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1 of the leading cryptocurrencies that could soar by 5,700%, according to Cathie Wood. Is this a purchase?
The average investor likes to turn to the professionals when it comes to potentially lucrative investment ideas. Given her reputation as an expert in the field of disruptive and innovative businesses, it makes sense that Cathie Bois is closely monitored.
Wood and his company, Ark Invest, are incredibly bullish on a top cryptocurrency that they say could skyrocket to $3.8 million by 2030. This is a truly goal ambitious that would attract everyone’s attention.
But does that mean the digital asset is an obvious buy?
Dizzying expectations
In January this year, Cathie Wood set a 2030 price target for Bitcoin (CRYPTO: BTC) of $1.5 million. Based on this leading digital asset’s price of $44,000 in early 2023, this would imply a whopping 34x gain over the next seven years. This outlook was provided just after the much-anticipated approval of Bitcoin spot exchange-traded funds (ETFs).
Most recently, in March, Wood raised his price target, now saying that if institutions allocated 5% or more of their portfolios to Bitcoin, it could reach $3.8 million per coin. At that level, the asset would have a monster market cap of $75 trillion, making it roughly three times more valuable than U.S. GDP.
And that implies that Bitcoin could rise nearly 58 times over the next seven years from its May 16 price, resulting in an annualized gain of 79%. This would undoubtedly outperform all available assets.
In addition to the ETF approvals, Ark Invest highlights the recent halving as a key catalyst that can drive prices higher over the next 12-18 months, just as has been the case in previous cycles. Greater clarity from regulators can also help drive institutional adoption.
Wood explains how Bitcoin can help diversify one’s portfolio. And it’s hard to argue with the history of Bitcoin, which has grown 800% in the last five years alone, in terms of significantly increasing purchasing power.
Should you buy Bitcoin?
Cathie Wood and Ark Invest are known for making wild projections that make you scratch your head and wonder how likely those outcomes are. I view Bitcoin’s price target of $3.8 million the same way. In my opinion, this could simply be a marketing ploy to raise more assets for his company’s Bitcoin ETF product. This means that investors should moderate their expectations.
But let’s be clear, just because Bitcoin probably won’t rise 79% annually by 2030 doesn’t mean investors should abandon it altogether. I think this crypto should always be on the radar of all investors, especially those with a long-term horizon. If you’re close or in retirement, it might be best to stay away.
The story continues
This is an asset that investors should only buy if they plan to own it for at least five to ten years. It can take a long time for things to play out with blockchain technology as well as regulatory developments. And the vast majority of available capital is far from wanting to own Bitcoin, as stocks, bonds, and real estate still reign supreme.
Investors should also be prepared, both financially and psychologically, for the extreme volatility that is sure to occur. Bitcoin has seen several declines in excess of 50% in the past. This simply means that you should only invest the maximum amount that will allow you to not lose sleep at night when large price fluctuations occur.
Hoping for Bitcoin to reach $3.8 million per coin seems like a pipe dream. Regardless, this top crypto could still prove to be a very successful investment over time.
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Neil Patel and its clients have no position in any of the stocks mentioned. The Motley Fool posts and recommends Bitcoin. The Motley Fool has a disclosure policy.
1 of the leading cryptocurrencies that could soar by 5,700%, according to Cathie Wood. Is this a purchase? was originally published by The Motley Fool