Over the last decade, the rise of Bitcoin ( BTC 0.06%) has seen prominent financial luminaries come out in support of the growing asset. Ark Invest’s Cathie Wood is one of the most vocal supporters. In 2020, her investment company rose to prominence thanks to the Ark Innovation ETF’s success.
According to one of the most optimistic predictions, Bitcoin would be worth $500,000 by 2026. She has even doubled down on her January statement that one Bitcoin will be worth $1 million or more in 2030.
What is she thinking?
To hit a $1 million price point, Bitcoin would need to rise more than 2,000 percent in less than eight years. When compared to recent trends, it doesn’t look all that insane. Much will have to change and current patterns must intensify if Bitcoin is to achieve these heights.
After writing several research papers that subjected one of the most comprehensive, in-depth analyses of Bitcoin’s present and future state, Cathie Wood and her team arrived at these numbers. This study highlights a number of macroeconomic and microeconomic variables that led Cathie to her million dollar hypothesis.
Wood was asked about her reasoning for the first time during an interview in Miami at the Bitcoin Conference. A few of her key points were highlighted in this exchange.
The Bitcoin community’s increased political backing was the most essential. She mentioned Gary Gensler (Chairman of the SEC) and Janet Yellen (Sec. of the Treasury) by name. Wood credited Gary Gensler with forcing Janet Yellen to reverse her previous anti-cryptocurrency position. His background as an MIT crypto professor has given him a leg up in attempting to persuade other lawmakers.
She thought that, in the near future, Bitcoin would be a major issue among voters. Wood said that it would not surprise her if the political candidates entire campaigns on Bitcoin and other cryptocurrencies. Wood chortled that when you think about how wide the political gap has grown recently, of all things, BTC now enjoys bipartisan support.
Another concern addressed by Wood was the rise in Bitcoin’s accessibility in the United States. Wood directly linked Bitcoin’s Lightning Network, which is a Layer 2 scaling solution, to its role in bringing more users to Bitcoin domestically, noting that payment apps like CashApp have used it to onboard millions of people.
Wood explained that in general, “there’s an amazing amount of potential uses for Bitcoin and it’s leading the charge.” For countries with unstable currencies, opportunities abound for Bitcoin to be utilized as a hedge against government currency manipulation. She thinks that more high-net-worth individuals will utilize Bitcoin as a means of protecting their assets from seizure by governments. And lastly, she predicted that big institutions would continue buying Bitcoins.
Trust the professionals
Cathie Wood has called her shot, just like Babe Ruth, as the leader of Adamant Capital Management. Their business strategy is based on them being correct about this sort of thing.
Let’s assume that Cathie Wood is only half-correct, or a quarter wrong. If Bitcoin reaches those levels, it will still be one of the greatest appreciation assets in history. In the long run, short-term Bitcoin fluctuations are irrelevant. The 2030s will arrive before we know it, and this fits in line with old investing practice of buying and holding.