Cathie Wood is one of the most vocal bulls on Wall Street when it comes to the potential of the technology sector. She founded ARK Investment Management, which operates several exchange-traded funds (ETFs) focused on investing exclusively in innovative technologies like cryptocurrency, artificial intelligence (AI), robotics, and more.
In fact, ARK was one of the first firms to win approval from the Securities and Exchange Commission to launch a Bitcoin (CRYPTO: BTC) ETF last year. Wood and her team are extremely bullish on the world’s largest cryptocurrency, predicting it could soar 1,660% to $1.48 million per coin by the year 2030.
The crypto currently trades at around $84,000, which is 21% below its record high. If ARK’s prediction is right, the recent dip could be a great buying opportunity.
Image source: Getty Images.
Bitcoin has a market capitalization of $1.6 trillion, which accounts for more than half of the total value of every cryptocurrency in circulation across the industry. If it were a company, it would be the seventh largest in the entire world.
It’s a speculative asset because it doesn’t generate any revenue or earnings, nor does it have a legitimate use case in the real world. Therefore, its value is very hard to pin down.
Nevertheless, it has a series of unique qualities that have led investors to believe it’s a good store of value, like a digital version of gold.
It’s completely decentralized, which means it can’t be controlled by any person, company, or government. It also has a capped supply of 21 million coins, which won’t be fully mined until around the year 2140, so it offers the perception of scarcity. Lastly, as I touched on earlier, it can be purchased through dozens of ETFs from different issuers, allowing financial advisors and institutional investors to own it in a safe, regulated manner.
Those attributes have paved the way for Bitcoin to march to new record highs recently, despite most other cryptocurrencies failing to break above their best-ever levels from 2021 (or in some cases, even earlier).
In fact, had you bought Bitcoin 10 years ago and held on, you would be sitting on a 29,100% return — enough to have turned an investment of $10,000 into $2.9 million! It has obliterated every other asset class over the last decade, from stocks to real estate to gold:
Bitcoin price data by YCharts.
In a report issued in 2023, ARK highlighted eight potential factors that could drive Bitcoin higher over the long term, but not all of them make sense, in my opinion. For example, it thinks Bitcoin could become the currency of choice in emerging markets, but even after El Salvador became the first country to adopt it as legal tender in 2021, it appears most consumers still aren’t willing to use it (partly because of its volatility).
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Moreover, ARK believes individuals with a high net worth will increasingly own Bitcoin because it’s harder for governments to seize than cash and other traditional assets. However, we know the U.S. government alone has successfully confiscated over 200,000 bitcoins, which are worth $17 billion at the current price. So, this particular theory doesn’t really hold water.
With that said, three of ARK’s eight catalysts are somewhat plausible:
Nation-state treasury: Governments all over the world hold trillions of dollars worth of physical gold, and ARK thinks they will eventually hold some of their reserves in Bitcoin. President Donald Trump recently signed an executive order to establish a Bitcoin reserve for the U.S., and while it technically still needs the support of Congress, the wheels are clearly turning on this idea.
Digital gold: ARK predicts between 20% and 50% of the money investors normally park in gold could be allocated to Bitcoin instead, because it’s digital and more portable than the precious metal.
Institutional investment: Wood’s firm believes institutions will eventually allocate a portion of their assets to Bitcoin over time, thanks to its consistent returns. ETFs could accelerate this trend, because they eliminate the risks associated with storing cryptocurrency in digital wallets, which are susceptible to hacks.
Setting my opinions aside for a moment, ARK believes Bitcoin could soar as high as $1.48 million per coin by 2030 based on the eight catalysts it outlined. That would give investors a potential return of 1,660% from where it currently trades.
Wood even went a step further at the Bitcoin Investor Day in March 2024. She said it could surpass ARK’s bullish forecast and reach $3.8 million instead, based on the idea that ETFs could lay the groundwork for institutional investors to allocate 5% of their assets to the cryptocurrency. If she’s right, that implies a potential upside of 4,420%.
If Bitcoin rose to a price of $1.48 million, it would have a fully diluted market capitalization of $31 trillion. In other words, it would be almost 10 times more valuable than Apple, which is currently the world’s most valuable company with a $3.2 trillion market cap. It would also be worth more than the output of the entire U.S. economy, which was around $29.7 trillion last year.
Does that sound realistic for an asset that produces no revenue, no earnings, and has struggled to generate traction as a currency? For me, the answer is no.
Despite Wood’s enthusiasm for the potential of ETFs, they have attracted less than $100 billion in inflows so far, which is a mere fraction of Bitcoin’s current market cap. Granted, these securities have been available for only one year, but I don’t see a catalyst on the horizon that would cause inflows to accelerate from here — they seem to be slowing down instead.
A more realistic price target might be $942,800 per coin. At that level, Bitcoin’s market cap would be $19.8 trillion, which matches the total value of all above-ground gold reserves right now.
I’m not suggesting this will happen, because I believe gold has more intrinsic value than a digital token thanks to its physical state and because it has been accepted as a store of value globally for thousands of years.
However, if Bitcoin does become universally accepted as the digital alternative to gold, that price target still presents investors with an incredible potential return of 1,020% from here.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Bitcoin. The Motley Fool has a disclosure policy.
1 Unstoppable Cryptocurrency to Buy Before It Soars 1,660%, According to Cathie Wood’s ARK Invest was originally published by The Motley Fool
