During Bitcoin 2022, the ARK Invest founder Cathie Wood wowed the conference audience when she repeated her firm’s price projection for bitcoin of $1 million by 2030.
While bitcoin price predictions range from hundreds of thousands of dollars to millions within a few or many years, Wood’s forecast is firmly on the higher end. The author and finance professor Nik Bhatia is among those who share her super-bullish forecast for $1 million bitcoin someday. But billionaire investor Ray Dalio, who has said he owns a small amount of crypto, does not think bitcoin will trade for seven figures.
Wood is sticking to her long-term bullish call at a volatile time for bitcoin and her flagship exchange-traded fund. So far this year, neither one is extending the gains it saw over the last two years; they were down 14% and 38% respectively as of Wednesday, and bitcoin traded near $40,000.
But short-term is not deterring this long-term-minded investor. For her forecast, Wood cited ARK’s “Big Ideas 2022” report that reviewed the top innovations that are estimated to generate significant equity market returns long term. They include artificial intelligence, battery technology, blockchain, robotics, and gene sequencing.
To arrive at $1 million bitcoin, ARK’s report projects bitcoin’s hitting $28.5 trillion by 2030 as adoption increases. The report then divides the projected market cap by bitcoin’s capped supply of 21 million to conclude that one bitcoin will be valued at $1.36 million.
It names eight main use cases that would drive growth: being a seizure-resistant asset; the transfer of remittances; digital gold; as part of corporate and nation-state treasuries; institutional investments; part of an economic settlement network; and an emerging market currency. The chart below shows how much value ARK is estimating each use case will generate.
ARK’s report also said that although bitcoin’s market capitalization remains a fraction of global assets, it’s likely to scale as nation-states adopt it as legal tender.
In Honduras, a privately managed economic zone called Prospera on the island of Roatán, adopted bitcoin as legal tender.
During last year’s conference, El Salvadoran President Nayib Bukele announced he would make bitcoin legal tender. But the rollout in September 2021 was bumpy due to capacity issues. Bitcoin ATMs needed to convert the digital coins into cash weren’t working, and there were issues downloading the digital wallet. Protestors also took to the streets with signs demanding the president focus on the country’s deeper issues.
Still, more Salvadorians hold the country’s bitcoin wallet called Chivo than they do traditional bank accounts, according to ARK’s report. It cited a tweet from Bukele that claimed the Chivo app had 3.8 million users compared to 1.9 bank accounts. However, the spike in Chivo downloads could have stemmed from the $30 incentive the government was handing out to new users in the form of BTC.
As for the private sector, Wood said that over the next eight years, roughly 2.5% of institutional assets will be allocated to bitcoin. Traditional investors will tiptoe into crypto, starting with bitcoin she said.
The politics around bitcoin is also changing radically, in Wood’s view.
“Even where we’ve moved in St. Pete, because people know that I’m very bitcoin-focused, the politicians have come to me and said, ‘I want to pull together a room of bitcoin enthusiasts and I really want to learn from them what they want from us,” Wood said.
She added that the Treasury Secretary Janet Yellen, who has been vocal against bitcoin, has also shifted her attitude. In the past, Yellen pegged bitcoin to nefarious characters, money laundering, and being environmentally damaging. But Yellen has changed her tune, Wood said.
“There is someone whispering in the ears of politicians,” Wood said. Whoever this is, is warning them that if they continued pushing against innovative platforms, the US will lose out.
But she cautioned against making the same mistake China did when they started off by embracing blockchain technology, only to ban it in favor of their own central bank digital currency, the digital yuan.
“I don’t hear talk about that here. And I haven’t heard much talk about, ‘hey, this is going to displace the dollar as the reserve currency of the world’.” Wood said. However, she’s sure that as the elections evolve, someone will raise these issues.
As for concerns about how regulation may impact bitcoin, Wood pointed out that the US Securities and Exchange Commission has declared that bitcoin is not a security. This lowers the risk, Wood added.
Wood noted that about 70% or roughly 13.5 million of the 19 million BTC units are now in the hands of long-term investors, or those who have held for more than six months.
ARK’s report indicates that bitcoin investors are maturing. An increased number of wallet addresses, roughly 500,000, has held bitcoin for longer than six months, according to Glassnode data cited in the report.
“So the community gets it and my fellow investors will get it with time. But in the meantime, it’s going to be a very nice ride,” Wood said.
MicroStrategy CEO Michael Saylor, who was on stage with Wood, said that technology will drive the adoption of bitcoin more aggressively in the coming 36 months. He added that if you’re a technical entrepreneur or venture capitalist who’s trying to figure out the next great thing, it has to include the Lightning Network, a layer-2 protocol on bitcoin’s platform that enables fast transactions.
Wood agreed with Saylor. While the store-of-value use case for bitcoin has always been clear, its use as a means of exchange and unit of account will be key for bitcoin’s growth and domination, Wood pointed out.
ARK’s report predicts that all money and contracts could migrate to open-source protocols that enable and verify digital scarcity and proof-of-ownership. This will push the financial ecosystem, which will include consumers and corporations, to adapt in order to take advantage of the capabilities associated with these technologies. Those advantages include lower transaction costs, transparency, and reduced capital and regulatory controls.
ARK’s report also points to a rapid increase in the Lightning Network’s (LN) channels, which are up by 119% since 2018, while its bitcoin capacity is up by 210% for the same period.
Wood said that LN’s integrations with platforms like , a mobile payment service, will make it easier to use the platform. During the conference, Jack Mallers, the CEO of Strike, a mobile payment application that runs on LN, also made announcements about a series of partnerships, including one with Shopify. The giant exchange app Robinhood also announced that its new wallet would allow for bitcoin transactions on the LN.
Wood told the audience to follow the developers and that we’re going to see an explosion of them focused on the LN. ARK’s report said that the digital asset could continue to scale in response to technological breakthroughs.
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