Cathe Woods, the CEO of Ark Invest sees Bitcoin as not only the new store of value and hedge against inflation but also an asset that will soon be widely accepted as a medium of exchange. Many investors are now losing interest in traditional investments in favor of Bitcoin and other cryptocurrencies, which people see as a new hedge against risk. Bitcoin exemplifies an evolutionary set of assets that has the prospect of being a reserve currency sooner or later.
The CEO expressed this opinion to back up the widespread belief and optimism held by crypto supporters. Woods was surprised that in 2020, she was expecting most institutional investors to have discovered the opportunities inherent in Bitcoin. many institutions need to diversify and invest more in Bitcoin. She also admitted that the crypto space is not yet free from regulatory obstacles. In a statement released by ARK Invest, Bitcoin could rise to $500K if institutions invest at least 6% of their assets in cryptocurrencies.
Crypto Industry Overtakes Bonds as Top Investment Option
Woods stated that the long-held investment formula of 60% equity and 40% bond portfolio would soon fade away and be replaced by a new one. She said the continuous dominance of bonds in investors’ portfolios has now ended and been replaced by crypto. Although Woods noted that the conventional diversification formula works concerning cash, she believes that the quantitative easing arrangement that the government is planning may not be the best policy.
Bond, according to the ARK CEO, is just a fixed income asset that has been dominant for four decades. While Bitcoin has presented better and more rewarding returns, “Why not try it?” She quipped. Recalling what happened on Thursday, she said the fact that big institutions, such as Tesla, are now investing heavily in Bitcoin is a testament to the wide acceptance of the asset as a store of value. She explained that Bitcoin serves as a hedge against both risk and inflation, replacing gold and cash.
Institutions Now Holding 3% of Total Bitcoin in Circulation
Meanwhile, a recent report shows that the Bitcoin holdings by institutional investors have risen to 3%. That is, they now hold up to 3% of the total Bitcoin in supply. For example, Grayscale, the institution that holds the highest percentage of Bitcoin, now has up to $30 billion in custody. Ross Stevens, an investment analyst, gathered a report that the number of institutional investors has risen from 25 from last year to 280 now.
He added that now by December, the total amount invested by institutional investors should be up to $25 billion. Also, Bitcoin is now among the top 10 assets worldwide, outranking Facebook and Tesla. Right now, Bitcoin now boasts of more than $1 trillion in market capitalization.
The US present administration has softened its stance on regulatory requirements needed to secure approval on crypto holdings. Some present and previous US administrations have supported the crypto industry, as Gary Gensler says that the limited supply of Bitcoin will inevitably shoot the price up. Also, US Treasury has announced that it won’t prevent banks from accepting stablecoins as a payment option.
MicroStrategy and GrayScale are among the top institutional investors that have invested billions of dollars in the crypto industry. After investing $1.5 billion in Bitcoin, Tesla has also shown interest in accepting Bitcoin as a payment option. Morgan Stanley has also been looking at investing in Bitcoin. Likewise, CME has announced that it will add a crypto option for accepting payments.