Recent filings of Form 13F reveal a significant shift in investment strategies by two prominent hedge fund managers. Both David Shaw of D.E. Shaw and Steven Cohen of Point72 Asset Management have reduced their holdings in Nvidia during the second quarter of this year, reallocating substantial capital into the iShares Bitcoin Trust (NASDAQ: IBIT), an ETF that tracks the performance of Bitcoin (CRYPTO: BTC).

David Shaw cut his Nvidia holdings by 52%, selling 12.1 million shares, while simultaneously purchasing 2.4 million shares of the iShares Bitcoin Trust, marking a 1,658% increase in his position. Similarly, Steven Cohen sold 409,042 Nvidia shares, reducing his stake by 16%, and acquired 1.6 million shares of the Bitcoin Trust, marking his first foray into cryptocurrency investments.

This move by Shaw and Cohen, both highly respected in the hedge fund industry, is noteworthy. D.E. Shaw and Point72 are ranked second and 13th, respectively, among the top 20 best-performing hedge funds, according to LCH Investments. Their actions highlight the importance of portfolio diversification rather than suggesting Nvidia is a poor investment. While AI stocks like Nvidia hold significant long-term potential, cryptocurrencies like Bitcoin are also being recognized for their explosive growth prospects. Some Wall Street analysts predict that Bitcoin, and by extension, the iShares Bitcoin Trust, could see an astonishing rise of up to 83,000%.

Bitcoin has experienced a rollercoaster year, starting with a strong surge that saw its price more than double in 2023. The momentum continued into early 2024, fueled by the U.S. Securities and Exchange Commission’s (SEC) approval of spot Bitcoin ETFs and the anticipation of the April halving event.

Bitcoin reached a new high above $73,000 in March, but investor sentiment took a hit amid rising economic uncertainty. Initially, investors expected the Federal Reserve to reduce interest rates by mid-year, but with rates remaining at a 20-year high, the market's outlook soured. Concerns grew in early August following a weak jobs report, which reignited fears of a recession. This led to a significant downturn in both the stock and cryptocurrency markets, with Bitcoin dropping to around $59,000—about 20% below its March peak.

Despite these setbacks, Shaw and Cohen remain bullish on Bitcoin, believing it has substantial growth potential.