News
Meet the widely held cryptocurrency that Cathie Wood says can skyrocket 5,855% by 2030
For more than a century, the average annual return on stocks has far outpaced that of Treasury bonds, real estate, gold and oil. But over the past decade, cryptocurrencies left the stocks in the dust.
About 10 years ago, the combined value of all existing digital currencies was about $8.4 billion, according to data provided by CoinMarketCap.com. At the time of writing, March 23, 2024, the combined value of over 2.4 million cryptocurrencies had reached $2.48 trillion. That’s a compound annual growth rate of nearly 77% over 10 years!
Image source: Getty Images.
Cathie Wood’s Supernatural Bitcoin Price Target Implies $75 Trillion Valuation in Six Years
The outperformance of leading cryptocurrencies is not lost on Wall Street or its pundits. Although lofty price targets have been set for the largest digital token by market cap, Bitcoin (CRYPTO: BTC), since it became a mainstream asset, none have come close to the predictions offered by Cathie Wood, CEO and CIO of Ark Invest, last week.
Speaking at the Bitcoin Investor Day conference in New York City on March 22, Cathie Wood updated her and her companies’ high forecasts for Bitcoin following the Securities and Exchange Commission’s (SEC) decision to approve 11 Bitcoin cash exchange-traded funds (ETFs). Wood said:
Last year we presented our bullish scenario for Bitcoin. It was $1.5 million. With this institutional green light that the SEC has given, despite its best efforts, the analysis that we have done is that if institutional investors were to allocate a little bit more than 5% of their portfolios to Bitcoin, as we believe they will over time, that alone would add $2.3 million to the projection that I just gave you.
This $3.8 million target price for Bitcoin by 2030 reflects a 5,855% upside from the $63,810 that Bitcoin finished at at the close of after-hours trading on Wall Street at 8 p.m. ET on Friday, March 22. It also implies that Bitcoin’s market cap would be well over $75 trillion by the start of the decade. For comparison, the gross domestic product of the U.S. economy was about $27.4 trillion in 2023.
There is no doubt that Bitcoin has benefited from the SEC’s approval of 11 Bitcoin spot ETFs in January. Instead of having to purchase Bitcoin on a cryptocurrency exchange located overseas or outside the jurisdiction of U.S. regulators, investors now have the option to gain exposure to Bitcoin by investing in ETFs that will directly manage the purchase of tokens.
The story continues
Additionally, Bitcoin is approaching a halving event, which has historically been a bullish factor for the world’s most valuable digital currency. In a few weeks, the block reward that cryptocurrency miners receive for validating Bitcoin transactions will be halved, from 6.25 to 3.125 Bitcoin. This means that the inflation rate of the circulating Bitcoin supply will slow significantly. Bitcoin’s perceived scarcity is one of the main appeals for long-term investors.
Wood’s Bitcoin Price Target Might Be the Most Ridiculous Thing Investors Have Ever Seen
However, there is no first-mover advantage that justifies a potential $3.8 million valuation for Bitcoin by the turn of the decade. While I have previously referenced Ark Invest’s $2,000 price target for the electric vehicle maker You’re here Deemed “complete nonsense” by 2027, Wood’s Bitcoin price prediction dwarfs Ark’s Tesla prediction in terms of ridiculousness.
Image source: Getty Images.
For starters, Bitcoin has failed the real-world utility test. Despite becoming a legal form of currency in El Salvador, most citizens in the country do not use the token to pay for goods or send money. According to a survey by the Central American University, 88% of Salvadorans have not used Bitcoin in 2023, despite President Nayib Bukele’s increased efforts to improve the token’s utility.
Bitcoin’s scarcity can also be questioned. While its hard cap is set at 21 million coins, the computer code is the only thing holding it in place. While something physical, like gold, is truly limited by what can be found on Earth, a consensus could always result in the computer code being changed and more Bitcoin being created.
However, the biggest problem with Bitcoin is that the barrier to entry into the digital currency space is almost non-existent, which has led the world’s largest cryptocurrency to lose its competitive edge. Although Bitcoin is the largest cryptocurrency by market cap, other payment currencies easily surpass it in terms of lower transaction fees and faster settlement. It is a first-generation blockchain that has been surpassed many times by third-generation blockchain networks.
Bitcoin is an asset that relies on technical analysis and investor emotion, has limited real-world utility, and has lost its competitive edge. To say that I don’t believe Wood’s price target will come close to reality would be an understatement.
Should You Invest $1,000 in Bitcoin Right Now?
Before you buy Bitcoin stock, consider this:
The Motley Fool Stock Advisor analyst team has just identified what they believe to be the 10 best stocks Investors need to buy now…and Bitcoin isn’t one of them. These 10 stocks could deliver monstrous returns in the years to come.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio construction advice, regular analyst updates, and two new stock picks each month. Stock Advisor has more than tripled the return of the S&P 500 since 2002*.
*Stock Advisor returns as of March 25, 2024
Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Tesla. The Motley Fool has a disclosure policy.
Meet the widely held cryptocurrency that Cathie Wood says can skyrocket 5,855% by 2030 was originally published by The Motley Fool