prosperous individuals are offloading Palantir shares and investing in an index fund, which some financial gurus on Wall Street predict could surge as high as 54,300%.
In the year 2024, Palantir Technologies has led the S&P 500 in its ascent. The shares of the company have recorded a remarkable increase of 283% since the beginning of the year, thanks to its impressive revenue growth and its significant presence in the artificial intelligence (AI) sector.
However, AI isn't the sole investment theme capturing Wall Street's interest. Several hedge fund managers, as listed below, sold their Palantir shares in the third quarter and shifted their investments towards the iShares Bitcoin Trust (IBIT). This index fund mirrors the price of Bitcoin (BTC).
- Millennium Management's Israel Englander divested 4.4 million Palantir shares, reducing his stake by 90%. He simultaneously increased his stake in the iShares Bitcoin Trust by purchasing 12.6 million shares, an enhancement of 116%.
- Schonfeld Strategic Advisors' Steven Schonfeld sold 60,384 Palantir shares, decreasing his position by 100%. He then boosted his position in the iShares Bitcoin Trust by acquiring 1.2 million shares, uplifting his stake by 30%.
- Susquehanna International's Jeff Yass disposed of 277,273 Palantir shares, reducing his holdings by 28%. He then invested in the iShares Bitcoin Trust by purchasing 1.8 million shares, amplifying his stake by 563%.
Englander's trades are particularly noteworthy, considering he runs the second-most profitable hedge fund in history, as per LCH Investment. Furthermore, Bitcoin holds the eighth-largest position in his investment portfolio, apart from options contracts.
The primary takeaway is not to shun AI stocks, but rather to emphasize diversification in investments. Bitcoin's value has more than doubled this year, and numerous Wall Street experts anticipate it will be worth significantly more in a decade or more.
Wall Street is optimistic about Bitcoin's potential growth
Bitcoin's value has shot up by 35% within the last month due to the excitement surrounding the US Presidential election. Not only is it projected that Donald Trump will triumph in another term as President, but the Republicans have also secured control over both halves of Congress.
Some industry analysts believe that the Republican party's majority in Congress will propel pro-cryptocurrency policies, potentially leading to the creation of a Bitcoin strategic reserve. Moreover, the Wall Street experts below expect spot Bitcoin ETFs to drive its price upwards.
- Bernstein analyst Gautam Chhugani predicts Bitcoin will reach $1 million by 2033. This forecast implies a staggering 1,000% gain from its current price of $90,000 within the subsequent nine years.
- Ark Invest CEO Cathie Wood estimates Bitcoin could hit $3.8 million by 2030. This forecast implies about 4,100% growth from its current price within the next six years.
- MicroStrategy Executive Chairman Michael Saylor anticipates Bitcoin's price will fluctuate between $3 million and $49 million by 2045. This forecast implies growth ranging from 3,200% to 54,300% within the subsequent two decades.
Although price targets should not be treated as gospel, the iShares Bitcoin Trust is worth further consideration due to the bullish sentiment in the aforementioned targets.
The investment thesis for Bitcoin and the role of spot Bitcoin ETFs
The investment thesis for Bitcoin is elementary: its price is a consequence of supply and demand, with demand being the crucial factor in this case because Bitcoin's supply is capped at 21 million coins. Consequently, Bitcoin will become progressively more valuable as demand spikes and less valuable as demand wanes. Spot Bitcoin ETFs have the potential to significantly impact demand.
Spot Bitcoin ETFs simplify the investment process by eliminating the requirement for cryptocurrency exchange accounts, along with the associated high fees. Moreover, they provide Bitcoin with a certain degree of legitimacy, which is crucial given that a recent survey revealed 63% of U.S. adults lack confidence in cryptocurrency's security, as per Pew Research. Spot Bitcoin ETFs offer a more familiar entry point for potential retail investors.
Similarly, spot Bitcoin ETFs also make it easier for institutional investors, who manage $120 trillion in assets, to invest in Bitcoin. If even a small portion of those assets were allocated to Bitcoin, its price would surge substantially. For example, Cathie Wood believes Bitcoin would be worth $3.8 million if institutions allocated a mere over 5% of their assets, an achievement she considers imminent.
Significantly, spot Bitcoin ETFs have already commenced the process of driving Bitcoin's price higher by generating demand. After securing SEC approval in January, spot Bitcoin ETFs broke records as the most successful ETF launch in history, according to Gautam Chhugani. Moreover, the iShares Bitcoin Trust has set new records, becoming the fastest ETF to reach $10 billion in assets, as reported by The Wall Street Journal.
Potential risks for prospective Bitcoin investors
Spot Bitcoin ETFs have the potential to drive Bitcoin's price considerably higher in the future, and they offer an attractive source of diversification amidst overvalued stocks - like Palantir. Yet, investors should bear in mind that cryptocurrency is an emerging asset class that is susceptible to extreme volatility.
Indeed, Bitcoin has plummeted more than 30% from its all-time high on six separate occasions within the last decade, and these steep declines have often taken well over a year to recover from. Similar downturns are expected in the future. Potential investors should be mentally prepared for such occurrences before investing in Bitcoin (or spot Bitcoin ETFs).
Investors who sold their Palantir shares in favor of the iShares Bitcoin Trust (IBIT) are betting on Bitcoin's potential growth, given its recent surge and Wall Street experts' forecasts. Gautam Chhugani, a Bernstein analyst, predicts that Bitcoin will reach $1 million by 2033, implying a staggering 1,000% gain from its current price.
Despite the potential risks associated with Bitcoin's volatility, the iShares Bitcoin Trust could be an attractive source of diversification for investors, especially considering Bitcoin's significant price increases and the potential for further growth due to spot Bitcoin ETFs.
