Cathie Wood, CEO of asset management company Ark Investment, is optimistic about the prospects of Bitcoin based on the characteristics of the limited supply of Bitcoin and its increasing demand.
The American celebrity stock critic mentioned this in a video. She believes, “If we take all potential demand and limited supply into consideration together, we will arrive at an incredible price expectation. “
At the same time, Wood predicts that the current market value of digital assets will increase substantially, noting that the $1 trillion milestone is “not worth mentioning compared to the final market value of digital assets.”
Wood pointed out that “the return of digital assets has extremely low correlation with other asset classes. In fact, according to our analysis, the correlation with the real estate industry is only 0.34.”
Asset correlation refers to the degree of correlation between two or more investment targets. Bitcoin has low correlation with other assets, which makes Bitcoin an attractive target choice because every asset allocator is trying to find non-related assets.
Turning to the asset relevance of Bitcoin, Wood said, “We believe this is the first new asset class since the 16th century, and the first truly new asset class since the first stock issuance.”
Wood’s forecast is largely affected by the growth in demand for Bitcoin, as evidenced by the recent move by major institutions to add digital assets to their balance sheets.
Speaking of the performance of companies such as Tesla, MicroStrategy and Square on Bitcoin, Wood said, “I think the most surprising recent development that we did not anticipate when writing the institutional report is that companies are now adopting Bitcoin. To achieve cash flow diversification.”
Recently, major players in the field began to include Bitcoin on their balance sheets, and this decision clearly reflects the surge in demand for Bitcoin.
In addition, Wood recommends that investors seeking to minimize volatility or maximize the Sharpe ratio add a certain amount of Bitcoin to their investment portfolio.
“We did a study on institutional involvement,” she said, “I think we did a million Monte Carlo simulations.” Based on the data from the model, Wood suggested integrating Bitcoin into institutional investment 2.5% to 6.5% in the portfolio.
Wood has always been a staunch supporter of Bitcoin. Earlier this month, she asserted in a report that Bitcoin would be a more acceptable new asset class, and pointed out that Bitcoin could become a new standard part of investment portfolios.
In fact, the Ark ETFs held by Wood are closely related to Square, Grayscale and Tesla, which hold large amounts of Bitcoin.
Although the collapse of Bitcoin last month had a negative impact on the price of Ark’s ETF, Wood is still confident in this asset.
With the recent increase in demand, the price of Bitcoin is still soaring. These factors have contributed to Wood’s firm confidence in this asset.
Time will tell her whether the latest prediction will become a reality in the long run.
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.