dominant cryptocurrency, Bitcoin (BTC 0.10%), currently accounts for 51% of the total crypto market by value and is itself worth about $1.65 trillion. Over the past three years, Bitcoin’s market share has ranged from 40% to 60%.
Based on this, Cathie Wood’s Ark Investments (an asset management company focused on disruptive technologies such as blockchain) believes that the crypto market could reach a value of $20 trillion by 2030. I think there is. This would mean an increase of about 1,100% from current levels, meaning there would be a significant amount of Bitcoin out there. price increase.
Specifically, if the broader crypto market reaches $20 trillion by 2030, and Bitcoin still accounts for 40% to 60% of that total, the potential upside for cryptocurrencies ranges from 840% to 840%. It falls between 1,400%.
Before you set aside that estimate, consider what value other asset classes have. The value of the global bond market is $130 trillion, the value of the global stock market is $110 trillion, and the value of earthly gold reserves is $14 trillion. In this context, there could be a $20 trillion crypto market.
Bitcoin is in high demand among individual and institutional investors
Bitcoin price is a product of supply and demand. However, its source code limits supply to his 21 million coins (of which approximately 19.6 million coins are currently in circulation), so the only variable that determines the outcome is demand. In other words, whether the value goes up or down depends on whether demand increases or decreases. And there is good reason to believe that demand will increase.
Bitcoin is already in greater demand than other digital assets, as evidenced by its dominant position in the cryptocurrency market.Furthermore, digital wallets PayPal, blockand mercadolibre Users can purchase selected cryptocurrencies, but only Bitcoin is accessible across all three fintech platforms.
Demand extends beyond retailers.According to a study by consulting firm PwC, exposure to digital assets by institutional investors will continue to increase in 2023, just as it did in 2022, with Bitcoin and Ethereum It remained the most popular digital asset by a wide margin.
Similarly, a recent report from consulting firm Ernst & Young found that “most institutional investors believe in the long-term value of blockchain and crypto/digital assets, and are likely to increase their interest in digital assets over the next two to three years.” We are planning to expand our investment.” The report also found that Bitcoin (followed by Ethereum) is the most popular digital asset among institutional investors.
The recent approval of a spot Bitcoin exchange-traded fund (ETF) is another sign of growing interest among financial institutions. Specifically, a Spot Bitcoin ETF was approved in the European Union in 2023, and 11 Spot Bitcoin ETFs were approved in the United States this year.
Spot Bitcoin ETF could boost demand
Spot Bitcoin ETFs buy the digital currency directly and must closely track its price. These products reduce friction by providing Bitcoin exposure without the hassle of a cryptocurrency exchange account or blockchain wallet. Investors can effectively buy and sell Bitcoin through their existing brokerage accounts by trading Spot Bitcoin ETFs.
Some of the world’s largest asset managers now offer spot Bitcoin ETFs. black rock (Size No.1), Fidelity (No.3), invesco (No.13), and franklin templeton (No.14). These reputable companies are particularly well-positioned to drive demand for Bitcoin, given their vast clientele. In fact, they collectively manage over $15 trillion in assets.
Ultimately, spot Bitcoin ETFs could draw significant demand from retail and institutional investors. In fact, Fundstrat analyst Tom Lee says Bitcoin could reach $500,000 by 2029, an increase of more than 1,000% from its current price of $43,000. Says.
Ark Invest is even more bullish. Wood and her team envision a base case in which the price per Bitcoin approaches $683,000 by 2030, implying an upside of more than 1,400%.
Bitcoin is a worthwhile investment, but only for certain investors
Although cryptocurrencies are not as polarized as they once were, volatility, risk, and regulatory uncertainty still characterize the market. As such, investors with short time horizons (less than 5 years) and those who dislike risk and volatility should avoid cryptocurrencies.
On the other hand, patient investors who can tolerate risk and volatility should consider keeping a small portion of their portfolio in Bitcoin. But they should temper their expectations.
The huge returns predicted by Ark Invest and other experts are possible, but not guaranteed. Bitcoin has fallen by more than 45% four times in the past five years, and similar declines are likely to occur in the future.
Trevor Jennewine has positions at Block, MercadoLibre, and PayPal. The Motley Fool has positions in and recommends Bitcoin, Block, Ethereum, MercadoLibre, and PayPal. The Motley Fool recommends this option: His March 2024 $67.50 Short Calls on PayPal. The Motley Fool has a disclosure policy.