Billionaires are Investing in This Cryptocurrency ETF, Which Could Increase in Value by 1,050% to 5,400%, Per Some Wall Street Analysts


In the last year, Bitcoin (CRYPTO: BTC) has increased by 154%. That recovery was made possible by a number of factors, including a shift back to riskier assets as concerns about a recession subsided. But such gains were undoubtedly aided by the approval of spot Bitcoin exchange-traded funds (ETFs), and their future effects may be even more substantial.

To give an example, in January the Securities and Exchange Commission (SEC) approved eleven spot Bitcoin ETFs. The decision was hailed by several analysts as a turning point for the bitcoin industry, since the institutional investors, who handle assets worth approximately $100 trillion, could become interested in the ETFs.

As can be seen below, a number of hedge fund managers bought shares in the newly authorized iShares Bitcoin Trust (NASDAQ: IBIT) in the first quarter.

On March 31, Israel Englander of Millennium Management paid $844 million for 20.9 million shares of the iShares Bitcoin Trust. His largest holding, excluding options contracts, is the ETF.

A $752 million acquisition of 6.1 million shares of the iShares Bitcoin Trust was made by Schonfeld Strategic Advisors' Steven Schonfeld. His second-largest holding, excluding options contracts, is the ETF.

Citadel Advisors' Ken Griffin paid $17.8 million for 440,709 shares of the iShares Bitcoin Trust.

Paul Singer of Elliot Investment Management paid $12 million for 296,010 shares of the iShares Bitcoin Trust.

After the SEC approved spot Bitcoin ETFs, some analysts made audacious predictions. For example, SkyBridge Capital's Anthony Scaramucci thinks Bitcoin's market capitalization may surpass that of gold. According to that, the cryptocurrency is worth nearly $800,000 a coin, which is 1,050% more than its current $69,000 price.

In a similar vein, Cathie Wood of Ark Invest predicts that spot Bitcoin exchange-traded funds (ETFs) would eventually account for roughly 5% of institutional assets managed. According to the estimate, the cryptocurrency's value would increase by over 5,400% from its present price to around $3.8 million per coin.

What investors need to know is as follows.

Spot Bitcoin ETFs may increase interest in cryptocurrencies.
Supply and demand ultimately decide how much bitcoin costs. Having stated that, demand is the most important factor because there are only 21 million coins available. Put otherwise, the price of Bitcoin will rise in response to an increase in demand and fall in response to a drop in demand.

Spot Bitcoin ETFs have a compelling case since they provide direct exposure to Bitcoin without the hassles of cryptocurrency exchanges. Its value proposition may attract additional institutional and ordinary investors to the market, creating demand that raises the product's price.

More specifically, spot Bitcoin ETFs are typically less costly than cryptocurrency exchanges. With an expense ratio of 0.25%, the iShares Bitcoin Trust would cost $25 in fees annually for every $10,000 invested in the product. In contrast, for orders under $10,000, Coinbase charges between 0.4% and 0.6% every transaction.

Investors can also increase their exposure to Bitcoin in their current brokerage accounts by purchasing spot Bitcoin ETFs. Purchasing Bitcoin directly, however, necessitates opening, funding, and keeping up a different account with a cryptocurrency exchange. Though it might seem like a minor source of conflict, it has probably caused some investors to stay away.

In fact, the remarkable success several spot Bitcoin ETFs have experienced since their introduction lends credence to that hypothesis. For example, according to Eric Balchunas at Bloomberg, more assets were amassed by the Wise Origin Bitcoin Fund and the iShares Bitcoin Trust in their first 50 trading days than by any other ETF in history.

It's worthwhile to purchase the iShares Bitcoin Trust, but have realistic expectations.
The same strategy should be followed by every spot Bitcoin ETF: purchase Bitcoin, divide it into shares, and then sell those shares on the stock exchange. It should come as no surprise that investors have favored ETFs with lower fees, particularly those offered by reputable asset managers.

As previously reported, two extremely successful Bitcoin funds are Fidelity's Wise Origin Bitcoin Fund and BlackRock's iShares Bitcoin Trust. This is due to the fact that both BlackRock and Fidelity are two of the biggest asset managers in the world, in addition to the funds' comparatively low 0.25% fee ratio. In my opinion, those who want to purchase a spot Bitcoin ETF should choose between those two funds to make things straightforward.

Note that there is no assurance that Bitcoin will ever hit the $800,000 price target set by Anthony Scaramucci or the $3.8 million price target set by Cathie Wood. In the case of cryptocurrencies, both possibilities are conceivable (I would never venture to claim that anything was impossible), but it's also feasible that Bitcoin will drop to zero.

Investors ought to pay attention to the facts instead. Almost all asset classes, including stocks, bonds, commodities, gold, and real estate, underperformed bitcoin over the previous five years, according to Ark Invest. If you're an investor who can tolerate high risk and tremendous volatility, this information presents a strong argument for holding Bitcoin (or a spot Bitcoin ETF).

Is it presently appropriate for you to put $1,000 into the iShares Bitcoin Trust?
Keep the following in mind before purchasing shares in the iShares Bitcoin Trust:

The top 10 equities, in the opinion of the Motley Fool Stock Advisor expert team, are currently available for purchase. among them was the iShares Bitcoin Trust.