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1 of the major cryptocurrencies that could increase by 5,700%, according to Cathie Wood. Is it a purchase?
The average investor prefers to turn to professionals when it comes to finding potentially profitable investment ideas. Given her position as an expert in the field of disruptive and innovative businesses, it makes sense to explain why Cathie Wood is carefully observed.
Wood and his company, Ark Invest, are incredibly bullish on a major cryptocurrency that they believe could skyrocket to $3.8 million by 2030. That’s a truly ambitious goal that would catch the attention of whoever.
But does this mean that purchasing the digital asset is a breeze?
Very high expectations
In January this year, Cathie Wood set a price target for 2030 Bitcoin (CRYPTO: BTC) of $1.5 million. Based on this major digital asset’s $44,000 price in early 2023, this would imply a massive 34x gain over the next seven years. This perspective was provided soon after the highly anticipated approval of spot Bitcoin exchange traded funds (ETFs).
More recently, in March, Wood increased his price target, now saying that if institutions were to allocate 5% or more of their portfolios to Bitcoin, it could rise to $3.8 million per coin. At that level, the asset would have a massive market capitalization of $75 trillion, making it about three times more valuable than the GDP of the United States.
And that implies that Bitcoin could rise nearly 58-fold over the next seven years from its May 16 price, translating into an annualized gain of 79%. This would undoubtedly probably exceed every single asset available.
In addition to ETF approvals, Ark Invest is targeting the recent halving as a key catalyst that can drive the price higher over the next 12-18 months, just as it has in previous cycles. Greater clarity from regulators can also help promote institutional adoption.
Wood highlights how Bitcoin can help diversify your portfolio. And it’s hard to argue with Bitcoin’s historical track record, up 800% in the last five years alone, of significantly increasing its purchasing power.
Should you buy Bitcoin?
Cathie Wood and Ark Invest are known for making outlandish projections that leave you scratching your head and wondering how likely these outcomes are. I view Bitcoin’s price target of $3.8 million the same way. In my opinion, it might just be a marketing ploy to raise more assets for his company’s Bitcoin ETF product. This means investors should temper their expectations.
But to be clear, just because Bitcoin likely won’t rise 79% per year between now and 2030 doesn’t mean investors should abandon it completely. I believe this cryptocurrency should still be on the radar of every investor, especially those who have a long-term time horizon. If you are someone close to or retired, perhaps it is best to stay away from them.
The story continues
This is an asset that investors should only buy if they intend to own it for at least the next five to ten years. It may take a long time for things to work out with blockchain technology and regulatory developments. And the vast majority of capital out there is not even remotely willing to own Bitcoin, as stocks, bonds and real estate still reign supreme.
Investors must also be prepared, both financially and psychologically, for the extreme volatility that is sure to occur. In the past, Bitcoin has suffered several withdrawals of more than 50%. This simply means that you should only invest as much money as necessary so as not to lose sleep at night when considerable price swings occur.
Hoping that Bitcoin reaches $3.8 million per coin seems like a pipe dream. Regardless, this flagship cryptocurrency could still prove to be a very successful investment over time.
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Neil Patel and its clients have no position in any of the securities mentioned. The Motley Fool has positions and recommends Bitcoin. The Motley Fool has a disclosure policy.
1 of the major cryptocurrencies that could increase by 5,700%, according to Cathie Wood. Is it a purchase? was originally published by The Motley Fool