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All it would take for bitcoin to reach a value of $ 500,000 would be for institutional investors to allocate only 5% of their wallets to cryptocurrency, according to Cathie Wood.
The renowned founder of ARK Investment Management believes the allocation is realistic, given that institutions have around this amount of their portfolios invested in categories such as emerging markets. A five percent allocation would equate to roughly $ 2,000 billion paid in bitcoin. (A bitcoin is now worth almost $ 40,000.)
Speaking at Robin Hood’s investor conference this week, Wood said his case is reinforced by the growing number of people in developing countries who view cryptocurrencies as an insurance policy against governments confiscating their wealth, directly or indirectly through inflation, as well as through capital controls. Wood said smart countries would end up supporting bitcoin, according to a conference attendee.
In an interview with Lee Ainslie, director of hedge fund Maverick Capital, Wood spoke about ARK’s investment process, which focuses on disruptive innovation and five transformational platforms: DNA sequencing, robotics, artificial intelligence , energy storage and blockchain. The conversation covered everything from Tesla to cryptocurrencies.
Wood, for whom ARK Investments is one of the fastest growing US fund managers, attributed the recent crypto downturn to environmental, social and governance investors; realizing the amount of electricity needed to mine bitcoin and the work it will take to change that system; and Tesla CEO Elon Musk giving bitcoin what Wood described as a second thought.
Musk sold $ 100 million out of a total of $ 1.5 billion in bitcoin investments, according to Wood. She said she believed Musk hadn’t sold more since and would revert to bitcoin when commodity power producers started hosting bitcoin mining machines. Power producers, such as Talen Energy, will be able to discharge excess energy from batteries to create a renewable energy ecosystem faster than they otherwise could, said the founder of ARK, according to the participant.
Wood also said that policymakers and governments will find it difficult to shut down bitcoin miners and exchanges, as these people and businesses will only migrate to other countries that are more crypto-friendly. Wood added that the competition between countries fighting to be innovation leaders as well as politicians fear blame if they raise barriers to the next big thing is also good for the digital currency, according to the participant.
According to Wood, many government leaders are starting to understand how important it is to embrace crypto, especially when it comes to decentralized finance. Without DeFi, banks and other institutions, already under pressure from new competitors, will not be able to cut costs and they will be disrupted even faster, she said.
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