Cryptocurrency bull Cathie Wood recently raised her long-term price target for Bitcoin, implying monster gains for this exchange-traded fund.
Ark Invest is an asset management company focused on disruptive innovation. Under the direction of CEO Cathie Wood, the company manages thematic exchange-traded funds (ETFs) built around various technologies, including blockchain and cryptocurrencies.
Ark has been optimistic for a long time bitcoin (btc -5.13%). In 2015, he became the first public fund manager to gain exposure to the cryptocurrency, which was trading around $200 at the time. Nearly a decade has passed and Bitcoin is now worth $70,000, but Wood and his team still see substantial upside for investors.
The company published a Bitcoin valuation model in 2023, that proposed a price of 1.5 million dollars for 2030. That implies an increase of more than 2,000% compared to its current price. But Ark quietly revised its target higher after the Securities and Exchange Commission (SEC) approved Bitcoin spot ETFs in January 2024. Wood made that information public at the Bitcoin Investor Day conference last month, saying:
Last year, we presented our bullish stance in favor of Bitcoin. It was 1.5 million dollars. With this institutional green light that the SEC has provided, although it has done so kicking and screaming, the analysis we have done is that if institutional investors allocated a little more than 5% of their portfolios to Bitcoin, as we believe they will do longer , that would only add $2.3 million to the projection I just gave you.
In short, Ark now believes Bitcoin could reach $3.8 million, presumably by 2030, although Wood did not provide a specific time frame. The upward potential implied by the new objective exceeds 5,300%. One way investors can take advantage of this is by purchasing a position in the iShares Bitcoin ETF (That's going to go -4.87%)a recently approved Bitcoin spot exchange-traded fund.
Why the iShares Bitcoin ETF is worth considering
Until recently, be direct bitcoin Exposure was a cumbersome and expensive process for American investors. They had to create and fund an account on a cryptocurrency exchange, where they typically had to pay exorbitant fees for each transaction. For example, Coinbase charges on 1.5% for simple operations. Additionally, investors who wanted full control of their Bitcoin had to move the cryptocurrency to a specific type of blockchain wallet.
Fortunately, things became easier when the SEC approved detect Bitcoin ETF in January. Those investment vehicles track the price of Bitcoin while eliminating the hassle of cryptocurrency exchanges, high fees, and specialized storage solutions. Ark highlighted those benefits in a recent report:
The launch of Bitcoin spot ETFs laid the foundation for Bitcoin's growth by offering investors a more direct, regulated and liquid way to gain exposure. Bitcoin spot ETFs trade on major stock exchanges, allowing investors to buy and sell shares through their existing brokerage accounts, and should reduce the learning curve and operational complexities associated with direct investments. in Bitcoin.
The SEC has approved 11 Bitcoin spot ETFs, all of which do the same thing: track the price of Bitcoin. The only important differences lie in the expense ratios and the reputation of the issuers.
With this in mind, investors should consider the iShares Bitcoin ETF. Black Rock. It has the third-lowest expense ratio, 0.25%, and BlackRock has an excellent reputation that comes from being the world's largest asset manager.
Investors Should Not Count on Bitcoin Hitting $3.8 Million
Ark Invest Believes Bitcoin Spot ETFs Will End Up Capturing More Than 5% of Institutional Capital assets under management (AUM). For context, consulting firm PwC believes institutional assets under management will reach $145 trillion by 2025. Using that figure, Ark's prediction implies that institutional investors will end up allocating about $8 trillion to Bitcoin. That may be exaggerated.
On the one hand, the launch of Bitcoin spot ETFs has undoubtedly been a success. ETFs issued by BlackRock and Fidelity saw more inflows during their first month on the market than any other ETF in history, according to Bloomberg's Eric Balchunas. Additionally, BlackRock's ETF became the fastest in history to reach $10 billion in assets, according to The Wall Street Journal.
On the other hand, Bitcoin spot ETFs had collectively accumulated just $57 billion in assets as of April 4, according to The Block. Even if every penny came from institutional investors, which it certainly doesn't, that figure would have to be multiplied by 140 to reach $8 trillion. I doubt that will happen in the near future, so readers shouldn't count on Bitcoin reaching $3.8 million anytime soon.
That said, the iShares Bitcoin ETF remains a worthwhile purchase for risk-tolerant investors. Bitcoin easily outperformed stocks, bonds, gold, commodities, and real estate over the past five years. Furthermore, any investor who has bought and held Bitcoin for at least five years has made a profit, regardless of when he made his purchase, according to Ark Invest. This makes a compelling investment thesis.
