1 Superior Cryptocurrency to Buy Before It Soars 2,860%, According to Cathie Wood’s Ark Invest

bitcoin (CRYPT: BTC) reached a major milestone in February, surpassing $50,000 for the first time since December 2021. The cryptocurrency has gained 120% over the past year as economic optimism led to a rotation into risk assets. More recently, the approval of spot Bitcoin exchange-traded funds has also contributed to its price appreciation.

However, Cathie Wood's Ark Invest sees Bitcoin going much higher. Ark analysts have proposed a bullish price target of $1.48 million by 2030, implying a 2,860% increase from its current price. If that estimate proves accurate, $10,000 invested in Bitcoin today would be worth about $296,000 by the end of the decade.

Here's what investors should know about this cryptocurrency.

Bitcoin has produced superior returns compared to other asset classes

Bitcoin has been a phenomenal investment over the last five years. In fact, investors would have been hard-pressed to find a better place to put their money. He cryptocurrency It returned 1,140% between January 2019 and January 2024, with a CAGR of 65%.

That monstrous growth easily outpaces other major asset classes. During the same five-year period, basic products profitability of 5.4% annually, emerging market The shares returned 1.4% annually, the S&P 500 returned 14.3% annually, U.S. fixed rent returned 0.8% annually and high-yield corporate bonds returned 4.4% annually, according to Morgan Stanley.

Better yet, Bitcoin has also outperformed those asset classes in four of the last five years, meaning its strong returns weren't driven by an exceptionally good year.

Asset class	2019	2020	2021	2022	2023
bitcoin	85%	309%	61%	(Sixty-five%)	154%
Raw Materials	10%	(3%)	31%	twenty-one%	(4%)
Emerging markets	twenty%	fifteen%	1%	(18%)	10%
S&P 500	29%	sixteen%	27%	(19%)	24%
US fixed income	8%	7%	(1%)	(12%)	6%
US High Yield Corporate Bonds	fifteen%	7%	5%	(eleven%)	13%

Data source: YCharts, Dow Jones Commodity Index, Dow Jones Emerging Markets Index, S&P US Aggregate Bond Index and S&P US High-Yield Corporate Bond Index. All percentages have been rounded to the nearest whole number.

As shown in the table, Bitcoin was consistently a rewarding investment over the past five years. It was also a volatile investment. The cryptocurrency fell more than 50% on three occasions. But patient investors have been well rewarded for enduring that volatility.

According to Ark Invest, “Historically, investors who bought and held Bitcoin for at least five years have made profits, no matter when they made their purchases.” Bitcoin was launched in 2009, so it doesn't have a very long history.

Important catalysts for Bitcoin in 2024 (and beyond)

Bitcoin price depends on offer and demand, like any other asset. But Bitcoin is an outlier because its supply is finite. Specifically, its source code reduces mining rewards by 50% every time 210,000 blocks are added to the blockchain, approximately once every four years. That mechanism is known as a Bitcoin halving, and the supply of Bitcoin is limited to 21 million coins.

To that end, demand is the only important variable when it comes to Bitcoin, and two major catalysts could drive demand in the coming years:

1. Bitcoin Spot ETF: The Securities and Exchange Commission (SEC) recently approved 11 Spot Bitcoin ETFs, funds that track the price of Bitcoin. Retail and institutional investors can now gain direct exposure to cryptocurrency without the hassle of specialized exchanges and storage solutions. In short, spot Bitcoin ETFs reduce friction and could drive demand greatly because some of the world's largest asset managers, such as No. 1 Black Rock and No. 3 Fidelity, participate as issuers.
2. Bitcoin Halving: The next Bitcoin halving event will occur in April. The mining reward will drop from 6.5 Bitcoin per block to 3.25 Bitcoin per block, effectively driving demand by reducing sales. Miners currently sell around $12 billion worth of Bitcoin per year, according to Microstrategy CEO Michael Saylor. But the upcoming halving event will cut that selling pressure in half, simply because miners will bring in half of Bitcoin over the next four years.

Ark Invest believes that the catalysts will drive Bitcoin much higher in the coming years. The company has defined three different price objectives. His bearish stance values ​​Bitcoin at $258,500 by 2030, implying an increase of 417%. The base case values ​​Bitcoin at $682,800 by 2030, implying an increase of 1,265%. And the bull case values ​​Bitcoin at $1.48 million by 2030, implying a 2,860% increase.

Cathie Wood recently told CNBC that the bull case has become more likely following the approval of spot Bitcoin ETFs.

Bitcoin is a worthwhile investment for some investors

It's fun to consider sensational price targets, but investors should focus on facts and not speculation. In this situation, the facts are simple: Bitcoin has been a great investment for the past five years, and its price could continue to rise as spot Bitcoin ETFs and the upcoming halving event drive demand. However, Bitcoin was also a volatile investment over the past five years, and the cryptocurrency market is plagued by regulatory uncertainty.

Patient investors who are comfortable with those drawbacks might consider keeping a small percentage of their portfolios in Bitcoin, as long as they are willing to hold onto the cryptocurrency for at least five years. I would personally limit my initial exposure to 5% maximum.

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Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Bitcoin. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.