It's always good to know what the smartest minds on Wall Street have been up to recently. That's why it's worth checking out recent 13F filings with the Securities and Exchange Commission (SEC), which are required of all companies and individuals with more than $100 million in assets under management (AUM). Often, you can get some very good clues about where billionaires see the market moving next by checking out what they have been buying and selling.

Based on these filings, it appears that a growing number of billionaires have been selling Nvidia (NASDAQ: NVDA) and buying Bitcoin (CRYPTO: BTC) instead. Let's take a closer look.

Billionaires and the Bitcoin ETFs

The push into Bitcoin began in January as soon as the new spot Bitcoin exchange-traded funds (ETFs) rolled out. Suddenly, institutional investors had a quick, convenient way to get exposure to the crypto-asset class. While there was certainly quite a bit of buzz and hype about the new spot Bitcoin ETFs in early 2024, there wasn't a clear picture of just how much these fund managers were buying until the first round of 13F filings came out in May.

That's when Millennium Management LLC popped onto the radar of Bitcoin investors. Israel Englander's hedge fund sank more than $2 billion into the new Bitcoin ETFs, and Bloomberg proclaimed him "king of the Bitcoin ETF holders." Other top Bitcoin buyers included Digital Currency Group, Susquehanna International Group (SIG), Jane Street Group, and D.E. Shaw.

At the same time, a number of prominent billionaires have been selling Nvidia. For example, in the second quarter of 2024, Stanley Druckenmiller, George Soros, Lee Ainslie, and David Tepper were a few of the big names selling Nvidia.

Bitcoin's long-term growth potential

So the big question becomes: Why are billionaires selling Nvidia and buying Bitcoin? The most likely answer is that shares of Nvidia have skyrocketed in value so much over the past two years, that some investors are now looking to cash in on their gains and put that money to work elsewhere. Recently, talk of an "AI bubble" has been getting louder, and that may also be impacting how investors view Nvidia.

And that's why Bitcoin looks so enticing right now. While Bitcoin is trading nearly 15% below its all-time high and is still underperforming Nvidia this year, it still boasts some impressive upside potential. For example, investment firm Bernstein thinks Bitcoin could hit $200,000 by the end of next year. At today's price of $63,000, that's a more-than 3 times return on your investment within a very short period of time.

If you are looking longer term, the outlook is even more impressive for Bitcoin. Cathie Wood of Ark Invest put out a $1 million price target for Bitcoin for the year 2030. She has since raised that target to $3.8 million, based on all the new money that has been flowing into the Bitcoin ETFs. And billionaire Michael Saylor, founder and executive chairman of MicroStrategy Inc. (NASDAQ: MSTR), thinks Bitcoin could eventually hit $13 million by the year 2045.

Bitcoin and downside-risk protection

Bitcoin has more going for it than just its enormous upside potential. It is increasingly viewed as a long-term store of value, similar to gold. And that makes it particularly attractive as an asset to hold during times of economic, political, or geopolitical uncertainty. In short, if you think the economy is going to implode, or if you think regional tensions in some part of the world are going to escalate, then it might make sense to move money into Bitcoin.

That's exactly what billionaire Stanley Druckenmiller told investors at the end of 2023. He compared Bitcoin to gold as a "brand" that you can trust when the market goes south. And other billionaires, such as Paul Tudor Jones and Mark Cuban, have also spoken about the potential of Bitcoin to protect against downside risk.

That type of thinking may help to explain why billionaire hedge fund managers are among the biggest buyers of Bitcoin. In short, they want to hold an asset that can help to hedge against political and economic uncertainty. If you're reading the daily news headlines, you can understand why there's a lot to be nervous about right now.

Nvidia or Bitcoin?

Just keep in mind that "Nvidia or Bitcoin?" might be a false dichotomy. The real answer could be "both." In other words, you might want to consider both for your long-term investment portfolio, rather than trying to pick between the two.

Interestingly, the correlation between Nvidia and Bitcoin is still very high. At the time of the Bitcoin halving in April, the correlation stood at 0.80. So, the two assets have largely been moving in tandem. If Nvidia goes up, then there is a high likelihood that Bitcoin will as well (and vice versa).

At the end of the day, you need to take into account your entire portfolio, and how adding or subtracting different assets will impact it in terms of diversification and overall risk exposure. If you are currently overweight on Nvidia, then you might want to consider an investment in Bitcoin.

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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and Nvidia. The Motley Fool has a disclosure policy.

Billionaires Are Selling Nvidia Stock and Buying Up This Cryptocurrency Instead was originally published by The Motley Fool