The crypto market is preparing to soar, according to many famous investors. For example, ARK Invest founder Cathie Wood sees a bull-case price point of $1.5 million per Bitcoin (CRYPTO: BTC) in 2030. That would be a 2,276% return from today's price, or a compound annual growth rate (CAGR) of 70% for six years.
That's Wood's most optimistic forecast, but even her bottom-end projections call for a $650,000 Bitcoin price by the end of this decade. Plenty of billionaires are building positions in this promising digital asset these days, hoping to capture the crypto's long-term wealth creation at an early stage.
Let's look at Cathie Wood's rationale for these ultra-bullish price targets, and what these arguments could mean for us ordinary non-billionaires.
Wood doubled down on her million-dollar price targets for Bitcoin in a recent video interview with Peter Diamandis, founder of the XPRIZE Foundation, which promotes innovation. Her bullish argument centered around three core themes:
Together, she expects these pillars to support strong price growth.
"If we're in the middle of the bull market, I think the next spur is going to be the platforms putting the spot Bitcoin ETF on it," Wood said. "And I do think that will happen this year."
I don't see anything wrong with Wood's logic.
The capped Bitcoin supply and gradual slowdown of new coin production are important parts of the cryptocurrency's value system. The supply growth is already slower than the annual inflation of the gold supply from physical mining, so all that's missing is a sustained increase in demand for the crypto. The good old law of supply and demand covers the rest of this argument.
Diamantis gave an anecdotal example of institutional resistance to Bitcoin assets, saying that a well-known financial advisor service refused to include spot Bitcoin ETFs in its portfolio services. That foot-dragging attitude could be the right idea if Bitcoin were destined to crash, burn, and go away. In any other scenario, the big banks should have to jump aboard the Bitcoin bandwagon eventually. The resulting cash infusions will push its price dramatically higher.
And the third bullish argument is just a question of consumer education. Bitcoin's decentralized nature makes it difficult to impose government controls over this alternative financial system. I already explained how it is immune to traditional forces of supply-side inflation. The digital currency could be easier to use, but people are already leaning on Bitcoin in times of economic strife.
Even so, I find it hard to peg a firm price target on Bitcoin -- especially in the long term. Wood says that the institutional-investor dominoes should start to fall before the end of 2024, while the other bullish forces could have slower effects.
Keeping an eye on how quickly old-school bankers embrace the Bitcoin opportunity will provide a clearer map for what comes next. But the market isn't quite there yet, so I'm holding my horses on the final analysis.
Will Bitcoin soar to $650,000 or even $1.5 million per coin in 2030? Maybe, but it doesn't really matter. I expect it to gain value over time, most likely outperforming the S&P 500 (SNPINDEX: ^GSPC) stock market index in the long haul.
That's good enough for me, and many investors with far deeper pockets would agree. The cryptocurrency, or one of the handy-dandy spot Bitcoin ETFs, should be a modest part of any diversified investment portfolio these days.
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Anders Bylund has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.