Known for its strict focus on disruptive and innovative technologies, Ark Invest is a firm that has attracted a lot of attention in recent years. The founder of the company, Cathy Woodwidely regarded as a top investor.
Given its huge potential to change the way people store and transfer wealth, it’s not surprising Bitcoin (CRYPTO: BTC) is a favorite asset for Wood and her team of analysts. The world’s most valuable cryptocurrency has made a fantastic investment, jumping 1,540% over the past five years (as of March 4).
Cathy Wood is extremely optimistic about her future. Her firm believes that Bitcoin, despite its impressive history, could skyrocket by 3,353%, reaching $2.3 million per token.
Extremely bullish outlook
The key to Ark Invest is amazing bullish outlook is the idea that bitcoin will find its way into more wallets, especially for larger institutional investors. The firm’s analysis shows that if 19.4% of the 250 trillion global investable assets were allocated to Bitcoin, the price of one coin could be a whopping $2.3 million, with the entire network valued at $48.5 trillion.
Even with a 1% distribution, which seems much more reasonable, the price of Bitcoin would be $120,000. That’s 80% more than the current price of $66,600.
In his Big Ideas 2024 report, Ark Invest lays out factors driving greater adoption of Bitcoin, particularly as a means for investors to de-risk their portfolios.
This may sound outrageous to those who still view Bitcoin as a scam or Ponzi scheme, mostly JPMorgan Chase Executive Director Jamie Dimon. But it’s hard to deny the digital asset’s attractive qualities. Bitcoin is fully decentralized, there is no counterparty risk, it ensures portfolio diversification benefits, is extremely liquid and has a fixed supply cap.
This last point should not be taken lightly. With a potential total of 21 million coins, scarcity is what makes Bitcoin a compelling store of value. Ark Invest believes that more people will slowly realize this.
Short term catalysts
Sentiment around Bitcoin is enthusiastic for many reasons.
The recent introduction of spot exchange-traded funds was a breakthrough moment for Bitcoin, providing an easy and hassle-free way to gain exposure to the asset’s price. And the upcoming halving, which is supposed to halve the rate of new supply, has historically been a very bullish event for Bitcoin.
Plus, Ark Invest believes 2024 will be a big year where more asset managers will shift their views on Bitcoin from seeing it as a “speculative instrument” to seeing it as a “strategic investment in a diversified portfolio.” Add this to the ongoing progress to achieve regulatory clarity, and you have the ingredients for Bitcoin to continue its rise.
Set realistic expectations
However, I urge investors not to get too attached to Cathie Wood and Ark Invest’s high price target. Her firm is known for throwing wild numbers at forecasts.
To be clear, I don’t think anyone knows what the price of Bitcoin will be in 10 or 20 years. If you expect it to reach a market cap of $48.5 trillion, which is Wood’s most bullish scenario, then you’re counting on a lot going right. There is simply too much uncertainty for that to happen.
In my opinion, Bitcoin is still a good investment right now, even though its price has jumped recently. But it’s best to temper expectations, as profits likely won’t resemble those of the past.
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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions and recommends Bitcoin and JPMorgan Chase. The Motley Fool has a disclosure policy.
1 Best Cryptocurrency to Buy Before It Jumps 3,353% According to Cathie Wood was originally published by The Motley Fool