The rise of Bitcoin (BTC 1.98% ) over the past decade it has led financial leaders to define their position on this growing asset. Ark Invest CEO Cathie Wood is one of the most vocal supporters. Her investment firm catapulted itself into the spotlight in 2020 thanks to the success of the Ark Innovation ETF (ARKK -1.34% ) .
In one of the most bullish estimates out there, the company demanded that Bitcoin hit $ 500,000 by 2026 last September. Even better, it recently doubled in January when‘predicted that a Bitcoin would be worth $ 1,000,000 or more by 2030.
– Bitcoin Magazine (@BitcoinMagazine) January 25, 2022
What is Ark based on for such an estimate?
So that Bitcoin reaches a price of $ 1,000,000, it would take which increases by almost 2,000% in just under eight years. That doesn’t sound too crazy considering it has increased by around 3,500% since 2017. If Bitcoin is to reach these levels, a lot has to change and current trends have to amplify.
Catia Wood and his company came up with these estimates after writing several research articles that took one of the most comprehensive and in-depth assessments of Bitcoin’s current and future state. This research highlights a multitude of macro and microeconomic factors that led Cathie and his team to the million dollar hypothesis.
During a recent interview in Miami at the Bitcoin Conference, Wood was first asked about his reasoning. Some of his key points stood out.
1- Political support for Bitcoin
Most important was Bitcoin’s new political support. In particular, he referred Janet Yellen (Secretary of the Treasury) e Gary Gensler (President of the SEC). Wood credited Gensler for leading the 180-degree turn of Yellen’s previous anti-crypto sentiment. He thinks Gensler will be more successful in persuading other politicians thanks to his experience than him as a cryptocurrency professor at MIT.
He speculated that Bitcoin would become a hot topic for voters in the upcoming election. Wood said she wouldn’t have surprised her if political candidates ran entire campaigns in support of Bitcoin and cryptocurrencies in general. With typical candor, Wood laughed at how much the political divide has widened recently, of all things, Bitcoin now enjoys bipartisan support.
2- Widespread adoption
Another topic was greater accessibility of Bitcoin in the United States. Wood referred directly to the innovation and integral role of Bitcoin’s Layer 2 scaling solution, Lightning Network, in bringing more users to Bitcoin nationwide. Payment apps like CashApp have used the Lightning Network to integrate millions of users into the Bitcoin network.
Overall, Wood believes there are “an astonishing number of use cases and Bitcoin is in the lead.”
The opportunity abound for Bitcoin to be used as a hedge against government currency manipulation in developing markets. He believes that the wealthiest people will use Bitcoin as an insurance policy against the confiscation of their assets by governments. And in the end, just like his company, he said it institutional investors will continue to buy Bitcoin slowly but surely.
3- Trust the professionals
Ark Invest exercised due diligence and just like Babe Ruth, Cathie Wood calculated her move. Their business model depends on whether they are right about these things.
Let’s say Cathie Wood is only half right, or a quarter right. If Bitcoin were to hit these prices, it would still be one of the most valued assets of our generation. Short-term price fluctuations for Bitcoin don’t matter in the grand scheme of things. The year 2030 will be here before we know it and it fits perfectly with the centuries-old buy and hold investment strategy.
This article represents the author’s opinion. Questioning an investment thesis, even our own, is a good thing. Do your research and don’t accept predictions, expert or not, for free!