Key takeaways

• Cathie Wood sets Bitcoin price target for $500,000 within the next 5 years.
• The target is hinged on growing institutional investment in Bitcoin.
• Data continues to support growing institutional interest in Bitcoin.

Cathie Wood, the CEO of ARK Invest, has set her price target for Bitcoin to reach $500,000 within the next 5 years. The CEO expects institutional investors to drive the price of the pioneer cryptocurrency to those levels.

Wood made the statement in an interview with CNBC anchor Andrew Ross Sorkin at the SALT Conference where she also spoke of cryptocurrency regulations. Wood who is a Bitcoin proponent as well as a serial investor expects Bitcoin adoption by institutions to continue.

“If we’re right and companies continue to diversify their cash into something like Bitcoin, and institutional investors start allocating 5% of their funds in Bitcoin – it could be other cryptos as well – we believe the price will be ten-fold what it is today. So instead of $45,000, over $500,000,” she said. 

The statement is an acknowledgment of the power that institutional investors wield in the cryptocurrency market as well as in Bitcoin’s growth. Bloomberg reports that this year alone, around $17 billion dollars have been invested by family offices, hedge funds, and traditional money managers. They seem to be favoring Bitcoin as the asset has been shown to have outperformed traditional investment vehicles including gold and stock. In the last 12 months, the return on investment on Bitcoin is up 343% while gold is down 8% and S&P 500 index is up a mere 32% according to case Bitcoin. It is a similar story in even bigger timeframes.

Institutional interest has been attributed to the current bull run of the Bitcoin market. Data from Chainalysis also seems to validate this observation. The cryptoanalysis firm notes that on-chain suggests that institutional investment in Bitcoin has been growing since 2020. The trend also continued into 2021 as data from May suggests a continuation of the previously observed trend.

“During the huge price fall in May, blockchain data showed that large investors were again buying significant numbers of bitcoin,” says Philip Gradwell, Chief Economist at Chainalysis.

Gladwell expects institutional investors to exert far more influence on Bitcoin’s value than retail buyers who initially drove Bitcoin adoption. “The institutional investors have so much power in the market, their valuation almost becomes the price,” he says.

This view has been validated by pools conducted by firms such as Fidelity Digital Assets found that seven in ten institutional investors expect to buy or invest in crypto assets in the near future as reported by Reuters in August. 

This is probably why Cathie wood is confident in her price target. Notably, Cathie Wood’s ARK Invest is also among the institutional investors at the forefront of Bitcoin investment. The firm that has over $52 billion in assets under management has several cryptocurrency funds and has recently filed for one of its funds to invest in Canadian Bitcoin ETFs.

The $5.7 billion ARK Next Generation Internet ETF (ARKW) changed its prospectus to include exposure to Bitcoin via Canadian ETFs despite the firm’s 5.5% exposure to Grayscale Bitcoin Trust, according to Bloomberg.