Ark Invest CEO: BTC could rise by $500k if institutions move into it

The closest correlation that BTC holds to other assets is real estate

Cathie Wood                                 
Cathie Wood, founder and CEO of Ark Investment Management, speaks during the Skybridge Capital SALT New York 2021 conference - Photo: Alamy
                                

Cathie Wood, CEO of American investment management firm, Ark Invest, believes that if institutions moved into bitcoin (BTC) by about 5%, it could add $500,000 (£378,700) to its value.

Wood made these comments on CNBC’s Squawk Box to Joseph Kernen.

Wood said: “We think that the move by institutions into bitcoin could add $500,000 to bitcoin’s price if they move into the tune of roughly 5% over time.”

The CEO of Ark Invest believes the reason that some institutions are moving into BTC is because “to some extent this is a new asset class with correlations very different to other asset classes.”

However, the closest correlation that BTC holds to other assets is real estate.         

Wood went onto say that the key to diversification is asset managers looking for new asset classes that are “evolving and that have low correlations” which is the “holy grail in terms of asset allocation”.

“A major correction”

Kernen also brought up the news that crypto is “ripe” for “a major correction” according to polls.

This correlates to a survey Natixis Investment Managers, an American French-based global asset management company conducted.

From their research, Natixis said Cryptos were named as the “top contender” for a “major correction” in 2022.

The survey also found that almost 75% of institutions believe cryptos are not an appropriate investment for most retail investors.

However, 28% said they currently invest in cryptos themselves, with almost a third planning to increase their crypto allocation next year.

Out of all the institutions surveyed, including those who already invest in cryptos and those who do not, 8% said they plan to increase their crypto allocation next year.

Natixis also found that around 40% of institutions recognise cryptos as a legitimate investment option but believe that central banks do eventually need to regulate them.

Despite Wood and her bullish prediction BTC is down

Wood stating BTC could shoot up in value still does not hide the fact that this past week has seen the lead crypto drop from $57,035 to $48,284 according to CoinMarketCap.

BTC’s lowest point in the past seven days was at $45,032 on the 4 December.

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