Bitcoin could soar higher, but investors should take Wood’s estimates with a grain of salt.
Cathie Wood is one of the market’s most closely followed investors. Wood, whose net worth exceeds $200 million, is the founder of Ark Invest — an investment firm that manages several growth-oriented exchange-traded funds (ETFs).
Ark’s investment strategy is divisive because it often chases high-growth stocks regardless of their valuations. It also isn’t shy about investing in riskier assets like cryptocurrencies. Through a partnership with 21Shares, Ark launched five crypto-oriented ETFs in late 2023 — but it eventually liquidated four of them.
The only one left is the ARK 21Shares Bitcoin ETF (NYSEMKT: ARKB), which tracks the spot price of Bitcoin (CRYPTO: BTC), the world’s top cryptocurrency. Wood believes Bitcoin’s price could surge about 2,122% from about $108,000 today to $2.4 million by 2030 in an “aggressive” bull case scenario. Let’s see if that ambitious outlook makes sense.
Bitcoin became the world’s first true cryptocurrency when it was launched in 2009. It’s mined with a proof-of-work (PoW) mechanism, which requires miners to solve cryptographic puzzles with their computers to earn Bitcoin as a reward.
Bitcoin could originally be mined with regular CPUs and GPUs. But every four years, that difficulty spikes with each “halving,” which cut its mining rewards in half. Today, Bitcoin can only be mined for a profit with powerful application-specific integrated circuits (ASICs).
Bitcoin has a maximum supply of 21 million coins. Some 19.9 million of those coins have already been mined, and the last one is expected to be mined in 2140. That scarcity makes it more comparable to gold and other hard assets than other cryptocurrencies.
Bitcoin’s PoW blockchain, which can only be used for mining, consumes a lot of power. By comparison, proof-of-stake (PoS) blockchains like Ethereum (CRYPTO: ETH) consume less power because the coins are only staked (locked up for interest-like rewards) instead of mined. PoS blockchains also support smart contracts — which are often used to develop decentralized apps (dApps), non-fungible tokens (NFTs), and other crypto assets. So while PoS coins are often valued by the growth of their developer ecosystems, PoW coins are usually valued by their scarcity, the power needed to mine new coins, and their usage in mainstream payments.
Bitcoin already has a market cap of $2.2 trillion, making it the world’s third most valuable commodity after gold ($28.1 trillion) and silver ($2.7 trillion). A 2,122% gain would propel Bitcoin’s valuation to $48.9 trillion and make it more valuable than gold.
That’s a bold forecast, but Wood believes Bitcoin’s first-mover’s advantage, scarcity, and fully decentralized nature will make it an attractive digital alternative to gold as a haven asset. It could also become a useful hedge against inflation and the persistent devaluation of fiat currencies. More countries, including the U.S., are already building up their Bitcoin reserves — and some countries like El Salvador and the Central African Republic are even accepting it as legal tender.
Wood, like many other fellow Bitcoin bulls, believes those core strengths will attract more like-minded institutional and corporate investors. Standard Chartered expects Bitcoin’s price to nearly double to $200,000 by the end of this year. Michael Saylor, who engineered Strategy’s transformation from a software company to a Bitcoin hoarder, expects the top cryptocurrency’s price to surge as high as $21 million per token by 2046.
With a wide range of spot price ETFs and a growing number of brokerages supporting direct cryptocurrency trades, it’s also becoming easier for retail investors to invest in Bitcoin. All of those tailwinds could drive Bitcoin’s price much higher over the next five years.
In its report, Ark admits that Bitcoin’s price might only hit its price target of $2.4 million by 2030 in an extremely bullish market. But even in its “base case” scenario, it believes its price can hit $1.2 million — and reach $500,000 in a “bear case” scenario.
So even in a gloomy market, Wood expects Bitcoin’s price to rise nearly fivefold over the next five years. I’d take that estimate with a grain of salt, since Wood previously predicted that Bitcoin would reach $500,000 by 2026 (back in 2021), but I’m still optimistic about the cryptocurrency’s future. Plenty of catalysts could drive its price higher through the end of the decade, but I wouldn’t be surprised if it falls short of Wood’s headline-grabbing estimates.
Before you buy stock in Bitcoin, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bitcoin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $602,049!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,105,092!*
Now, it’s worth noting Stock Advisor’s total average return is 1,028% — a market-crushing outperformance compared to 190% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool recommends Standard Chartered Plc. The Motley Fool has a disclosure policy.
Read more on NASDAQ Stock Market
