It’s easy to understand why Nvidia(NASDAQ: NVDA) has become the favorite tech stock of many investors. For the year, it’s up 192%. And over a five-year period, Nvidia is up a staggering 2,547%.
So why is billionaire hedge fund manager Israel Englander of Millennium Management now trimming his position in Nvidia? Perhaps he’s found another asset that might end up soaring higher than Nvidia over the long haul, and that’s Bitcoin(CRYPTO: BTC). Let’s take a closer look at his recent portfolio moves.
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According to publicly available 13F filings, Englander sold off 1.6 million shares of Nvidia during the most recent quarter, resulting in a 12.5% reduction in his Nvidia position. At the same time, he increased his position in Bitcoin by approximately 120%.
Englander boosted his Bitcoin exposure by buying 12.62 million shares in the iShares Bitcoin Trust(NASDAQ: IBIT), which has become the most popular spot Bitcoin exchange-traded fund (ETF) for investors. He also slightly increased his position in the Fidelity Wise Origin Bitcoin Fund(NYSEMKT: FBTC), another popular spot Bitcoin ETF.
Image source: Getty Images.
Based on the 13F filings, Nvidia accounts for 1.17% of his entire portfolio, while Bitcoin accounts for approximately 1.3% of his portfolio. That might not sound like a lot for either, but Nvidia and Bitcoin rank as two of the top 10 holdings for Millennium Management, which now has over $115 billion in assets under management. Thus, any moves that Millennium makes with either of them could give an important clue about which way the market is headed next.
Just keep in mind: 13F filings only provide a snapshot photo of a particular moment in time, which in this case, happens to be Sept. 30. A lot has happened then, including a presidential election and a big post-election rally. However, based on all available public information, it appears that Englander is once again actively buying Bitcoin.
The combination of the two moves — selling off Nvidia while simultaneously buying Bitcoin — seems to suggest that Englander thinks Bitcoin has a real chance of outperforming Nvidia in the future. That hasn’t been the case in 2024, with Bitcoin up 125% compared to Nvidia’s 192%.
But something fundamentally seems to have changed in November with the election of Donald Trump as the next president of the United States. Bitcoin immediately went on a post-election rally, soaring by 40% in the span of just a few weeks. During the campaign, Trump made efforts to establish himself as the pro-crypto candidate, and it appears to be paying off in terms of Bitcoin’s recent performance.
If Trump follows through on some of his biggest ideas — such as creating a strategic Bitcoin reserve — then Bitcoin could go parabolic in 2025. The strategic Bitcoin reserve could commit the U.S. government to buying 1 million Bitcoins over the next five years. That would make the U.S. government the largest holder of Bitcoin in the world. The sustained buying pressure over such a long period would almost certainly send the price of Bitcoin soaring even higher.
How much higher, though, is a matter of considerable speculation. Some investors think Bitcoin could easily double in value next year, to hit a price of $200,000. Others, such as Cathie Wood of Ark Invest, are predicting that Bitcoin could hit a price of $1 million by 2030. And still others — such as Michael Saylor, founder and executive chairman of MicroStrategy — think Bitcoin could soar as high as $13 million over the next two decades.
The fact that prominent investors are tossing around such stratospherically high price targets might lead some to believe that they should go all-in on Bitcoin. But consider the example of Israel Englander. As noted above, Bitcoin represents just over 1% of his entire portfolio. Yes, he might have boosted his position in Bitcoin by nearly 120% last quarter, but the iShares Bitcoin Trust still ranks as just the eighth largest overall position in his portfolio. The Fidelity Wise Origin Bitcoin Fund is just the 10th largest position.
So, when it comes to investing in Bitcoin, don’t forget about portfolio diversification. As a general rule of thumb, Bitcoin should account for no more than 5% of your portfolio. And, if you are following the example of billionaire investor Israel Englander, then it should account for no more than 1% of your total portfolio. It really depends on your overall risk tolerance, and how willing you are to accept the historically high volatility of Bitcoin.
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