Ark Invest is an asset management company focused on disruptive innovation. Under CEO Cathie Wood, the company manages thematic exchange traded funds (ETFs) built around a variety of technologies, including blockchain and cryptocurrencies.
Ark has been bullish for a long time Bitcoin (Cryptocurrency: BTC). In 2015, it became the first public fund manager to gain exposure to the cryptocurrency, which was trading at around $200 at the time. Nearly a decade later, Bitcoin is now worth $70,000, but Wood and her team still see significant upside potential for investors.
In 2023, the company released a Bitcoin valuation model that assumed a price of $1.5 million by 2030. This represents an increase of more than 2,000% from current prices. However, after the Securities and Exchange Commission (SEC) approved a Spot Bitcoin ETF in January 2024, Ark quietly revised its target upward. Wood disclosed the information at last month's Bitcoin Investor's Day conference, saying:
Last year, we made a bullish case for Bitcoin. It was $1.5 million. Despite the SEC giving institutional investors the green light and yelling, the analysis we conducted shows that if an institutional investor allocates just over 5% of his portfolio to Bitcoin, we think , Bitcoin will exceed. That alone would add $2.3 million to the projection I gave earlier.
So Ark currently believes Bitcoin could reach $3.8 million, possibly by 2030, although Wood declined to give a specific date. The new target suggests more than 5,300% upside. One way investors can take advantage of it is by iShares Bitcoin ETF (NASDAQ:IBIT)the recently approved Spot Bitcoin Exchange Traded Fund.
Why the iShares Bitcoin ETF is worth considering
Until recently, direct exposure to Bitcoin was a cumbersome and expensive process for US investors. They had to create and fund an account with a cryptocurrency exchange, and typically had to pay exorbitant fees for each transaction. for example, coinbase A fee of approximately 1.5% is charged for simple transactions. Additionally, investors who wanted full control over their Bitcoin needed to move their cryptocurrency to a specific type of blockchain wallet.
Fortunately, things got easier when the SEC approved a spot Bitcoin ETF in January. These investment vehicles track the price of Bitcoin while eliminating the hassle of cryptocurrency exchanges, high fees, and specialized storage solutions. Ark highlighted these benefits in a recent report.
The launch of the Spot Bitcoin ETF set the stage for Bitcoin's growth by offering investors a more direct, regulated and liquid way to gain exposure. Bitcoin Spot ETFs trade on major stock exchanges and allow investors to buy and sell shares through their existing brokerage accounts, which should reduce the learning curve and operational complexity associated with investing directly in Bitcoin. is.
The SEC has approved 11 spot Bitcoin ETFs, all of which do the same thing: track the price of Bitcoin. The only consequential difference is in the expense ratio and reputation of the publisher.
With this in mind, investors should consider the iShares Bitcoin ETF. black rock. BlackRock has the third lowest expense ratio of 0.25% and is highly regarded as the world's largest asset management company.
Investors shouldn't expect Bitcoin to reach $3.8 million
Ark Invest believes the Spot Bitcoin ETF will ultimately capture more than 5% of institutional assets under management (AUM). For context, consulting firm PwC believes institutional investors will have $145 trillion in assets under management by 2025. Using this number, Ark's forecast suggests that institutional investors will eventually allocate around $8 trillion to Bitcoin. That may be an exaggeration.
On the other hand, the launch of the Spot Bitcoin ETF was definitely a success. ETFs issued by BlackRock and Fidelity attracted more money in their first month on the market than any other ETF in history, according to Eric Balchunas of Bloomberg. Additionally, the BlackRock ETF became the fastest in history to reach $10 billion in assets. wall street journal.
Meanwhile, Spot Bitcoin ETFs had amassed only $57 billion in total assets as of April 4, according to The Block. Even if every penny came from institutional investors (which is never true), that number would have to increase 140x to reach $8 trillion. I don't see that happening in the near future, so readers should not expect Bitcoin to reach $3.8 million anytime soon.
That said, the iShares Bitcoin ETF is still worth buying for investors who can tolerate risk. Over the past five years, Bitcoin has easily outperformed stocks, bonds, gold, commodities, and real estate. Furthermore, according to Ark Invest, investors who bought Bitcoin and held it for at least five years reaped profits regardless of when they bought it. That makes for a convincing investment theory.
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Trevor Jennewine has no position in any stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Coinbase Global. The Motley Fool has a disclosure policy.
According to Cathie Wood's Ark Invest, this crypto exchange-traded fund (ETF) could soar 5,300%.
