Billionaires betting big on Bitcoin include Israel Englander, Paul Tudor Jones, and Alan Howard.
According to a growing number of Wall Street experts, Bitcoin (CRYPTO: BTC) could hit a price of $1 million within just five years. Given Bitcoin’s current price of $108,000, that’s an incredible 825% increase in price within a relatively short period of time.
It’s no wonder, then, that billionaire investors are buying Bitcoin in size. But they’re not buying Bitcoin directly in the crypto market. Instead, they’re investing via a BlackRock (NYSE: BLK) exchange-traded fund (ETF) — the iShares Bitcoin Trust (NASDAQ: IBIT) — that gives them direct exposure to the price of Bitcoin.
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Leading the way is British billionaire Alan Howard of Brevan Howard Capital Management LLC, which owns $2.3 billion worth of Bitcoin via the iShares Bitcoin Trust. That position now represents 25% of his fund’s total portfolio, in what could turn out to be a stunning bet on the future of Bitcoin.
Close behind is Israel “Izzy” Englander, the billionaire hedge fund manager of Millennium Management LLC. According to the latest SEC 13F filings, his fund now has a position of $1.31 billion in Bitcoin. That makes Bitcoin his second-largest position. Another notable billionaire moving into crypto is Paul Tudor Jones of Tudor Investment Corp., which holds $275 million worth of Bitcoin.
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Typically, billionaire fund managers also hold positions in other spot Bitcoin ETFs, giving them even more exposure to Bitcoin with a bit more diversification. For example, if you peek inside the holdings of Millennium Capital Management LLC, you’ll see that Izzy Englander also holds $660 million in the Fidelity Wise Origin Bitcoin Fund (NYSEMKT: FBTC).
Joining these billionaire hedge fund managers are plenty of large institutional investors and big Wall Street giants. Goldman Sachs Group (NYSE: GS), for example, now holds $1.57 billion worth of Bitcoin. Morgan Stanley (NYSE: MS), another Wall Street juggernaut, now holds $489 million worth of Bitcoin.
These staggering Bitcoin ownership totals are those that are reported on SEC 13F filings at the end of each quarter. As a result, they may not be fully indicative of what total holdings are now. But they give a good snapshot look at overall buying trends in the crypto market, as well as insight into how big-time investors are choosing to get their exposure to Bitcoin.
Obviously, these billionaire investors are attracted to the long-term upside price potential of Bitcoin. The growing consensus now is that Bitcoin is on a glide path to $1 million. While a current price tag of $108,000 for Bitcoin is hardly cheap, it may look inexpensive years from now.
In much the same way, investors watched with wonder as Bitcoin hit $1,000, then $10,000, and then finally $100,000. Investors who were early to Bitcoin in 2013, when it first crossed through the $1,000 mark, are likely crypto millionaires today.
But there’s a bigger story to be told. Paul Tudor Jones, for example, has been outspoken in his view that Bitcoin is analogous to gold, in that it can act as a long-term store of value and a hedge against inflation. In many ways, Bitcoin is the “modern gold” for the digital era, helping to insulate portfolios from economic calamity.
That type of thinking is now going mainstream. Right now, one of the biggest trades on Wall Street is known as the “debasement trade.” It’s the reason why both gold and Bitcoin are now flirting with all-time highs. Simply put, investors are moving their money out of fiat currencies such as the U.S. dollar and moving it into gold, precious metals, and Bitcoin.
Until recently, Bitcoin was largely uncorrelated with any major asset class. This made it particularly attractive to large institutional investors and hedge fund managers who were looking to diversify their portfolios and reduce their overall risk profile. From that perspective, Bitcoin seemed to be the perfect digital asset: It had nearly unlimited upside potential, and still could provide downside protection and enhanced diversification benefits.
Based on the above, it would seem like a no-brainer move to buy Bitcoin now. After all, the “smart money” appears to be buying Bitcoin in bulk, and the investment case for Bitcoin as a stand-alone asset class is no longer debated.
But just keep in mind: Bitcoin has historically been a very volatile asset, capable of extreme price swings within very short periods of time. The “flash crash” on Oct. 10 was more proof of that, with Bitcoin quickly dropping in price within a period of just 24 hours.
So buyer beware. Over the long haul, Bitcoin is a cryptocurrency you can buy and hold for decades. But the path from $100,000 to $1 million may be a lot more volatile and choppy than many people might assume.
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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and Goldman Sachs Group. The Motley Fool recommends BlackRock. The Motley Fool has a disclosure policy.
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