Cathie Wood’s ARK analysts predict Bitcoin at US$1 million each by 2030
Five major factors contribute to the continued bull run of Bitcoin, ARK says, including growing adoption and long-term focus of investors.
Bitcoin's market cap could grow to US$28.5 trillion in 2030 from US$720 billion today, predicts ARK Invest, the firm led by Cathie Wood.
"According to our research, Bitcoin's market capitalisation could scale more than 25-fold in the next decade, with each exceeding US$1 million in value," wrote ARK analyst Yassine Elmandjra, in the firm's just-released "Big Ideas 2022" outlook report.
That would make today's price – about US$38,000 each – a definite buying opportunity.
Why it could happen
"Our research suggests that Bitcoin has the potential to transform monetary history by providing financial freedom and empowerment in a fair, global and distributed way," Elmandjra wrote. The report lists five reasons for this bold prediction.
1. Market participants are focused on the long-term
Bitcoin's (BTC) long-term holders aren't selling. Despite reaching a record high price in November 2021 and then falling sharply, on-chain data shows that Bitcoin holders are focused on the long-term potential.
Long-term investors hold 13.5 million BTC. That's more than 70% of the currently available Bitcoin supply.
2. Bitcoin is taking a larger market share
"Bitcoin's cumulative transfer volume increased by 463% in 2021. Bitcoin's annual settlement volume has surpassed Visa's payments volume," Elmandjra wrote. The transaction volume grew from US$2.3 trillion in 2020 to US$13.1 trillion in 2021.
3. Bitcoin continues to scale
Bitcoin activated Taproot in November 2021. This is a base-layer protocol upgrade designed to increase the privacy and efficiency of Bitcoin transactions.
Another upgrade was the Lightning Network (LN). This is a layer-2 payment protocol built on Bitcoin. LN's goal is to enable fast transactions and has been proposed as a solution to the bitcoin scalability problem.
4. Wider adoption
Exchange-traded products, countries and corporations held 8% of Bitcoin's supply as of November 2021. The total value of this was US$89 billion in November, with the largest noncustodian holder Grayscale Bitcoin Trust with 654,200 Bitcoin.
Companies weren't the only entities to hold Bitcoin. El Salvador was the first country to accept Bitcoin as a legal tender in 2021. There are more crypto wallets in the country than traditional bank accounts.
5. Bitcoin mining has evolved
Bitcoin miners generated revenue of US$16.7 billion in 2021. ARK's analysts see Bitcoin mining as an incentive to discover cost-efficient energy sources, independent of location and consumer demand.
For example, El Salvador announced it will start mining Bitcoin with energy from volcanic activity. "Mining will encourage and generate more electricity from renewable carbon-free sources," said the report.
Bitcoin is beaten down. So are ARKs investment funds
It's worth nothing that both Bitcoin and Wood have struggled lately.
After reaching a record high in November 2021, Bitcoin has lost almost half of its value. ARK's funds have also performed poorly. Its flagship fund Ark Innovation ETF (ARKK) is down more than 50% since February 2021.
But ARKK gained 228% in the past years even with a poor 2021, and Wood has stood behind its strategy of investing in cutting-edge tech stocks. Of course, whether the Bitcoin prediction happens remains to be seen.
Kliment Dukovski owns Bitcoin as of the publishing date.