Cathy Wood is one of Wall Street’s most vocal bulls when it comes to the potential of the technology sector. She founded ARK Investment Management, which operates several exchange trade funds (ETFs) that focus on investing solely in innovative technologies such as cryptocurrencies, artificial intelligence (AI), and robotics.
In fact, Ark was one of the first companies to win Securities and Exchange Commission approval to launch Bitcoin. (Cryptography: BTC) ETF last year. Wood and her team are extremely bullish on the world’s biggest cryptocurrency, predicting that by 2030, 1,660% could rise from 1,660% per coin to $1.48 million.
Crypto is currently trading at around $84,000, down 21% below its record high. If Ark’s predictions are correct, recent DIPs can be a great buying opportunity.
Image source: Getty Images.
Bitcoin’s market capitalization is $1.6 trillion, accounting for more than half of all cryptocurrencies in circulation throughout the industry. If it were a company, it would be the seventh largest in the world.
It is a speculative asset because it does not generate revenue or revenue, and there are no legitimate use cases in the real world. Therefore, it is extremely difficult to identify its value.
Nevertheless, it has a set of unique qualities that have led investors to believe they are good storage for value, like the digital version of gold.
It is completely decentralized. That is, it cannot be controlled by a person, company, or government. It also provides a recognition of rarity as the supply of 21 million coins, which will not be fully mined until around 2140. Finally, as I mentioned previously, it can be purchased through dozens of ETFs from different publishers, allowing financial advisors and institutional investors to own it in a safe and regulated way.
These attributes have paved the way for Bitcoin to recently march into the new Record High, despite most other cryptocurrencies failing to surpass 2021 (or even earlier in some cases).
In fact, if you bought and held Bitcoin ten years ago, you would have sat at a 29,100% return. We converted our $10,000 investment to $2.9 million. Over the past decade, we have wiped out all other asset classes, from stocks to real estate to gold.
Bitcoin price data by YCHARTS.
In my opinion, in a report published in 2023, ARK highlighted eight potential factors that can make Bitcoin even higher in the long run, but not all of them make sense. For example, we believe that Bitcoin could be a currency of choice in emerging markets, but even after El Salvador became the first country to adopt as a fiat currency in 2021, most consumers still seem unwilling to use it (partly due to volatility).
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Furthermore, ARK believes that individuals with net worth will more and more own Bitcoin. However, we know that the US government alone has confiscated more than 200,000 Bitcoin, which is worth $17 billion at its current price. Therefore, this particular theory does not actually retain water.
That said, three of ARK’s eight catalysts are somewhat plausible.
Nation-State Treasury: Governments around the world hold trillions of dollars worth of physical gold, and the Ark will ultimately hold reserves in Bitcoin. President Donald Trump recently signed an executive order to establish a US Bitcoin Reserve. Technically, it needs Congress support, but the wheels clearly turn this idea on.
Digital Gold: ARK predicts 20% to 50% of monetary investors who can allocate to Bitcoin instead, as investors are digitally and portable than regular gold metal.
Institutional Investment: Wood’s company believes that, thanks to its consistent returns, institutions will ultimately allocate some of their assets to Bitcoin over time. ETFs could accelerate this trend as they eliminate the risks associated with storing cryptocurrency in digital wallets that are susceptible to hacking.
Ark puts my opinion aside for a moment and believes that by 2030 it could reach $1.48 million per coin, based on the eight catalysts outlined by Bitcoin. This allows investors to earn a potential profit of 1,660% from where they are currently trading.
Wood was one step further in Bitcoin Investor’s Day in March 2024. She said ETFs could surpass Ark’s bullish forecasts and reach $3.8 million based on the idea that institutional investors could lay the foundation for allocating 5% of their assets to cryptocurrency. If she’s right, that means a potential benefit of 4,420%.
If Bitcoin rises to a price of $1.48 million, it would be a fully diluted market capitalization of $31 trillion. In other words, it is now almost ten times more valuable than Apple, the world’s most valuable company with a market capitalization of $3.2 trillion. It is also worth more than the overall production of the US economy. This was about $29.7 trillion last year.
Does that sound realistic for assets that have no revenue or revenue and are not struggling to generate traction as currency? For me, the answer is no.
Despite Wood’s enthusiasm for the potential of ETFs, they have so far attracted less than $100 billion inflows, a mere portion of Bitcoin’s current market capitalization. Certainly, these securities were only available for a year, but there is no catalyst on the horizon that will cause the inflow to accelerate from here – it appears to be slowing down instead.
A more realistic price target is $942,800 per coin. At that level, Bitcoin’s market capitalization is $19.8 trillion, currently coinciding with the total amount of all gold reserves on the ground.
I’m not suggesting that this will happen. Because we believe that gold has more intrinsic value than digital tokens thanks to its physical state, and it has been accepted as a globally valuable store for thousands of years.
However, if Bitcoin is universally accepted as a digital alternative to gold, its price target presents investors with an incredible potential return of 1,020% from here.
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Anthony di Pizio does not occupy any of the stocks mentioned. Motley Fool has been working and recommending Apple and Bitcoin. Motley Fools have a disclosure policy.
According to Cathie Wood’s Ark Invest, one unstoppable cryptocurrency can be purchased before it rises by 1,660%, according to Cathie Wood’s Ark Invest, published by one Motley Fool.
