Following the moves of billionaires across Wall Street can provide some valuable insight into the ideas of some of the smartest investors around. While any single trade rarely means too much, taken in aggregate, interesting trends can emerge.
One fund in particular has seen an incredible inflow of capital from these investors over the last year: the iShares Bitcoin Trust ETF (IBIT -1.14%). The exchange-traded fund (ETF) is the largest of the new spot Bitcoin ETFs that launched in January after receiving the green light from regulators. Billionaire money managers have been eagerly buying in and it has quickly swelled in size.
The demand was so great that the iShares Bitcoin Trust ETF became the fastest-growing ETF in history. The fund reached $40 billion in assets under management (AUM) in just 211 days, smashing the previous record of 1,253 days.
Some of the most notable billionaires with the largest stakes are Israel Englander, Steven Schonfeld, Dan Och, Yan Huo,and Paul Tudor Jones. Here's how much their funds have invested:
- Israel Englander, Millennium Management: $849 million
- Yan Huo, Capula Management: $308 million
- Steven Schonfeld, Schonfeld Strategic Advisors: $195 million
- Dan Och, Sculptor Capital: $195 million
- Paul Tudor Jones, Tudor Investments: $160 million
While the differences among the spot Bitcoin ETFs are relatively minimal and any would be a solid choice, for my money, the iShares ETF is the best option. It's the largest and that means maximum liquidity. It's also one of the lowest-cost funds, with an expense ratio of just 0.25%, meaning you pay just $2.50 for every $1,000 in the ETF.
There could be a whole lot of upside
Ultimately, all these funds are vehicles for investing in Bitcoin; that's the whole point. So what kind of upside does Bitcoin -- and therefore this ETF -- have? If you believe MicroStrategy (MSTR -3.24%) Executive Chairman Michael Saylor, the answer is a whole lot. Saylor is fond of making bold claims, but this may be his boldest: Bitcoin will reach $13 million by 2045 -- a potential gain of 13,100% from today's price.
He's not the only one making claims like it, however. Cathie Wood of Ark Invest -- which offers its own spot Bitcoin ETF -- has said that Bitcoin could reach as high as $3.8 million. And while that's a lower number, her timeline is just five years, making it a much more aggressive target.
Both investors believe that the key to Bitcoin reaching these heights is through institutional adoption, something spot Bitcoin ETFs have accelerated. It wasn't long ago that professional fund managers wouldn't dream of investing in Bitcoin. That's changed. At this point, about 60% of funds say they have at least 1% of their assets invested.
Bitcoin ETFs make it much easier for funds to invest. They bring liquidity, security, and a legitimacy that can only come from the Securities and Exchange Commission (SEC). Since their introduction, more and more managers are directing a portion of their funds toward the cryptocurrency.
Still, there's a long way to go to get to the level of buy-in required for Bitcoin to reach the heights imagined by Saylor and Wood. While the 60% of funds with 1% is impressive, it obscures the fact that the largest funds -- where the lion's share of total wealth is concentrated -- are still skeptical. About 40% of funds larger than $500 billion have at least 1% in crypto and 33% have less than 0.5%.
While I find their targets overly optimistic, I agree with the general sentiment; Wall Street is coming around to Bitcoin and it seems likely the trend of acceptance by professional managers will continue apace. This will drive up Bitcoin's value and the value of its ETFs and I believe both will outperform the market for years to come.
