Cathie Wood made this bold prediction recently: Boosted by ETF investments, the price of bitcoin will soar to $3.8 million.
The ARK Invest founder and CEO explained her upbeat view at March's Bitcoin Investor Day conference in New York City. "We put our bull case for bitcoin at $1.5 million," Wood said. "If institutional investors were to allocate a little more than 5% of their portfolios to bitcoin, that alone would add $2.3 million to the projection I just gave you."
It's an impressive forecast. In 2023, bitcoin's price skyrocketed by more than 150%, reaching more than $820 billion in market cap. If Wood is right, bitcoin's market cap could climb to roughly $80 trillion, based on the projected supply of 21 million bitcoins.
Market Enthusiasm Builds On Bitcoin ETF Approvals
Wood did not specify a time frame for her bitcoin price target. But the rosy prediction is pegged to a major development: institution-supported bitcoin exchange traded funds.
In January, the SEC approved a preliminary batch of 11 issuers of bitcoin ETFs, including ARK Invest's ARK 21Shares Bitcoin ETF, BlackRock's iShares Bitcoin Trust, and VanEck's VanEck Bitcoin Trust.
The approvals allowed banks and other larger institutions to offer their customers investment products that have bitcoin exposure. For customers, it means exposure to bitcoin without a need to directly hold the cryptocurrency. And for banks, it's an opportunity to meet a growing customer demand: investment access to bitcoin and other digital assets.
Banks and money managers with bitcoin ETFs saw plenty of upside in the SEC approvals. "Investors are resoundingly choosing to bid for bitcoin access," Robert Mitchnick, BlackRock Head of Digital Assets, said at the conference. Mitchnick cites demand from investors interested in bitcoin but unwilling to directly hold the crypto. He also points to crypto investors looking for more efficient, cheaper and more convenient ways to gain exposure to bitcoin.
Mitchnick says BlackRock is seeing interested investors fall into three broad buckets. Direct investors, individuals ranging from small-dollar to ultrahigh net worth, comprise the first bucket. The second? Wealth advisory partners who are interested in crypto but still doing their due diligence on bitcoin ETFs. Mitchnick says institutions make up the third bucket. "We're having lots of great conversations and a lot of research and diligence education happening, but that's early," he said. "They just operate on a longer time scale, so that'll be interesting to see as the months and quarters for those other channels start to come on."
Different Approaches To Bitcoin ETFs
Not every ETF was able to gain SEC approval. First Trust SkyBridge, run by crypto investor and one-time Trump administration Communications Director Anthony Scaramucci, had its application rejected by the SEC. The SEC has signaled fears that ETFs directly tracking bitcoin would not provide sufficient protection for investors. The agency has tended to approve ETFs that track bitcoin futures instead.
"We made a decision alongside of our partners to pull the application," Scaramucci, founder and managing partner at SkyBridge Capital, told Investor's Business Daily.
Still, the SEC's rejection has not dampened Scaramucci's enthusiasm for crypto. "We were the first money into the BlackRock Bitcoin Trust that got converted into the ETF in January," he said. "Our attitude is if BlackRock's in there alongside of Fidelity, we're small, we like doing things that are a little off the grid."
Wait-And-See From Institutions
Despite the spike in interest in bitcoin and bitcoin ETFs, many institutional investors are adopting a wait-and-see stance. "The institutional investors that I speak with for our fund, most have almost no allocation to anything in crypto," Dan Tapiero, CEO and chief investment officer of 1RoundTable Partners & 10T Holdings, told IBD.
"We have a handful of very forward thinking institutional investors in the fund, but generally of the people that I speak with, there isn't an overwhelming acceptance," Tapiero said.
But bitcoin ETF approvals have made traditional finance to take notice, Tapiero said. "It's beginning to change just a little bit now with the ETF."
Standing Out From The Bitcoin ETF Crowd
Within the cryptoverse, enthusiasm for bitcoin ETFs remains strong. "You're now transitioning into this more mature regime for the asset class moving forward, now that we have the ETFs," Will Clemente, founder of Reflexivity Research and a notable bitcoin bull, told IBD. "You have pension funds, sovereign wealth funds, et cetera, that can actually look at (bitcoin) seriously and allocate and feel comfortable doing so."
"The career risk has come down from a compliance standpoint," he said.
Interest is strong enough that ETF managers are considering tactics to stand out from a growing crowd of bitcoin ETFs.
"Where we differentiate is through our own skin in the game," Matthew Sigel, VanEck head of digital assets research, told IBD. "VanEck made the largest seed investment into our product by a factor of $372 million of our own money. We are going to be right alongside our clients."
"We always eat our own cooking," Sigel said.
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