Cathie Wood Just Delivered Fantastic News for Bitcoin Investors

Anders Bylund, The Motley Fool

Wed, Nov 20, 2024, 5:11 AM 5 min read

Bitcoin (CRYPTO: BTC) is on a roll right now. The largest cryptocurrency has gained 25% from the end of October to November 18. It has more than doubled in 2024 with a 114% year-to-date gain. Trading at $91,000 per digital coin today, Bitcoin is resting near an all-time high with a total market value of $1.8 trillion.

And the gains won't stop there -- at least not according to acclaimed growth investor Cathie Wood. She doubled down on Bitcoin's long-term value creation in a recent interview, even raising her price targets a bit.

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Cathie Wood's updated Bitcoin price targets

Speaking to CNBC host Andrew Ross Sorkin in last Friday's Squawk Box show, Wood clarified her Bitcoin views. She had laid out a $500,000 price target in earlier appearances, but she and her fund managers have a more positive outlook now.

Wood sees $650,000 as a base target for Bitcoin in 2030. A more bullish analysis lands between $1.0 and $1.5 million per coin.

"Remember, we were the first public asset manager to gain exposure to bitcoin in 2015 at $250," Wood said. "And still at $90,000, I think we have a long way to go."

To explain this bullish view, Wood cited lighter cryptocurrency regulations under the incoming Trump administration and an influx of institutional investor interest. Moreover, she highlighted Bitcoin's pricing patterns after each halving of mining rewards, especially in times of mild inflation.

"It usually has had a nice big move" under these circumstances. One halving fell six months ago and has arguably not moved the Bitcoin market yet. Another will follow in 2028, well before the 2030 deadline.

Key drivers behind Bitcoin's potential surge

The bullish catalysts are starting to pile up.

A pair of halving boosts could certainly give Bitcoin a large long-term boost over the next five or six years.
A more crypto-friendly American government could also result in higher crypto prices, though it remains to be seen exactly how the Trump team will manage issues such as trading, ownership, and taxation in the crypto space.
The expected boom in institutional investor activity is supported by the regulatory shift, the recent introduction of Bitcoin-based exchange-traded funds (ETFs), and the increasingly predictable nature of Bitcoin's long-term price trends.

I'm not privy to Cathie Wood's latest Bitcoin research reports, so I can't analyze her Ark Invest team's detailed reasons for the given price targets.

But I can agree that Bitcoin is on a positive trajectory that very well could land in her broad range of price targets over time. If Bitcoin doesn't pass $500,000 in 2030, there's always the next halving event in 2032. Meanwhile, upward pressure should continue to build as wealth managers, index funds, hedge funds, and pension plans start to include Bitcoin in their investment strategies.

So whether Cathie Wood's new Bitcoin price targets are accurate or not, they seem to point in a reasonable direction.

Managing risk in your cryptocurrency investments

That being said, try to ignore the fear of missing out on skyrocketing crypto gains. Bitcoin (and other cryptocurrencies) should account for a limited portion of your diversified investment portfolio. Bitcoin may be maturing, but it still faces significant risks.

For example, cryptocurrency prices are still very volatile and unstable. The next crypto winter could be colder and longer than the last one. The promised regulatory relief might not materialize. What happens if there's another health crisis, inflation panic, or energy crunch? And there's always a non-zero chance that a new blockchain network or an entirely unheard-of accounting system kicks Bitcoin off the next-generation financial asset throne.

I'm just scratching the surface of a much broader risk profile. Any or all of these events could play out before 2030, perhaps derailing Bitcoin's price chart before it reaches Cathie Wood's lofty destination levels. The final result might be just a scratch, or the end of Bitcoin as we know it.

So yeah, I do recommend including some Bitcoin in your long-term investment portfolio. Start a crypto exchange account or pick up a few spot Bitcoin ETF shares such as the iShares Bitcoin Trust ETF (NASDAQ: IBIT) in your stock portfolio. A bit of digital asset exposure goes a long way.

Still, it's unwise to devote your entire nest egg to any single idea -- Bitcoin included. Keeping your investments diverse will help you sleep at night.

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