Cathie Wood, the founder of Ark Invest, is a strong supporter of Bitcoin (CRYPTO: BTC). In January, she launched Ark’s first Bitcoin exchange-traded fund (ETF) after receiving regulatory approval.
Wood has recently raised her price target for Bitcoin from $1 million to $1.5 million by 2027. This would represent a massive 2,139% increase from Bitcoin’s current price of around $67,000. Wood believes this growth will be driven by three factors: the approval of Bitcoin ETFs, institutional purchases of these ETFs, and the expected halving next month which will reduce the rewards for mining Bitcoin.
However, Wood is known for making bold predictions that don’t always come true. For example, her flagship fund, the Ark Innovation ETF, has only risen 13% in the past five years compared to the S&P 500’s 88% increase. Therefore, it’s important to consider whether Wood’s bullish thesis for Bitcoin makes sense and if it’s a good investment.
The argument for Bitcoin’s growth is that it will become a hedge against long-term inflation, similar to gold and silver. The belief is that fiat currencies will depreciate, leading more governments, businesses, and investors to adopt Bitcoin. Until recently, most people could invest in Bitcoin through direct purchases on a crypto exchange like Coinbase, trusts like Grayscale Bitcoin Trust, or ETFs that were tied to Bitcoin futures.
However, these methods had their drawbacks, such as high fees and regulatory hurdles. The approval of the first 11 spot price Bitcoin ETFs in January resolved these issues. These ETFs have lower fees, are directly tied to Bitcoin’s spot price, and can be easily traded on the open market.
Wood believes that the approval of these ETFs will drive institutional investors to buy more Bitcoin. She predicts that if institutional investors allocate 5% of their portfolios to Bitcoin, its price could increase by $500,000. Additionally, the upcoming halving in April could further boost Bitcoin’s price as its supply growth slows down.
Moreover, the ongoing inflation and geopolitical tensions could lead more countries to adopt Bitcoin as a mainstream currency, accelerating its transformation into a safe asset like gold and silver.
Many experts, including Wood, have made bullish predictions for Bitcoin’s future. The British bank Standard Chartered predicts a price of $100,000 by 2024, while Fidelity expects it to reach $100 million by 2035 and $1 billion by 2038. While it’s impossible to say if these predictions will come true, the approval of spot price Bitcoin ETFs could provide stability to its volatile price.
Instead of focusing on a potential 2,000% gain in just three years, investors should consider if they believe in the bullish argument for Bitcoin’s future. If they do, it might be wise to invest in Bitcoin or a low-fee spot price ETF as a long-term growth opportunity.
While Bitcoin may seem like a promising investment, it’s important to do your own research and consider all factors before investing. The Motley Fool Stock Advisor team has identified 10 stocks that they believe will deliver massive returns in the coming years. It’s worth considering these stocks as part of your investment strategy.
