Summary:
Cathie Wood predicts Bitcoin could reach $1 million by 2030.
Bitcoin's supply is capped at 21 million, making it scarcer than gold.
Growing demand from institutional investors and central banks is driving interest.
Bitcoin is increasingly viewed as a long-term store of value and hedge against inflation.
Cathie Wood's $1 Million Bitcoin Prediction
Nearly two years ago, Cathie Wood of Ark Invest made waves by predicting that Bitcoin (CRYPTO: BTC) would reach a staggering $1 million by 2030. At the time, Bitcoin was just beginning to recover from the crypto winter of 2022, and its future was far from certain.
In a recent interview with Bloomberg, Wood reaffirmed her prediction, stating that Bitcoin could even reach $1.5 million if conditions align favorably. But what fuels her optimism?
The Scarcity Factor
Wood points to Bitcoin's inherent scarcity as a primary driver behind its surging price. The total supply of Bitcoin is capped at 21 million coins, with 19.8 million already in circulation. This makes Bitcoin even scarcer than gold, as its production cannot be increased like gold can.
Rising Demand
The demand for Bitcoin is on the rise, with more investors racing to own it. This growing interest plays a crucial role in boosting Bitcoin's price, given its limited supply.
Building Block Model
To arrive at her $1 million price prediction, Wood utilized a building block model to estimate Bitcoin's future price. Key components of this model include:
- Institutional Demand: Institutional investors are increasingly allocating portions of their portfolios to Bitcoin, particularly with the availability of spot Bitcoin ETFs. In her model, Wood estimates a base case allocation of 2.5%, with a potential best-case scenario of 6.5%.
- Store of Value: Bitcoin is gaining traction as a long-term store of value, often referred to as digital gold. More investors are recognizing Bitcoin's potential as a hedge against inflation.
- Nation State Treasury Demand: There is also a growing interest from central banks and sovereign governments around the world considering holding Bitcoin as a reserve asset.
Image source: Getty Images.
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