Daily dose of hopium provided by ARK invest, but is this just a wild crystal ball prediction? Or does this prediction actually have some legs under it and fundamentals to back it up?
First, who is 'ARK Invest'?
ARK Invest is an American Investment management firm founded by Cathie Wood. ARK invests in futuristic and cutting-edge technology ranging from A.I, Robotics, Energy Storage, Crypto, and Medical Innovations.
Bitcoin - The Misunderstood Asset
"There's no long-term stability, without short-term volatility"
Is Bitcoin volatile? - Yes
Is it becoming less volatile over time? - Yes
This chart above shows us how the peak-to-bottom % for Bitcoin's price is contracting with each market cycle.
In its earliest years, BTC faced a scary ~94% drawdown from highs,
fast forward to a decade later, and the drawdown shrunk to ~75%
Sure, this is still a huge drawdown, but one that is historically getting smaller.
Volatile, Yet A Great Performer
People love to use Bitcoin and or Ethereum as a punching bag via cherry-picked timelines.
The truth nobody wants to mention, is the fact that both Bitcoin and Ethereum, in price, have outperformed every single public stock in the last decade (since their inception):
The chart above illustrates how just 5 years ago, Bitcoin at $15k was outrageously high and euphoric for all investors, and today, this same level is considered a doomsday scenario where max-fear lingers. (perspective matters)
Bitcoin to $1.5m by 2030 - why?
First, its important to note that ARK has 3 price predictions (bear, base, bull):
2030 Bear Case: $258,000 per 1 Bitcoin.
2030 Base Case: $682,800 per 1 Bitcoin.
2030 Bull Case: $1.5 million per 1 Bitcoin.
ARK has some fundamental assumptions that back up their predictions, though:
In the above graphic, ARK shows how they came to their price conclusions.
Basically, they have taken the total addressable markets of Bitcoin, such as:
- Corporate Treasuries - i.e Tesla adding Bitcoin to their balance sheet in 2021
- Nation State treasuries - i.e El Salvador government buying Bitcoin in 2021
- Emerging Market Currency: i.e Argentinians using BTC due to 94% inflation
- Settlement Network: i.e Visa to implement payments on Ethereum L2
- Seizure Resistant Assets: i.e High Networth Individuals own $87 trillion
- Institutional Investments: Pension Plans, Mutual Funds, Endowments..
- Digital Gold: i.e The narrative that Bitcoin is digital gold (Gold = $11 trillion market cap)
and have assigned a % for a bear, base, and bull case of how much of these markets Bitcoin could potentially capture.
Essentially what ARK has done is assess all of the different entities and narratives / verticals of Bitcoin that it could potentially capture & keep growing in,
then assign a probability of how much of that market or vertical it will be able to capture by the year 2030.
- Perspective matters: zoom out enough and Bitcoin is up and to the right since inception.
- Early tech speculation is always volatile, but eventually levels out.
- Bitcoin has been around (and growing) for over a decade now, there is a reason behind this.
- Crypto as a whole, is still a tiny asset class, just Apple inc, alone, is 2x the size of the entire crypto market, at the moment.
- Lots of room for growth, adoption and opportunity for Bitcoin and crypto in general. the total addressable market is huge.
Predictions are fun, research is fun, but you never really know.
Always do your own research and don't make financial decisions based on others' opinions.
We are very bullish on crypto here at BankRunners, and hope you enjoyed our summary of the ARK invest report (Bitcoin section).