Ark Invest’s Cathie Wood Predicts 5,300% Surge for This Cryptocurrency by 2030

Ark Invest’s Cathie Wood Predicts 5,300% Surge for This Cryptocurrency by 2030

Ark Invest’s Cathie Wood continues to raise her price forecast for Bitcoin (CRYPTO:BTC). At the recent Bitcoin Investor Day event in New York, Wood increased his Bitcoin price forecast for 2030 to $3.8 million, up from an already high figure of $1.5 million. Given the current price of around $70,000, that would represent a staggering gain of around 5,300% in just six years.

At first glance, the prediction seems far-fetched. However, two key enablers could eventually make this a reality.

Institutional adoption

The main factor pushing Bitcoin to previously unthinkable heights is stronger than expected institutional adoption. Quite simply, large institutional investors are waking up to the idea of ​​Bitcoin as a standalone asset class worthy of inclusion in their portfolios. With the launch of the new Spot Bitcoin exchange-traded funds (ETFs)they now have a regulated way to invest in Bitcoin without having to directly participate in the crypto market.

Ark Invest’s Cathie Wood Predicts 5,300% Surge for This Cryptocurrency by 2030

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Investor flows into new spot Bitcoin ETFs since January have been nothing short of breathtaking. The first two Bitcoin ETFs have together accumulated more than $25 billion in client assets in just over two months. And the new Ark 21Shares Bitcoin ETF (NYSEMKT:ARKB) hasn’t done too badly either, with almost $3 billion in assets under management. Certainly, some of this money comes from small retail investors, but the lion’s share comes from institutional investors.

The big question, of course, is what fraction of their assets these institutional investors will choose to allocate to Bitcoin over time. Currently, the conservative allocation range is estimated to be between 1% and 3%. But Drink estimates that this allocation will end up well in excess of 5%. This percentage would be high enough, she claims, to push Bitcoin beyond the $1.5 million mark.

Bitcoin as a financial highway?

However, for Bitcoin to reach its full potential, something more is needed. From my point of view, it is very unlikely that Bitcoin will be able to reach $3.8 million if people just accumulate it and hold it for their lives. People actually need to do something with their Bitcoin. In crypto jargon, Bitcoin must have some sort of utility.

This is why Ark Invest has systematically focused on all potential use cases of Bitcoin. From a macro perspective, the growth of these use cases will lead to increased demand for Bitcoin, which should support its price. In Ark Invest’s “Big Ideas 2023” report, the investment firm outlined eight key Bitcoin use cases, projected their growth potential, and then aggregated the market size of each for the year 2030. C This is how Ark Invest arrived at its price target of $1.5 million. for Bitcoin.

Rapid price appreciation can only occur, Wood says, if Bitcoin becomes a “financial superhighway” for the global banking and financial system. The construction of such a financial highway would be of particular importance, according to Wood, for emerging countries. So you can imagine a Bitcoin highway crossing Latin America or connecting sub-Saharan African countries.

While this sounds inspiring, how realistic is this scenario? After all, Bitcoin remains a relatively slow proof-of-work blockchain that was never designed to handle smart contracts. It’s not as fast as other blockchains, not as energy efficient as other blockchains, and not as flexible or scalable as other blockchains. And that’s why all the use cases originally planned for Bitcoin – like the scenario that one day we would all pay for everything we buy with Bitcoin – have not come to pass.

From my point of view, it would be much better to build a financial highway using a super fast and very cheap blockchain such as Solana (CRYPTO: SOL). Even Cardano (CRYPTO: ADA) might be a better choice, especially given its progress in sub-Saharan Africa. So I’m not as ready to embrace this financial superhighway vision of Bitcoin as I was to embrace former Vice President Al Gore’s “information superhighway” vision of the Internet.

How realistic is a $3.8 million price tag?

Bitcoin’s ability to reach a $3.8 million price target depends on its ability to continue delivering historically high returns to investors. By working backwards and performing just a few back-of-the-envelope calculations, Bitcoin is expected to generate annualized returns of just over 100% to reach a price of $3.8 million by 2030.

Certainly, Bitcoin has already done this. Over the 10-year period from 2001 to 2011, Bitcoin generated annualized returns of 230%, making it the best-performing asset in the world. And last year, Bitcoin performed by a whopping 150%. So I’m not saying that Bitcoin can’t return 100% per year.

But, at some point, you need to moderate your expectations and end some of the current Bitcoin ETF euphoria. While I remain very optimistic about Bitcoin’s prospects, I am also concerned that some of these price predictions are getting too high and too fast.

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Dominique Basulto has positions in Bitcoin and Cardano. The Motley Fool holds positions and recommends Bitcoin, Cardano and Solana. The Motley Fool has a disclosure policy.

This crypto could climb 5,300% by 2030, according to Cathie Wood of Ark Invest was originally published by The Motley Fool

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