Observing the strategies and decisions of the world’s most successful investors can offer valuable insights for everyday investors. Fortunately, any investment fund managing at least $150 million in publicly traded U.S. assets is required to submit a quarterly 13F filing to the Securities and Exchange Commission (SEC), which details their current holdings.
The latest filings show that several prominent hedge funds, along with the largest university endowment globally, have been accumulating shares of BlackRock's iShares Bitcoin Trust ( IBIT 2.52%). This exchange-traded fund (ETF) mirrors the spot price of Bitcoin ( BTC 3.20%), making it straightforward for institutional investors to access the cryptocurrency market.
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Below are a few billionaires who have made significant investments in the BlackRock ETF:
- Brevan Howard, led by Alan Howard, acquired 15.9 million shares, making this its largest holding. The fund also hedged this position with put options.
- Millennium Management, managed by Israel Englander, collectively purchased 3.8 million shares, making the ETF one of its top holdings overall.
- Farallon Capital, the former hedge fund of Tom Steyer (who remains a shareholder), bought 1.2 million shares, placing it among its top 20 investments.
- Harvard Management, which oversees Harvard University's endowment, initiated a new stake in the ETF by acquiring 1.9 million shares, making it one of its five largest public holdings.
Many market experts are optimistic about Bitcoin’s future, and the increasing participation from major institutional investors is a key factor. Here’s why the BlackRock ETF could potentially increase more than tenfold in the years ahead.
The long-term outlook for Bitcoin
Several long-range forecasts predict that Bitcoin could rise from its current price of around $114,000 per coin to over $1 million.
- Ark Invest , led by Cathie Wood, projects Bitcoin could reach $1.2 million by 2030.
- Bitwise has set a target price of $1.3 million for Bitcoin by 2035.
- Tom Lee from Fundstrat recently suggested in an interview that Bitcoin could hit $1 million, though he did not specify a timeline.
- Strategy's Michael Saylor anticipates Bitcoin could reach $21 million by 2046.
Two main drivers are behind these projections: the increasing adoption by institutions and Bitcoin’s role as an investment that can protect against inflation.
Currently, institutional investors control assets exceeding $100 trillion. If this figure grows as it has historically, it could approach $200 trillion within the next decade. Should just 1% of these assets be allocated to Bitcoin, it would add $2 trillion to Bitcoin’s market capitalization—enough to nearly double its current value. Analysts at Ark base their projections on a 2.5% institutional allocation, which could more than triple Bitcoin’s price, especially since not all coins are available for sale.
However, the most significant growth potential may come from Bitcoin surpassing gold as a preferred store of value. Gold’s market capitalization is over $25 trillion, more than ten times that of Bitcoin. Some experts believe gold’s recent momentum will persist as investors look for inflation hedges, potentially doubling the market for such assets by decade’s end. If Bitcoin captures even a quarter to half of this market, its market cap could increase by $12 trillion to $25 trillion, representing a tenfold increase at the upper end.
Other factors could also contribute to Bitcoin’s appreciation, such as purchases by corporations, sovereign wealth funds, and its growing use as a safe haven in developing economies. Still, these markets are not as large as the institutional and store-of-value segments.
Should you follow the billionaires?
Bitcoin is known for its high volatility, and its price can drop by half in a short period. Even the most enthusiastic supporters acknowledge that short-term price swings present real risks. Nevertheless, allocating a small portion of your portfolio to Bitcoin could be a reasonable way to diversify and potentially benefit from its long-term growth prospects.
It’s crucial to remember that long-term price forecasts are rarely precise. However, the analysis suggests these predictions are at least directionally correct. Consider examining the methodologies behind these forecasts and evaluating your own risk tolerance to decide if Bitcoin deserves a place in your investment strategy.
