In the first half of 2024, the following billionaires initiated positions: black rockExchange traded funds (ETFs) that track the spot price of Bitcoin (Cryptocurrency: BTC). The name of the fund is iShares Bitcoin Trust (NASDAQ:IBIT). Although their position remains small, their ownership remains notable as they manage three of the best-performing hedge funds in history as measured by net income, according to LCH Investments.
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Ken Griffin of Citadel Advisors purchased a net total of 63,186 shares of iShares Bitcoin Trust. This position accounts for less than one-tenth of his $494 billion portfolio.
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David Shaw of DE Shaw & Company purchased a net total of 2.6 million shares of iShares Bitcoin Trust. The position represents one-tenth of his $107 billion portfolio.
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Millennium Management's Israeli-English purchased a net total of 10.8 million shares of iShares Bitcoin Trust. The position represents two-tenths of his $216 billion portfolio.
Bitcoin's value has more than doubled in the last year, and some Wall Street experts are predicting monster profits in the coming decades. In fact, some forecasts suggest that the price of Bitcoin could rise by 73,000% by 2045, meaning that the iShares Bitcoin Trust could make similar gains. Here's what investors need to know.
Wall Street bulls think Bitcoin could soar as much as 73,000%
Gautam Chughani, an analyst at Bernstein, says Bitcoin could reach $500,000 by 2029 and $1 million by 2033 as the Spot Bitcoin ETF makes crypto more mainstream. I predict that. The latter figure in this forecast implies an increase of approximately 1,390% from the current price of $67,000.
Ark Invest's Cathie Wood predicts that Bitcoin could reach $3.8 million by 2030 if institutional investors “allocate just over 5% of their portfolios to Bitcoin.” , she thinks that the possibility is high. This forecast implies an increase of 5,570% from the current price.
micro strategy Executive Chairman Michael Saylor expects Bitcoin to reach $13 million by 2045, but he sees a bearish scenario where it stays at $3 million and a bullish scenario where it spikes to $49 million. There is. Saylor's base case implies an upside of 19,300% from the current price, while the bull case implies an upside of 73,000%.
Wall Street bulls have at least one thing in common. They believe the Spot Bitcoin ETF will spark demand from institutional investors. Importantly, financial institutions manage approximately $120 trillion in assets. Even a small portion of assets allocated to Bitcoin can cause the price to rise significantly.
Bitcoin investment theory depends on adoption by institutions
Bitcoin investment theory is simple. The supply is limited to 21 million coins, and its price is determined primarily by demand. Spot Bitcoin ETFs could increase demand from retail and institutional investors by eliminating traditional sources of friction associated with crypto exchanges.
In detail, Spot Bitcoin ETFs allow investors to add Bitcoin to their existing brokerage accounts, eliminating the need for a separate crypto exchange account. Spot Bitcoin ETFs also tend to be cheaper than trading on cryptocurrency exchanges. For example, iShares Bitcoin Trust has an expense ratio of 0.25%; coinbase global Orders under $10,000 are subject to a 0.6% fee per transaction.
In January, Ark Invest's Yassin Elmanjura listed the benefits of a spot Bitcoin ETF approved by the SEC in January 2024.
First, spot ETFs offer a direct way for institutional and retail investors to gain exposure to Bitcoin without having to deal with the complexities of self-custody or other onboarding requirements. Second, spot ETFs legitimize Bitcoin as an institutional asset, which should facilitate its acceptance and integration into the traditional financial system. Finally, spot ETFs should significantly increase Bitcoin's liquidity and trading volume.
Wood believes institutional investors will allocate about $6 trillion to Bitcoin by 2030, while Bernstein's Chugani is more conservative and estimates it at $3 trillion by 2033. For context, the Spot Bitcoin ETF has amassed $63 billion in assets, about 1% of Wood's forecast. 2% of Mr. Chugani's prediction.
However, Spot Bitcoin ETFs are definitely at peak interest from institutional investors. About 600 institutional investors owned iShares Bitcoin Trust stock as of the second quarter, up from about 450 in the first quarter, according to its 13F form. Over time, this number should tend to rise further as professional wealth managers become more familiar with Bitcoin.
Bitcoin is a very risky asset that could theoretically drop to zero.
Time for a reality check. Investors should note that forecasts cannot be relied upon. There is no guarantee that Bitcoin will come close to the goals proposed by Chugani, Wood, and Saylor. In fact, there is no guarantee that Bitcoin will have any value 10 years from now.
Cryptocurrencies have fallen by more than 50% on several occasions, and similar drawdowns may occur in the future. In fact, cryptocurrencies could theoretically go to zero. Therefore, investors should get used to the idea of losing everything before investing anything in Bitcoin, either directly or indirectly through an exchange-traded fund like the iShares Bitcoin Trust. is.
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Trevor Jennewine has no position in any stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Coinbase Global. The Motley Fool has a disclosure policy.
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