Why Billionaires Are Betting Big on This Bitcoin ETF

Recently, a surprising number of billionaire hedge fund managers have been buying a single ETF. This fund, the iShares Bitcoin Trust ETF (IBIT), is a spot Bitcoin ETF that tracks the performance of the world’s largest cryptocurrency.

Managers such as Ken Griffin and Israel Englander have decided to buy this fund despite their proven acumen in picking individual stocks that outperform the market. Why are some of the best investors on Wall Street buying IBIT, and how high could the fund’s shares go over the next few years?

Key Points

• Top hedge fund managers and banks are increasing exposure to this Bitcoin ETF, signaling strong institutional interest.

• Bitcoin’s growth potential is fueled by institutional demand and pro-crypto policies.

• If Bitcoin hits $200K–$250K, IBIT could reach $125–$155.

The Bull Case for Bitcoin

Right now, there are several factors that could cause Bitcoin prices to trend upward over the next several years. The first of these is the continued popularity of spot ETFs like IBIT itself. There’s little doubt that last year ETF flows were a driving support to Bitcoin reaching new heights as new investors bought in without the difficulty involved with setting up a cryptocurrency wallet.

Investors may also be looking at Bitcoin as an alternative investment for protection against market turmoil and inflation. With new tariffs and trade restrictions expected to raise input costs and potentially cause a recession before the end of the year, stocks are quickly correcting downward to price in more adverse business conditions. Some bullish investors believe that Bitcoin acts in a similar way to gold during such times, though the jury is still very much out on whether this will prove to be the case if the economy enters a prolonged recession.

By far the biggest catalyst for upward price pressure on Bitcoin, however, is likely to be the Trump administration’s pro-crypto stance on regulation and investing. Recently, Trump hosted several cryptocurrency experts at the White House. A day earlier, he had signed an executive order for the creation of a national stockpile of Bitcoin and other leading cryptocurrencies.

The news, however, wasn’t quite as good as some crypto bulls had hoped for. While the government still plans to create a Bitcoin reserve, the current plan is to use Bitcoin that the government has seized in criminal or civil forfeitures. Even without a plan that will directly increase demand for Bitcoin, however, the creation of a national reserve will more or less permanently lock up a large amount of the cryptocurrency and likely increase demand by further legitimizing its standing as an investment asset.

Together, these factors could cause IBIT prices to continue rising as the price of Bitcoin moves steadily upward with demand. Demand from large institutional investors will also likely play a part in Bitcoin’s future. Goldman Sachs, for instance, has become a significant holder of Bitcoin ETFs and was still adding to its cryptocurrency position as recently as mid-February. With large banks and funds continuing to bet on Bitcoin’s appreciation, it’s likely that funds such as IBIT will see strong ongoing demand over time.

The Risk of Hedging Stocks With Bitcoin

While there is a case to be made for strong growth in IBIT, there are also some very hefty risks associated with that growth thesis. To begin with, Bitcoin is largely unproven as a hedge during tough economic times. To date, BTC has largely moved in concert with the stock market. This trend has continued to hold true so far this year, with Bitcoin falling more than 15 percent YTD as the market has entered a correction.

Bitcoin could also be in for a rough period as the market prices in the revelation that the US government is unlikely to become an active cryptocurrency buyer. Bitcoin had been trending upward since Donald Trump was elected on hopes of both deregulation of the crypto industry and active purchasing for a strategic reserve. While a more friendly regulatory environment is still very likely, Trump’s reserve will be capitalized with Bitcoin that the government already technically owned. As a result, Bitcoin could continue to sell off to correct for assumptions about the influence government buying would have on its price.

On the more extreme end of the risk spectrum for Bitcoin investors are finance experts who argue that Bitcoin is intrinsically worthless. This camp has included such notable figures as Warren Buffett, Charlie Munger and Jamie Dimon for several years. More recently, the sentiment was echoed by Eugene Fama, a Nobel Prize-winning economist. The noted economist argues that Bitcoin has a nearly 100% chance of being worthless a decade from now. If this prediction proves accurate, almost $2 trillion in total value would be wiped out and ETFs like IBIT would follow Bitcoin as its value deteriorated.

How High Could IBIT Go?

While some extreme Bitcoin bulls suggest prices of $1 million or more by 2030, it seems unwise to bank on predictions that would see Bitcoin rise more than tenfold in just a few years given the current risks.

More sensible but still very optimistic predictions suggest a price range of $200,000-$250,000 by the start of the next decade. Given the current price of about $79,650, this would imply that Bitcoin could increase by about 2.5 to 3.1 times over the same period.

Unsurprisingly, an ETF backed by Bitcoin is likely a high-risk, high-reward investment. Given the number of prominent billionaires moving into Bitcoin, however, it’s likely worth taking a look at IBIT as a serious investment.

Assuming IBIT continues to closely track Bitcoin’s overall performance, this could give us a decent idea of where the ETF could find itself five years from now. Shares of IBIT are currently priced at $49.81. Using the multiples outlined above, IBIT shares would end up trading roughly somewhere between $125 and $155.

It’s important to remember, however, that Bitcoin is a deeply volatile asset. As such, its performance could very easily undershoot or overshoot that range in the coming years. The risks involved with Bitcoin at the moment could be substantial, especially if its price continues to be positively correlated to stocks and the US economy enters a recession. Over the long run, however, it’s likely that both Bitcoin and IBIT still have upside in them as long as investor demand for the cryptocurrency remains strong.