per the latest 13F filings with the SEC, and tracking ownership of Bitcoin among the top 20 billionaire hedge fund managers, it appears that nearly half of them now own Bitcoin. This is based on the latest data available, which may not fully reflect any changes in their crypto holdings that occurred after June 30.

This development marks a significant change from the past, when billionaire investors largely ignored Bitcoin and other cryptocurrencies. However, the launch of the spot Bitcoin ETFs seems to have changed the game.

These ETFs have attracted a lot of attention from both retail and institutional investors, as they provide a convenient way to invest in Bitcoin without having to directly enter the cryptocurrency market, which can be perceived as quite daunting.

According to the latest figures from CoinShares, nearly $20 billion has flowed into Bitcoin since the start of the year. This far exceeds the figure for any other cryptocurrency, and you can thank the new Bitcoin ETFs for that. In fact, hedge funds have emerged as some of the biggest buyers of these ETFs.

At the same time as billionaires are buying up Bitcoin, they are simultaneously shedding some of their Nvidia holdings. For example, earlier this summer, two high-profile billionaire hedge fund managers -- David Shaw of D.E. Shaw and Steven Cohen of Point72 Asset Management -- sold off Nvidia stock and reallocated that money to the iShares Bitcoin Trust (IBIT -4.52%), which has become the most popular of the new spot Bitcoin ETFs.

Now, this may come as a surprise, especially considering that Nvidia (NVDA -1.52%) has been one of the best-performing stocks in the market this year. But there's a method to this madness.

If you look at the year-to-date performance of Bitcoin and Nvidia, you'll see that the digital asset is actually lagging behind the tech stock. Bitcoin is up 40% year to date and set a new all-time high of $73,750 back in March.

Meanwhile, Nvidia is up an even more impressive 132% this year. And if you zoom out and look at Nvidia's performance over the past two years, it's jaw-dropping. If there's ever a stock that has gone truly parabolic, it's Nvidia.

So why would billionaires sell off an asset that's gone parabolic and reallocate that money elsewhere? It may sound obvious, but it has to do with Bitcoin's upside potential.

Bitcoin is already up over 100,000% since its launch back in 2009, and some analysts believe that it could still have another two decades of high-powered growth ahead of it.

Arguably, Bitcoin has an even higher upside than Nvidia over the next two decades. In fact, Michael Saylor of MicroStrategy has suggested that Bitcoin could eventually be worth as much as $49 million per coin by 2045. That represents a potential return on investment of nearly 83,000%!

Now, compare that to Nvidia, which is valued at about 40 times earnings. Even if Nvidia were to continue growing earnings at a 20% clip for the next two decades, the stock could only go up about 20-fold from here.

When you put it in those terms, it's easy to see why billionaires might be shifting a tiny portion of their Nvidia holdings into Bitcoin. After all, a small allocation to Bitcoin could potentially have a outsized impact on their overall portfolio returns over the next two decades.

Another factor in Bitcoin's favor is the growing realization on Wall Street that cryptocurrency is a stand-alone asset class, with its own unique risk-reward profile.

That carries enormous significance from the perspective of portfolio diversification. So, just as a savvy billionaire investor might allocate a certain percentage of a portfolio to traditional asset classes (such as stocks or bonds), there's now a perceived need to allocate at least a tiny portion of that portfolio to crypto as well.

The big question, of course, is just how big that allocation is going to be. For now, it appears that most billionaire hedge fund investors are choosing to allocate anywhere from 0.2% to 1% of their portfolios to Bitcoin. So it's not like they're jumping head-first into crypto quite yet.

Tetapi 1% daripada portfolio $100 juta ialah $1 juta, jadi wang yang serius adalah dipertaruhkan. Dan peruntukan 1% itu pastinya ditakdirkan dari masa ke masa untuk menjadi lebih besar. Sebagai contoh, Cathie Wood dari Ark Invest mencadangkan bahawa peruntukan portfolio optimum kepada Bitcoin mungkin setinggi

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