Cathie Wood, from Ark Investis a great enthusiast of Bitcoin (CRYPTO: BTC). It launched Bitcoin’s first spot price exchange-traded fund (ETF) in January, as soon as regulators gave their approval.
Earlier this year, Wood raised his price target from $1 million to $1.5 million by 2027 – which would represent an incredible 2,139% jump over Bitcoin’s recent price of around $ 67,000. Wood expects this explosive growth to be driven by three favorable factors: the approval of ETFs Bitcoininstitutional purchases of these ETFs and the expected halving next month, which will halve Bitcoin mining rewards.
We must take these estimates with caution, as Wood has a habit of making extremely optimistic predictions and not always fulfilling them; for example, its flagship ETF, the Ark Innovation ETF, is up just 13% over the past five years, while the S&P 500 is up 88%. However, we must still consider whether Wood’s bullish thesis makes sense and whether Bitcoin is worth investing in.
The bullish case for Bitcoin
Optimists believe that the Bitcoin it will eventually join gold, silver and other precious metals as a long-term inflation hedge. Like gold advocates, Bitcoin optimists believe that fiat currencies are destined to depreciate, and this trend will lead to more governments, companies and investors adopting cryptocurrency. Until January of this year, most of these people invested in Bitcoin in three ways: through direct purchases on a cryptocurrency exchange like Coinbase, through a trust like the Grayscale Bitcoin Trust, and through ETFs linked to Bitcoin futures. Bitcoin.
But all these methods had disadvantages. Cryptocurrency exchanges were disconnected from public exchanges, prone to outages and sudden outages, and often targeted by regulators. The collapse of FTX and recent criminal charges against Binance have also shaken investor confidence in standalone cryptocurrency exchanges.
Cryptocurrency trusts were safer and could be actively traded on the stock market, but they charged high fees. Bitcoin futures ETFs also charged high fees, but often did not track the cryptocurrency’s spot price. The Securities and Exchange Commission’s (SEC) approvals in January of the first 11 Bitcoin spot price ETFs resolved these issues; ETFs charge low fees, are directly linked to the spot price of Bitcoin, and can be easily traded on the open market.
Wood believes these new ETFs will drive institutional investors to buy more Bitcoin. In December 2021, Wood predicted that if institutional investors allocated an average of 5% of their portfolios to Bitcoin, this would increase its short-term price by around $500,000. Wood reiterated this bullish view earlier this month and stated that institutional buyers would drive the price of Bitcoin towards $1.5 million as it became recognized as a new asset class.
Bitcoin and the next halving
Meanwhile, Bitcoin will undergo its next halving in April. This process, which takes place every four years, cuts the reward for miners like Marathon Digital for creating new Bitcoins in half – but could help boost the price of Bitcoin as market demand outstrips slowing supply growth.
At the same time, persistent inflation and rising geopolitical conflicts could lead more countries to adopt Bitcoin as a mainstream currency. This trend could accelerate Bitcoin’s transformation into a reliable and secure asset like gold and silver.
But is Bitcoin really heading to $1.5 million? Cathie Wood is not alone in her optimistic outlook for the future of Bitcoin. British bank Standard Chartered says its price will reach $100,000 by the end of 2024, while financial services giant Fidelity predicts its price will reach $100 million by 2035 and $1 billion by 2038. It’s impossible to say whether these predictions will come true, but approvals of the first Bitcoin spot price ETFs could put a floor under its volatile price.
So instead of wondering whether Bitcoin will deliver a 2,000% gain in just three years, investors should simply ask themselves whether they believe the bullish argument. If Bitcoin looks like a promising investment, it might be smart to accumulate some Bitcoin or shares of a low-fee spot ETF as a long-term growth bet.
Source: Atrevida
Earl Johnson is a music writer at Gossipify, known for his in-depth analysis and unique perspective on the industry. A graduate of USC with a degree in Music, he brings years of experience and passion to his writing. He covers the latest releases and trends, always on the lookout for the next big thing in music.
