ARK Invest: bitcoin price can hit $2.3 million if allocation target reached
The price of the world's largest cryptocurrency could skyrocket to a staggering $2.3 million if 19.4% of global institutional investment moved to the digital asset, Cathie Wood's ARK Invest speculated in a new report.
With the global investable asset base standing at $250 trillion, the "Big Ideas 2024" report from ARK indicated that investing 19.4% from that base would cause bitcoin's price to soar to staggering new heights.
The report outlined how the world's top digital asset has shown resilience after a recent brutal crypto winter, and was now poised to be a major growth vehicle in investor portfolios, particularly for those institutional investors maximizing risk-adjusted returns.
“According to our analysis, in 2015, the optimal allocation to maximize risk-adjusted returns on a 5-year time horizon would have been 0.5%. Since then, on the same basis, the average allocation to bitcoin would have been 4.8%, and in 2023 alone, 19.4%,” analysts at ARK Invest reported.
ARK Invest analysts also underscored that long-term holding of the asset has proven profitable for investors.
"Historically, investors who bought and held bitcoin for at least 5 years have profited, no matter when they made their purchases,” the report pointed out.
It added that bitcoin was a key tool for portfolio diversification, "offering unprecedented growth potential" to investors seeking rewards. This echoed the positive sentiment expressed by JPMorgan research in 2021, which said that investors might put 1% of their portfolio in bitcoin in pursuit of gains.
“In a multi-asset portfolio, investors can likely add up to 1% of their allocation to cryptocurrencies in order to achieve any efficiency gain in the overall risk-adjusted returns of the portfolio,” JPMorgan analysts reported.