1 Top Cryptocurrency to buy before it soars 1,500%, according to Cathie Wood

It’s no secret that growth investing mind Cathie Wood expects big things Bitcoin (BTC 1.82%). Fund manager Ark Invest started talking about crypto before it was a household name, and recently doubled down again on its bullish projections.

In an interview Bloomberg TV last Thursday, Wood reiterated a price of Bitcoin of $ 1.0 to $ 1.5 million for the year 2030. But this is not the whole story. The cool part of Cathie Wood’s Bitcoin coverage is that she continues to explain her investment thesis in more detail over time.

Last week’s interview was no exception. So let’s check out Cathie Wood’s latest nuggets of Bitcoin-friendly economic theory.

Why Cathie Wood sees Bitcoin as a bargain to buy at $100,000

First, Wood noted that the probability of reaching his existing Bitcoin price targets has increased in 2024. Institutional investors are finally taking the digital asset seriously, assisted by new instruments such as the spot Bitcoin exchange-traded funds ( ETFs) that launched in January. Their investments in Bitcoin should make a big difference to the asset’s price and stability in the coming years.

“[Large investors] should consider an allocation “these days, because there is a hard cap on the production of Bitcoin in the long term.

94.3% of all Bitcoins that have ever existed have already been produced and are placed in crypto wallets around the world. You cannot capture a large slice of the total Bitcoin pie by making or finding more of it as you could with physical assets such as gold or oil. The iron law of supply and demand should inevitably drive the price of this limited asset higher, so financial institutions should start building their Bitcoin portfolios before it gets expensive.

In this context, $100,000 per coin does not qualify as “expensive”. Remember, the long-term target price is measured in millions of dollars. Cathie Wood is playing the long game here.

Bitcoin is a valuable accounting tool

Wood also explained that Bitcoin is more than a speculative asset. Rather than the next worthless “tulip bulb craze,” Bitcoin serves a meaningful purpose for people who aren’t just waiting for it to gain value over time.

“It is a global monetary system that is based on rules,” he said. “It’s private, it’s digital, it’s decentralized, and it’s backed by the biggest [computer system] in the world. It’s the most secure network in the world.”

Bitcoin is similar to a global and highly detailed accounting system that tracks all the gold in the world, assigning an owner to each sliver of a gold nugget and protecting the data with multiple layers of encryption. You cannot cancel or change any transaction or ownership record without essentially breaking Bitcoin’s transaction recording platform. The asset that is tracked in this case is not a physical piece of noble metal, but the computer work that went into generating a unique digital token.

There is an unknown but very real limit to the amount of physical gold in the world, until entrepreneurs find additional sources on asteroids or other planets. At the same time, there will never be more than 21 million Bitcoin tokens, and 19.6 of them are already in circulation. In the long run, this system is almost inflation-free – assuming its security resists new attack ideas like quantum computing algorithms.

Cathie Wood takes the mystery out of her investment thesis for Bitcoin. Image source: Getty Images.

Bitcoin vs Gold: Different Effects of Inflation

Cathie Wood also highlighted how this approach to inflation testing differs from gold.

“When the price of gold goes up, production goes up — the rate of supply growth goes up,” he said. “This cannot happen with Bitcoin. It is mathematically measured to go up 0.9% per year for the next four years, and then the growth of the supply will be cut in half again.”

Indeed, physical gold mining tends to become more common when the price of the metal is high. Miners want to take advantage of this valuable asset when it makes the most economic sense. The equation is different for Bitcoin miners, who produce smaller and smaller pieces of the digital asset over time. So the cost of minting new Bitcoins will increase while the number of new coins introduced to the market slows down.

So it’s smarter to put in a maximum production effort as soon as possible, because the return on your mining machine and electricity investment will only decrease over the years. The same logic suggests that buying Bitcoin first will be more profitable in the long run. Waiting for a lower purchase price or an easier Bitcoin mining environment almost never makes sense.

Why Bitcoin may deserve a place in your portfolio

Then Cathie Wood underlined her 5-year Bitcoin goal of at least $1 million per coin, and offered more details about her underlying investment thesis.

Other Bitcoin investors may work with different assumptions that result in different target prices, but the general tenor of the market is quite consistent. Bitcoin seems poised to rise from the recent price milestone of $100,000. From major banks to ordinary nest builders, most investors should pay attention to these new cryptographic tokens.