The Curious Case of Billionaires and BlackRock’s Bitcoin Gambit

by

It is a peculiar spectacle, one that would have delighted Evelyn Waugh himself: the titans of finance, those modern-day aristocrats of excess, flocking to an instrument as volatile and enigmatic as the iShares Bitcoin Trust (IBIT). Issued by BlackRock, this exchange-traded fund has become something of a fashionable bauble among hedge fund billionaires, who appear to view it not merely as an investment but as a badge of their sophistication-or perhaps their recklessness.

  • Israel Englander of Millennium Management, a man whose wealth could likely purchase several small nations, added 3.8 million shares of IBIT, swelling his stake by 22%. One wonders if he views the fund as a prudent diversification or simply another bauble for his collection.
  • Steven Schonfeld, whose name evokes visions of opulent boardrooms and whispered deals, increased his position in IBIT by 5%, elevating it to his third-largest holding. A curious choice for someone so often associated with stability.
  • Tom Steyer, erstwhile environmental crusader turned financier, acquired 1.2 million additional shares, raising his stake by 21%. One cannot help but marvel at the irony of such a figure embracing the digital Wild West of cryptocurrency.

These gentlemen, lauded for their acumen and derided for their hubris in equal measure, serve as exemplars of our age-a time when even the most august institutions seem willing to gamble on the capricious whims of Bitcoin. Both Englander and Schonfeld have outpaced the S&P 500 (^GSPC) over the past three years, while Englander and Steyer rank among history’s most profitable hedge fund managers. Yet one must ask: is this triumph born of wisdom or mere audacity?

Let us now turn our attention to the iShares Bitcoin Trust itself, a vehicle whose allure lies not only in its potential rewards but also in the sheer absurdity of its premise.

Wall Street’s Soothsayers Predict Gains of Mythic Proportions

Bitcoin, that mercurial darling of speculators, has surged 88% in the past year to reach $111,000, leaving the staid S&P 500’s 16% return in the dust. But Wall Street’s prognosticators, ever eager to outdo one another in hyperbole, foresee even greater glories ahead.

  • Geoffrey Kendrick of Standard Chartered envisions Bitcoin ascending to $500,000 by 2029-a prediction so bold it borders on the surreal. Such a rise would imply a 350% gain from current levels.
  • David Puell of Ark Invest, undeterred by modesty, foresees a price of $710,000 by 2030, suggesting a 540% increase. One can almost hear the champagne corks popping in anticipation.
  • Gautam Chhugani of AllianceBernstein dares to dream even bigger, predicting $1 million by 2033-an 800% leap. The mind boggles at such audacity.
  • Tom Lee of Fundstrat Global Advisors takes the cake with a forecast of $3 million in the distant future, implying a staggering 2,600% upside. One wonders whether Mr. Lee has been sampling the same elixirs as his more exuberant colleagues.
  • Finally, Michael Saylor, executive chairman of Strategy, declares that Bitcoin will swell to a $200 trillion asset by 2045, implying an 8,990% surge from its current market value of $2.2 trillion. Such declarations are less forecasts than acts of faith.

While these predictions may inspire awe-or amusement-they should be approached with skepticism. Anchoring oneself to such lofty targets is akin to chasing mirages across a desert. Nevertheless, for those investors endowed with patience and a tolerance for volatility, exposure to Bitcoin through a spot ETF like IBIT may prove prudent. Allow me to explain.

Institutional and Corporate Adoption: A Tale of Two Drivers

Asset prices, as any seasoned investor knows, are governed by supply and demand. Yet Bitcoin, with its rigidly capped supply of 21 million coins, presents a unique case where demand reigns supreme. And there are two compelling reasons to believe that demand will continue to grow.

1. The Rise of Institutional Adoption

Once wary of cryptocurrency due to regulatory ambiguity, institutional investors-a cohort controlling some $130 trillion in assets-have begun to embrace Bitcoin. This shift owes much to the approval of spot Bitcoin ETFs last year and the pro-cryptocurrency stance of the Trump administration. Among the converts are the aforementioned hedge fund luminaries, whose collective enthusiasm has propelled the number of large asset managers holding IBIT positions up by 150% in the past year. Meanwhile, the total number of shares owned by these entities has tripled.

2. The Corporate Embrace of Bitcoin

Strategy, formerly known as MicroStrategy, has metamorphosed into a veritable Bitcoin behemoth, amassing 636,505 coins-3% of the total supply-and adding to its hoard quarterly for five consecutive years. During this period, its market capitalization has soared 6,500%. Inspired by this success, other companies have followed suit, including Block, Mara, Semler Scientific, Tesla, and Trump Media & Technology Group. According to BitcoinTreasuries.net, corporate ownership of Bitcoin rose 95% in the past year alone.

Loading widget...

Why Choose a Spot Bitcoin ETF Over Direct Ownership?

Owning Bitcoin directly often proves cumbersome and costly. Investors must first navigate the labyrinthine process of creating and funding an account on a cryptocurrency exchange. While some brokerages, such as Robinhood, offer crypto trading, most do not, forcing investors to juggle multiple portfolios. Moreover, Coinbase, the largest U.S. exchange, charges between 0.4% and 0.6% per transaction under $10,000, imposing fees twice-once upon purchase and again upon sale.

In contrast, the iShares Bitcoin Trust boasts an annual expense ratio of just 0.25%, meaning shareholders pay a mere $25 annually for every $10,000 invested. However, prudence dictates caution: cryptocurrencies are notoriously volatile, and Bitcoin is no exception. Its price has plummeted more than 50% from record highs twice in the last five years, suffering losses exceeding 75% during one such drawdown. Similar turbulence may well lie ahead.

And so, dear reader, we find ourselves at the intersection of folly and opportunity, where fortunes are made and lost with dizzying speed. As you contemplate your own role in this grand drama, remember that wisdom lies not in blind optimism but in tempered courage. Proceed with care-and perhaps a touch of skepticism. 😊

Read More

2025-09-04 11:41