Billionaires Are Investing in a BlackRock ETF That Wall Street Analysts Say Could Surge as Much as 9,400%

In the second quarter, a number of hedge funds led by billionaires acquired shares in the iShares Bitcoin Trust ( IBIT -1.57%), an exchange-traded fund (ETF) designed to mirror the spot price of Bitcoin ( BTC 2.41%). This ETF is managed by BlackRock, the world’s largest asset management firm.

• Millennium Management’s Israel Englander purchased 3.8 million shares, making the iShares Bitcoin Trust one of his 15 largest investments.
• Philippe Laffont from Coatue Management acquired 56,500 shares. While this is one of his smallest positions, it marks a new addition to his portfolio.
• Steven Schonfeld of Schonfeld Strategic Advisors bought 247,500 shares, making the iShares Bitcoin Trust his third-biggest holding.
• Tom Steyer at Farallon Capital Management added 1.2 million shares, placing the iShares Bitcoin Trust among his top 20 investments.

The investors mentioned above have impressive histories. Both Englander and Steyer are ranked among the ten most successful hedge fund managers ever. Over the past three years, Englander, Laffont, and Schonfeld have each outperformed the S&P 500 by at least 15 percentage points.

Additionally, there’s another compelling reason for individual investors to consider the iShares Bitcoin Trust: Many Wall Street analysts are forecasting substantial growth for Bitcoin in the coming years.

Some Wall Street experts forecast monster gains in Bitcoin

Although Bitcoin experienced a significant drop in October, it has still climbed 59% over the past year, outperforming gold by 2 percentage points and the S&P 500 by 42 percentage points as of Oct. 18. Currently trading at $107,000, several Wall Street analysts predict major gains for Bitcoin in the years to come.

• David Puell from Ark Invest projects Bitcoin could reach $710,000 by 2030, suggesting a 560% increase from its current value.
• Gautam Chhugani at AllianceBernstein anticipates Bitcoin will hit $1 million by 2033, which would be an 835% rise from today’s price.
• Tom Lee of Fundstrat Global Advisors believes Bitcoin could eventually surpass $3 million, representing a 2,700% gain from its present level.
• Michael Saylor, executive chairman at Strategy, envisions Bitcoin becoming a $200 trillion asset by 2045, which would mean a 9,400% jump from its current $2.1 trillion market cap.

Investors should avoid focusing solely on price targets, especially those that predict extraordinary returns. It’s crucial to evaluate the underlying investment rationale before buying any asset.

The investment thesis for Bitcoin

Bitcoin’s price is determined by supply and demand. Unlike most assets, the total supply of Bitcoin is capped at 21 million coins, making demand the key factor. Here are four reasons why demand for Bitcoin may rise in the future.

• Bitcoin as a hedge against inflation: Economists predict that broad tariffs introduced by President Donald Trump will push inflation higher. Bitcoin, often referred to as digital gold, is considered a potential safeguard against fiat currency devaluation due to its fixed supply. In fact, its value doubled in the two years leading up to June 2022, a period when CPI inflation reached a four-decade high.
• Improved regulatory climate: President Trump ran on a platform to establish the U.S. as the "crypto capital of the world." He has issued executive orders supporting this vision and appointed cryptocurrency supporter Paul Atkins as SEC chair. Earlier this year, the SEC also withdrew Staff Accounting Bulletin 121, a rule that had discouraged financial institutions from offering crypto custody services.
• Spot Bitcoin ETFs are fueling demand: Even top cryptocurrency exchanges can be cumbersome, requiring investors to manage digital assets separately and often charging high transaction fees. Spot Bitcoin ETFs have made investing easier by removing these obstacles. The iShares Bitcoin Trust, for example, saw the highest inflows of any ETF in its first year and is now among the 20 largest ETFs by assets.
• Institutional adoption is increasing: According to Bitwise CIO Matt Hougan, institutional investors have embraced spot Bitcoin ETFs faster than any previous ETF. While four hedge funds with positions in the iShares Bitcoin Trust have already been mentioned, 13F filings reveal that the number of major asset managers holding the ETF more than doubled in the second quarter, with their total investment growing fivefold.

In summary, the current administration under Trump is much more supportive of the cryptocurrency sector than its predecessors. The increasingly favorable regulatory environment, combined with the convenience of spot Bitcoin ETFs, has encouraged more investors to enter the Bitcoin market. Institutional participation is particularly significant, as these investors managed around $130 trillion in assets last year. Even a small allocation from that pool could drive Bitcoin prices much higher.

Caveat emptor: Bitcoin has historically been a volatile asset

It’s important to note that while Bitcoin has often served as a reasonable inflation hedge, it has never behaved like a traditional safe haven. Gold prices typically rise during times of economic uncertainty, but Bitcoin tends to experience sharp declines in such periods.

For example, Bitcoin has fallen 15% from its all-time high earlier in October, largely due to renewed trade tensions between the U.S. and China this month. In contrast, gold has surged to new record highs as investors seek safety.

More generally, Bitcoin has always been highly volatile. In just the past three years, it has dropped at least 20% from its peak on three separate occasions, and another similar drop could happen soon. Such volatility is likely to continue. Therefore, investors who are uncomfortable with significant and frequent price fluctuations should steer clear of Bitcoin and any spot ETFs that follow its price.