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1 Top Cryptocurrency to Buy Before It Soars 2,860%, According to Cathie Wood’s Ark Invest
Bitcoin (CRYPTO:BTC) hit 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 towards risky assets. More recently, the approval of Bitcoin spot exchange-traded funds has also contributed to its price appreciation.
However, Cathie Wood’s Ark Invest sees Bitcoin rising much further. Ark analysts have proposed a bullish price target of $1.48 million by 2030, implying a 2,860% upside from its current price. If this estimate proves accurate, $10,000 invested in Bitcoin today would be worth around $296,000 by the end of the decade.
Here’s what investors need to know about this cryptocurrency.
Bitcoin has produced higher returns than other asset classes
Bitcoin has been a phenomenal investment over the past five years. In fact, investors would have been hard-pressed to find a better place to put their money. THE cryptocurrency returned 1,140% between January 2019 and January 2024, a compound return of 65% per year.
This monstrous growth easily outpaces other major asset classes. Over the same five-year period, commodities returned 5.4% annually, emerging market stocks returned 1.4% annually, S&P500 an annual return of 14.3%, US fixed income 0.8% per year and high yield corporate bonds 4.4% per year, according to Morgan Stanley.
Better yet, Bitcoin has also outperformed these asset classes in four of the last five years, meaning its robust returns weren’t driven by one exceptionally good year.
|
Bitcoin |
85% |
309% |
61% |
(65%) |
154% |
|
Raw materials |
ten% |
(3%) |
31% |
21% |
(4%) |
|
Emerging Markets |
20% |
15% |
1% |
(18%) |
ten% |
|
S&P500 |
29% |
16% |
27% |
(19%) |
24% |
|
US Fixed Income |
8% |
7% |
(1%) |
(12%) |
6% |
|
US High Yield Corporate Bonds |
15% |
7% |
5% |
(11%) |
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 the table shows, Bitcoin has consistently been a profitable investment over the past five years. It was also a volatile investment. The cryptocurrency has fallen more than 50% three times. But patient investors have been handsomely rewarded for enduring this volatility.
According to Ark Invest, “Historically, investors who have purchased and held Bitcoin for at least five years have profited, regardless of when they made their purchases. » Bitcoin was launched in 2009, so its history is not very long.
The story continues
Important catalysts for Bitcoin in 2024 (and beyond)
The price of Bitcoin depends on supply and demand, like any other asset. But Bitcoin is somewhat atypical because its supply is limited. Specifically, its source code reduces mining rewards by 50% every time 210,000 blocks are added to the blockchain, approximately once every four years. This mechanism is known as Bitcoin halving, and Bitcoin’s supply is limited to 21 million coins.
To this end, demand is the only important variable when it comes to Bitcoin, and two major catalysts could drive demand in the years to come:
-
Spot Bitcoin ETFs: 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 benefit from direct exposure to cryptocurrency without having to rely on specialized exchanges or storage solutions. In short, spot Bitcoin ETFs reduce friction and could significantly boost demand as some of the world’s largest asset managers, like No. 1, black rock and No. 3 Fidelity – participate as issuers.
-
Bitcoin halved: The next Bitcoin halving event will take place in April. The mining reward will increase from 6.5 Bitcoins per block to 3.25 Bitcoins per block, effectively boosting demand by reducing sales. Miners currently sell around $12 billion worth of Bitcoin per year, according to MicroStrategy CEO Michael Saylor. But the next halving event will cut that selling pressure in half, simply because miners will bring in half as much Bitcoin over the next four years.
Ark Invest believes the catalysts will propel Bitcoin much higher in the coming years. The company has set three distinct price targets. His bear case values Bitcoin at $258,500 by 2030, implying a 417% upside. The base case values Bitcoin at $682,800 by 2030, implying an upside of 1,265%. And the bull case values Bitcoin at $1.48 million by 2030, implying a 2,860% upside.
Cathie Wood recently told CNBC that the bull case has become more likely following the approval of spot Bitcoin ETFs.
Bitcoin is a profitable investment for some investors
Sensational price targets are fun to contemplate, but investors should focus on facts rather than speculation. In this situation, the facts are simple: Bitcoin has been a great investment over the past five years, and its price could continue to rise as Bitcoin spot ETFs and the upcoming halving event drive demand. However, Bitcoin has also been a volatile investment over the past five years, and the cryptocurrency market is plagued by regulatory uncertainty.
Investors who are patient and comfortable with these drawbacks might consider keeping a small percentage of their portfolios in Bitcoin, provided they are willing to hold the cryptocurrency for at least five years. Personally, I would limit my initial exposure to no more than 5%.
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Trevor Jennevine has no position in any of the stocks mentioned. The Motley Fool posts and recommends Bitcoin. The Mad Motley has a disclosure policy.
1 Top Cryptocurrency to Buy Before It Soars 2,860%, According to Cathie Wood’s Ark Invest was originally published by The Motley Fool