Cathie Wood: 5% institutional capital can drive Bitcoin to $ 500,000

Cathie Wood is the founder, CEO and CIO of ARK Invest, one of the most risk tolerant investment firms on Wall Street. She has placed big bets on companies that she believes will shape the future. Her most famous bet so far was on Elon Musk’s Tesla, which has skyrocketed in value. She says Bitcoin can go up 10 times, but only if institutional investors increase their stakes in the cryptocurrency. In a recent interview, she said that a 5% stake in institutional investors could bring Bitcoin to $ 500,000. In addition, unlike many colleagues, she considers Ethereum to be even more undervalued than Bitcoin and consequently believes that ETH BTC will likely surpass in the near future.

In an interview with CNBC’s Squawk Box, Wood said she believes Bitcoin will soar despite the recent drop in prices:

“I think the institutions will go in and they will start with Bitcoin and Ethereum. Cryptocurrencies currently only make up a minimal proportion of institutional portfolios. The reason for the entry of the institutions is that it is a new asset class, the correlations of which differ greatly from that of other asset classes. “

According to Wood, the asset with the closest correlation to cryptocurrency is real estate, and she cites a study her company conducted.

“Institutional managers need to look for new asset classes that are evolving and that have low correlations [with the overall market]. This is the key to diversification and the holy grail in terms of asset allocation. We think institutional entry into Bitcoin … could raise the Bitcoin rate to $ 500,000 if it hit around 5% of the institutional investment portfolio. “

"We think that the move by institutions into #bitcoin … could add $500,000 to bitcoin's price if they moved into the tune of roughly 5% over time," says @ARKInvest's @CathieDWood #crypto pic.twitter.com/lX5yQGSK3b
— Squawk Box (@SquawkCNBC) December 9, 2021

It is not the first time that Cathie Wood has made this steep forecast for the Bitcoin price. A year ago , she predicted a Bitcoin rate of $ 500,000 – with the same reasoning. At the time, Bitcoin was trading below $ 20,000 and has more than tripled since then.

While many other senior executives have made similarly bold predictions, Wood can point to a number of correct predictions. The parade example is Tesla, a company they continued to back up even after the stock plummeted.

Bitcoin is currently trading just over $ 48,000 after losing nearly 3% overnight. It has not yet recovered from crashing from 56,000 a week ago and has traded below $ 51,000 for most of the past week.