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1 of the best cryptocurrencies to buy before it rises 3,000% or more, according to Cathie Wood
According to Cathie Wood, CEO of Ark Invest, the price of Bitcoin (CRYPTO:BTC) could rise to as high as $1.5 million by 2030. Considering Bitcoin’s current price of just under $50,000, this would represent a gain of nearly 3,000% in a remarkably short period.
At first glance, this $1.5 million price target might seem outlandish to you. After all, throughout its 15-year history, Bitcoin it only reached a high of $69,000, and that was during the extremely frothy and speculative cryptocurrency bull market of 2020-2021. But, as Wood points out, two key catalysts could lead to a surge in Bitcoin’s value. Let’s take a closer look.
The new Bitcoin ETF
The obvious starting point is the new spot Bitcoin ETF Product. Ark Invest is one of the investment firms that has received approval for a spot Bitcoin ETF, so it’s no surprise that Wood is extremely optimistic about what this means for Bitcoin’s long-term growth. As he recently pointed out on CNBC, the SEC just gave the “green light” to both Wall Street and Main Street to invest in Bitcoin.
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Considering that institutional investors have trillions of dollars in assets under management, it won’t take much to move the needle. For example, if institutional investors such as pension funds and endowments decide to allocate just 1% of their portfolios to Bitcoin, the consequences could be enormous. It could cause billions of dollars to flow into Bitcoin.
At the same time, wealth managers and financial planners may start advising their clients to consider allocating a portion of their portfolios to Bitcoin. This could also lead to an influx of new money flowing into Bitcoin. Most likely, this would happen over a longer period and probably not have as dramatic an effect as, for example, BlackRock Inc. (NYSE: BLK) flipping the switch on $10 trillion in assets under management.
Bitcoin use cases
Additionally, Bitcoin has an increasingly broad range of use cases that make it valuable. Remember: Bitcoin is not just a financial asset, it is also a technological innovation based on blockchain technology. The most obvious use case right now is to act as a store of value. Many cryptocurrency investors refer to Bitcoin as “digital gold” precisely because it appears to be a long-term store of value, similar to physical gold.
But there are a handful of other use cases for Bitcoin that you may not have considered. In Ark Invest’s “Big Ideas 2023” report, the investment firm outlines eight different use cases for Bitcoin. For each of these use cases, the company applies different projections and estimates of how big the market opportunity could become.
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For example, the baseline scenario in the Ark Invest report is for institutional investors to allocate 1% of their portfolios to Bitcoin. But the bull scenario calls for institutional investors to allocate up to 6.5% of their portfolios to Bitcoin. The more institutional investors believe (literally) in the idea of Bitcoin, the higher Bitcoin could go in the medium to long term.
What could go wrong?
Based on the above, Bitcoin would seem unstoppable. No wonder Cathie Wood recently doubled her $1.5 million price estimate for Bitcoin. But keep in mind that Bitcoin is rarely predictable and often highly volatile. So, while the long-term macro trend may be for Bitcoin to rise in value, there will certainly be plenty of turbulence along the way.
One of the key risks to Bitcoin has always been regulatory risk. Simply put, the SEC could decide to pull the plug on Bitcoin at any time. The large-scale approval of so many different spot Bitcoin ETF products at once would seem to signal that the SEC is finally on board with the idea of investors buying Bitcoin. But what if new ETFs behave erratically, or if there are major problems with the way Bitcoin trades in the cryptocurrency market due to so much new money entering the market so quickly?
That said, I agree with Wood that a “building block” model for Bitcoin valuation – where all use case projections for Bitcoin are summarized and then aggregated – makes a lot of sense. And I agree that spot approval of the Bitcoin ETF will almost certainly lead to billions of new dollars flowing into Bitcoin. The big question, however, is how long it will take Bitcoin to reach the mythical $1 million price target.
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Domenico Basulto has positions in Bitcoin. The Motley Fool has positions and recommends Bitcoin. The Motley Fool has a disclosure policy.
1 of the best cryptocurrencies to buy before it rises 3,000% or more, according to Cathie Wood was originally published by The Motley Fool