Institutional investors are redirecting their capital from popular artificial intelligence stock Nvidia (NVDA -2.61%) to Bitcoin Exchange-Traded Funds (ETFs), with expectations of substantial gains. These strategic moves come following the recent approval of spot Bitcoin ETFs, which has sparked increased interest from hedge funds and investment banks.

Noteworthy names such as Ken Griffin at Citadel Advisors, David Shaw at D.E. Shaw, and Israel Englander of Millennium Management, who manage three of the top-performing hedge funds, have all reduced their stakes in Nvidia while initiating positions in the recently approved iShares Bitcoin Trust (IBIT 6.02%), one of the prominent Bitcoin ETFs.

Ken Griffin sold 2.4 million shares of Nvidia in the first quarter, reducing his stake by 68%, while initiating a small position in the iShares Bitcoin Trust. Similarly, David Shaw sold 1.4 million Nvidia shares, reducing his stake by 38%, and also began a small position in the Bitcoin ETF. Israel Englander, who ranks the iShares Bitcoin Trust as his twelfth-largest holding, sold 720,004 Nvidia shares, reducing his stake by 35%.

While these transactions should not be interpreted as a negative outlook on Nvidia as an investment, they indicate a diversification strategy employed by these billionaire investors. The appeal of Bitcoin stems from its potential to reach astounding price levels, driven by the recent approval of spot Bitcoin ETFs.

According to analysts Gautam Chhugani and Mahika Sapra at Bernstein, Bitcoin could reach $200,000 by 2025, $500,000 by 2029, and even $1 million by 2030. This forecast represents an upside potential of 1,415% from its current price of $66,000. Notably, renowned investor Cathie Wood raised her Bitcoin forecast to a staggering $3.8 million by 2030 following the approval of spot Bitcoin ETFs, implying a remarkable upside of 5,655%.

The approval of spot Bitcoin ETFs has attracted institutional investors to the market, as they unlock a new asset class for investors to gain exposure to Bitcoin. Spot Bitcoin ETFs enable investors to add Bitcoin exposure through existing brokerage accounts, simplifying the process and tax reporting. Additionally, these ETFs are often cheaper compared to traditional methods of investing in Bitcoin, such as through cryptocurrency exchanges like Coinbase.

Bernstein and Ark Invest believe that institutional demand for spot Bitcoin ETFs will drive the forecasted gains in the coming years. Though institutional investors currently hold smaller positions in these ETFs, major players like JPMorgan Chase, Morgan Stanley, and Wells Fargo have joined the trend.

Furthermore, analysts at Bernstein highlight the historical significance of halving events in Bitcoin's price cycles. Bitcoin block subsidies are periodically reduced by 50% every time 210,000 blocks are added to the blockchain. As demonstrated in the past, Bitcoin's price has consistently surged to new highs between 12 to 18 months after such halving events. The most recent halving event occurred in April 2024, suggesting a potential new peak for Bitcoin between April 2025 and October 2025.

As institutional investors continue to evaluate and establish positions in spot Bitcoin ETFs, the future of Bitcoin's price remains optimistic. Observers anticipate further growth and increased demand as the market embraces this new investment opportunity.