Cathie Wood is closely watched by many investors. Her firm, Ark Invest, focuses on innovative and disruptive companies it believes can register tremendous growth. The hope is that this results in strong portfolio returns.
As a revolutionary store of value that has now become a legitimate financial asset drawing lots of attention, Bitcoin (BTC -0.22%) is prominently on the radar of Ark Invest. It offers the Ark 21Shares Bitcoin ETF, which has $4.8 billion in assets.
Wood has some high hopes as we look toward the future, as she is known for being incredibly bullish with her predictions. She believes that Bitcoin will soar 1,477% from $95,100 (as of the afternoon of Dec. 31) to $1.5 million by 2030.
Whatever your opinion is of this rosy outlook, it’s still worthwhile to consider buying Bitcoin.
Cathie Wood’s thesis
In a recent interview, Wood stated that in Ark Invest’s bull case, Bitcoin’s price will hit $1 million to $1.5 million in 2030. The investment firm released its Big Ideas 2024 report at the start of last year. In it, Ark Invest provided details on its view of Bitcoin and the crypto’s prospects. I don’t believe the thesis has changed from back then.
I’m certain that Wood and her team believe Bitcoin will build on key catalysts from 2024 as we look toward the future. The launch of spot Bitcoin ETFs in January 2024 opened the floodgates of fresh capital flowing to the digital asset. Then the Bitcoin halving occurred in April, reducing new supply hitting the market.
Ark Invest cited greater institutional adoption as a key driver. Indeed, we’ve seen countries, corporations, and asset managers warm up to Bitcoin. Regulatory progress was also mentioned in the report. The incoming presidential administration has publicly stated its support for Bitcoin. A continuation of these important developments likely figure in Wood’s price target.
If Bitcoin’s price does reach $1.5 million in 2030, it implies the digital asset’s market cap will get to a whopping $29.5 trillion. That gain would undoubtedly outperform the broader stock market indexes by insanely wide margins.
What’s more, at that valuation, Bitcoin would rival the combined market caps of the most dominant tech enterprises, as well as the largest economic superpowers in the world. It’s safe to say that Cathie Wood’s outlook is extremely bullish when viewed in this light.
Long-term time horizon
These kinds of price targets get a lot of attention. Predictions are loved by the investment community because they provide a clear number to fixate on and to be optimistic about.
However, they are hard to make accurately on a consistent basis. This is especially true when looking at something like Bitcoin that can have a lot of things affecting its trajectory, like investor sentiment, financial ecosystem expansion, regulatory changes, and technological progress.
For the average investor, it’s certainly important to understand the variables driving the bull case, like broader adoption and a predetermined supply growth rate. However, it’s critical to keep your focus on the long term. Bitcoin’s ultimate fate isn’t going to play out in a quarter, a year, or even five years. This is an asset that should be held for a decade or more.
With this perspective, I believe investors should pay attention to the single factor that really matters. Bitcoin’s scarcity cannot be overstated. In a world in which governments and their central banks continue running gigantic deficits and constantly debase their fiat currencies, Bitcoin stands out. There will only be 21 million coins, the last of which will be mined in the next century. This fixed supply is appealing for investors looking to park their capital somewhere.
Bitcoin’s ongoing volatility means that the best approach is to simply dollar-cost average a small amount of your savings into it over time. This makes sense as part of a well-diversified portfolio, regardless of whether Cathie Wood’s prediction comes to fruition.
Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
