Although Bitcoin(CRYPTO: BTC) is only up 11% for the year, it has regained some of its early-year momentum and is close to regaining its all-time high of $109,000 from January. Even the biggest crypto skeptics have to acknowledge that Bitcoin -- up almost 25% during the past 30 days -- is proving remarkably resilient in the face of continued macroeconomic uncertainty.
So it's, perhaps, no surprise that some of the biggest hedge fund managers in the world are also turning their attention to Bitcoin. Based on recent Securities and Exchange Commission (SEC) Form 13F quarterly filings, it appears that two billionaire hedge fund managers -- Steven Cohen of 72Point Asset Management and Ken Griffin of Citadel Advisors -- are now loading up on Bitcoin. So should you be doing the same?
Image source: Getty Images.
A peek inside two hedge fund portfolios
By analyzing SEC filings, it is possible to get some tangible numbers on just how much Bitcoin these two billionaires are buying. What's interesting is that they are using the new spot Bitcoin ETFs -- and, specifically, the iShares Bitcoin Trust ETF(NASDAQ: IBIT) -- as their preferred way to get exposure to Bitcoin.
For the quarter ended March 31, Cohen boosted the value of his iShares Bitcoin Trust ETF holdings to $198.9 million. He purchased 1.39 million new shares, and now owns 4.25 million, for an increase of 49%.
During that same time period, Griffin boosted the value of his iShares Bitcoin Trust ETF holdings to $146.9 million. He purchased 2.08 million new shares, and now owns 3.14 million, for a head-spinning increase of 195%.
Those might sound like staggering totals, but here's the thing: The sizes of these two hedge funds are so big that Bitcoin still accounts for less than 1% of their portfolios. In the case of Point72 Asset Management, this Bitcoin ETF position is 0.56% of the total portfolio. In the case of Citadel Advisors, the position is just 0.14% of the total portfolio.
Why are they buying Bitcoin?
Although the SEC filings present a valuable view of what's happening with the holdings of these two billionaire hedge fund managers, it's still an incomplete view. It's just a snapshot in time, letting us know what happened during the first quarter of the year.
While we really don't know the precise motivations of these two big-name investors, we can certainly speculate. In the first quarter of the year, Bitcoin was on yet another epic run. Pro-crypto euphoria was everywhere. On the day of the presidential inauguration, Bitcoin hit an all-time high of more than $109,000. So, obviously, Bitcoin seemed to possess a tremendous amount of upside potential for the year.
Of course, it's also possible to speculate that these investors were buying Bitcoin as a hedge against macroeconomic and geopolitical uncertainty. After all, Bitcoin historically has had little correlation with any major asset class. That makes it a potential hedge against macroeconomic factors such as inflation, which was a major topic of discussion during the early part of the year.
So it will be interesting to check out what happened to these Bitcoin positions over Q2. Did tariff uncertainty and Bitcoin's brief decline below the $75,000 mark lead them to dump their Bitcoin positions? Or, did fears of tariff-induced inflation and a potential recession lead them to load up on yet more Bitcoin as a hedge against a worst-case economic scenario?
Not all hedge fund managers are buying Bitcoin
It's also important to point out that not all hedge fund managers are loading up on Bitcoin. If you take a look at a hedge fund database, search for holdings of the iShares Bitcoin Trust ETF, and then see who's buying and selling, a number of the top holders of this Bitcoin ETF were actually selling their positions.
Much of this buying and selling is likely about getting the Bitcoin allocation right. Griffin, for example, had almost no exposure to Bitcoin heading into 2025. So, while a massive jump of 195% in exposure sounds impressive, his overall Bitcoin allocation is still minuscule.
The 1% rule for Bitcoin investors
Somewhat surprisingly, it appears that top hedge fund managers are keeping their Bitcoin allocations under the 1% level. About a dozen or so hedge fund managers are now over 1% when it comes to their Bitcoin allocations, but nobody appears to be going all-in on Bitcoin.
So, if you are allocating more than 1% of your portfolio to Bitcoin, you may be taking on too much risk. Even a 1% target allocation might be aggressive, depending on where you are in your investing career.
That thinking squares up with what BlackRock(NYSE: BLK), the company behind the iShares Bitcoin Trust ETF, recently advised investors in a report ("Sizing Bitcoin in Portfolios"). It suggested that, for the typical investor, a Bitcoin allocation around 1% is "reasonable."
With top billionaires adjusting their exposure to Bitcoin, smaller investor might consider doing so as well. Just remember, though, the overall diversification of your portfolio is much more important. There's room for Bitcoin in your portfolio, but it shouldn't be a disproportionate part of your holdings.
Should you invest $1,000 in Bitcoin right now?
Before you buy stock in Bitcoin, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bitcoin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider whenNetflixmade this list on December 17, 2004... if you invested $1,000 at the time of our recommendation,you’d have $642,582!* Or when Nvidiamade this list on April 15, 2005... if you invested $1,000 at the time of our recommendation,you’d have $829,879!*
Now, it’s worth notingStock Advisor’s total average return is975% — a market-crushing outperformance compared to172%for the S&P 500. Don’t miss out on the latest top 10 list, available when you joinStock Advisor.
