Hedge Funds Shift to Bitcoin as Nvidia Faces Market Turmoil

New York, NY — In a surprising turn of events, several top hedge fund managers sold shares of Nvidia and shifted their investments towards the iShares Bitcoin Trust in the fourth quarter of 2024. This move comes amid significant fluctuations within the tech sector, raising questions about the future trajectory of both investments.

Nvidia, known for its leadership in AI accelerators, reported impressive fourth-quarter earnings, with revenue soaring 78% year-over-year to $39.3 billion. Net income also climbed 71%, reaching $0.89 per diluted share. However, despite these stellar results and guidance that surpassed Wall Street expectations, Nvidia’s stock has nosedived approximately 10% since the earnings report.

Analysts are examining potential causes for this downturn. One factor identified is the 3-percentage point contraction observed in the fourth quarter, hinting at a loss in growth momentum. Stifel analyst Ruben Roy believes the company will rebound as it begins selling more of its next-generation Blackwell graphics processing units (GPUs), stating, ‘The fundamentals for Nvidia remain solid with its leading position in AI.’

Despite short-term stock fluctuations, Wall Street anticipates that Nvidia’s adjusted earnings will increase by 50% in fiscal 2026, which ends in January 2026. This prospect positions Nvidia’s current valuation at 40 times its earnings as attractive. However, the change in hedge fund strategies suggests a broader trend towards diversifying portfolios amid uncertainties.

In contrast to Nvidia’s recent struggles, the iShares Bitcoin Trust has shown a remarkable advance, with its price surging 35% in the past year to reach $84,000. Experts predict that Bitcoin could experience significant price appreciation driven by three main catalysts: increasing adoption of cryptocurrencies, periodic halving of mining subsidies, and the potential establishment of a national digital asset stockpile.

Spot Bitcoin ETFs are gaining traction by offering easier access to Bitcoin for investors, reducing previous barriers and high fees associated with traditional cryptocurrency exchanges. The iShares Bitcoin Trust was notably recognized as the most successful ETF launch in history regarding net inflows during its first year, according to The Wall Street Journal.

Bitcoin operates under a fixed supply model, where subsidies awarded to miners are halved approximately every 210,000 blocks, capping total Bitcoin to 21 million coins. As demand increases, the value is expected to rise, adhering to economic principles regarding fixed supply assets. Additionally, President Donald Trump recently signed an executive order for a working group to evaluate the establishment of a government-backed digital asset stockpile, which could fuel further demand for Bitcoin.

However, investors are warned that the path of Bitcoin is fraught with volatility. Bitcoin has seen a decline of 20% since mid-January 2025 and has experienced drops greater than 50% from peak values in the previous six years. Investors looking to engage with these volatile assets are advised to carefully consider their risk tolerance before buying into the iShares Bitcoin Trust.

As the market landscape evolves, it remains crucial for investors to stay informed about developments in firms like Nvidia and emerging assets like Bitcoin. The shifting preferences of hedge funds highlight the dynamic nature of investment strategies in today’s economy.