Cathie Wood’s Ark Invest Predicts Bitcoin Could Reach $2.3 Million
According to Ark Invest, if institutions allocate a significant portion of their investable assets to Bitcoin (BTC), the price could skyrocket to $2.3 million. This prediction was made in Ark Invest’s research report titled Big Ideas 2024, which explores the potential impact of institutional investments on BTC’s price.
Analysis of Allocations
Ark Invest’s analysis shows that a portfolio aiming for risk-adjusted returns over a five-year period would have allocated 0.5% to BTC starting in 2015. Since then, the average allocation to BTC has been 4.8%, and in 2023 alone, portfolios would have allocated 19.4%. Based on this analysis, a 1% allocation from the global $250 trillion investable asset base could push BTC to $120,000. A maximum Sharpe ratio allocation from 2015 to 2023 could result in BTC reaching $550,000, while a 19.4% allocation in 2023 could propel the price to $2.3 million.
“Bitcoin’s volatility can obscure its long-term returns. Investing in bitcoin with a long-term horizon has been key to profiting from it,” said Ark Invest.
Bitcoin as a Strategic Allocation
Ark Invest argues that bitcoin has become an independent asset class deserving of a “strategic allocation in institutional portfolios.” The cryptocurrency’s price movements have shown low correlation with other asset classes. Over the past five years, BTC’s returns have had an average correlation of only 0.27 with traditional assets, while its annualized return has averaged around 44% compared to 5.7% for major assets.
Hot Take: Bitcoin’s Potential Soars
Ark Invest’s prediction of Bitcoin reaching $2.3 million if institutions allocate a significant portion of their assets showcases the growing belief in the cryptocurrency’s potential. As more institutions recognize Bitcoin as an independent asset class, its price could experience exponential growth. However, it is important to consider Bitcoin’s volatility and the need for a long-term investment horizon. Historically, investors who have held Bitcoin for at least five years have profited regardless of the timing of their purchases.
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