Billionaires Are Investing in a Bitcoin ETF That Could Skyrocket, Experts Say

CryptoCurrency Bitcoin has gone up by 154% in the past year. This increase happened for a few reasons, including people getting back into riskier investments as worries about a recession eased. A big factor was the approval of spot Bitcoin exchange-traded funds (ETFs), which could have an even bigger impact going forward.

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In January, the Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs. Some experts say this could be a game-changer for cryptocurrency because it might attract large institutional investors who manage around $100 trillion in assets. Several hedge fund managers have already invested in the new iShares Bitcoin Trust (NASDAQ: IBIT).

• Israel Englander of Millennium Management bought 20.9 million shares of the iShares Bitcoin Trust, valued at $844 million as of March 31, making it his 12th largest holding.

  
  

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• Steven Schonfeld of Schonfeld Strategic Advisors purchased 6.1 million shares worth $752 million, making it his second-largest holding.

• Ken Griffin of Citadel Advisors bought 440,709 shares, valued at $17.8 million.

• Paul Singer of Elliott Investment Management acquired 296,010 shares, worth $12 million.

Some analysts have high hopes for Bitcoin after the SEC's approval of these ETFs. Anthony Scaramucci of SkyBridge Capital thinks Bitcoin could reach the same market value as gold, which would make each Bitcoin worth about $800,000, a 1,050% increase from its current price. Cathie Wood of Ark Invest believes these ETFs could eventually attract 5% of institutional investments, valuing Bitcoin at around $3.8 million per coin, a 5,400% increase.

How Spot Bitcoin ETFs Work

Spot Bitcoin ETFs could increase demand for Bitcoin. Since there are only 21 million Bitcoins available, its price goes up when demand rises. Spot Bitcoin ETFs offer a way to invest in Bitcoin without dealing with cryptocurrency exchanges, which might attract more investors.

These ETFs usually have lower fees than cryptocurrency exchanges. For example, the iShares Bitcoin Trust charges an expense ratio of 0.25%, meaning $25 in fees for every $10,000 invested. In contrast, Coinbase charges between 0.4% and 0.6% per transaction for orders under $10,000.

Additionally, spot Bitcoin ETFs let investors add Bitcoin to their existing brokerage accounts, avoiding the need to set up and manage separate accounts with cryptocurrency exchanges. This ease of use might have kept some investors from buying Bitcoin before.

The success of these ETFs is clear. The iShares Bitcoin Trust and the Wise Origin Bitcoin Fund gathered more assets in their first 50 trading days than any other ETFs in history, according to Eric Balchunas at Bloomberg.

Should You Invest in Spot Bitcoin ETFs?

All spot Bitcoin ETFs do the same thing: they buy Bitcoin, divide it into shares, and sell those shares on the stock market. Investors usually prefer ETFs with lower fees and those managed by well-known companies. BlackRock's iShares Bitcoin Trust and Fidelity's Wise Origin Bitcoin Fund are popular because of their low fees and reputable management.

Although predictions that Bitcoin could reach $800,000 or $3.8 million are exciting, they are not guaranteed. Bitcoin's value could also drop significantly. Investors should consider Bitcoin's past performance and their own comfort with risk and volatility.

In summary, spot Bitcoin ETFs offer a new way to invest in Bitcoin, but investors should be cautious and realistic about their expectations.

Also Read: 3 Easy and Safe Ways to Invest in Cryptocurrency and Avoid Scams