It’s hard to deny Nvidia’s (NASDAQ: NVDA) staggering growth, with Goldman Sachs recently dubbing it “the most important stock on planet Earth.” If you had invested $1,000 in Nvidia just five years ago, that investment would be worth over $26,000 today.
Now boasting a market cap nearing $3 trillion, Nvidia is well-positioned for future gains, largely driven by the explosive growth in artificial intelligence (AI). However, while Nvidia seems like an unbeatable force, Bitcoin also offers significant future potential — perhaps even greater than Nvidia. And surprisingly, investing in Bitcoin might be less risky than many assume.
Unlocking Future Potential
Nvidia has undeniably outpaced Bitcoin this year. In 2024, Nvidia’s value surged by 130%, compared to Bitcoin’s more modest 40% increase. Over the past two years, Nvidia rose an impressive 764%, while Bitcoin saw a 209% climb. Does that mean it’s time to abandon Bitcoin and go all-in on Nvidia?
Not quite. The stock market is forward-looking, with future performance, not past results, driving valuations. This is where Bitcoin’s potential shines. The further we look into the future, the more enticing Bitcoin’s upside becomes.
For instance, Bernstein predicts Bitcoin could more than triple by the end of 2025, potentially reaching $200,000. Some Silicon Valley tech leaders even forecast Bitcoin skyrocketing to $1 million in the coming years, while Cathie Wood of Ark Invest believes it could hit $3.8 million by 2030.
Even these predictions are eclipsed by Michael Saylor, founder and executive chairman of MicroStrategy. Saylor envisions Bitcoin reaching $13 million by 2045, viewing it as the future of money with the potential to replace the U.S. dollar. While such forecasts might seem extreme, they reflect the optimism surrounding Bitcoin’s long-term trajectory.
At today’s price of around $60,000, a jump to $13 million would represent a staggering 21,000% gain. Good luck finding Wall Street analysts forecasting anything remotely similar for Nvidia.
Assessing Risk and Volatility
Bitcoin’s immense growth potential does come with its share of risks. Government regulation remains a wild card, as the U.S. could follow other countries in banning Bitcoin. Tax laws could also make holding Bitcoin costly if investors are taxed on unrealized capital gains. Furthermore, regulatory bodies like the SEC might classify Bitcoin as a security, adding further uncertainty.
But Nvidia isn’t without its risks either. The current AI boom could fizzle, potentially becoming a speculative bubble akin to the dot-com crash in the early 2000s. Additionally, Nvidia faces increasing competition, and there’s always the risk it won’t meet Wall Street’s sky-high growth expectations.
The better way to evaluate Bitcoin versus Nvidia might be by looking at risk-adjusted returns — that is, how much risk you’re taking to achieve your potential gains. Interestingly, Bitcoin may not be as risky as many believe. According to Fidelity Investments, Bitcoin had the highest Sharpe ratio (which measures risk-adjusted returns) of any asset class over the past five years. In short, while Bitcoin is undeniably risky, you’re being compensated for that risk.
Bitcoin vs. Nvidia: The Choice
If forced to choose between Bitcoin and Nvidia, I’d lean toward Bitcoin. Despite its volatility, Bitcoin has consistently been one of the best-performing assets globally. The introduction of new spot Bitcoin exchange-traded funds (ETFs) in January has made Bitcoin more accessible, allowing mainstream investors to buy in as easily as they would purchase a tech stock.
While Bitcoin’s million-dollar price predictions may seem far-fetched, they highlight the tremendous potential this cryptocurrency holds. Over the long term, Bitcoin offers more upside than even the most promising tech stocks like Nvidia.
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Read Nvidia Forecast
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