It’s probably not a good idea to be a cryptocurrency investor these days. Bitcoin is down 65% since the beginning of the year. Some say this is not “crypto winter” but rather “crypto extinction”.
However, one expert remains optimistic: Cathy Wood of Ark Invest.
When asked if she still holds onto her bitcoin prediction of $1 million per coin by 2030 during a Bloomberg interview, her answer was “yes.”
“Sometimes you need to test the battle, you need to go through crises to see the survivors first and foremost,” she says.
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Wood acknowledges that the current cryptocurrency crisis could delay institutional adoption, but he still believes that Bitcoin will emerge from this “smelling like a rose.”
“Once they do their homework and see what happened here, I think they might be more comfortable moving to bitcoin and maybe ether as a first stop.”
Given that bitcoin is currently trading around $16,400, the $1 million price target would imply a potential upside of 5,998%.
As always, Wood puts her money where her mouth is. Here’s a look at how to bet on cryptocurrencies.
Grayscale Bitcoin Fund (GBTC)
With the rise of bitcoin over the past several years, quite a few bitcoin funds have entered the market. Grayscale Bitcoin Trust is one of them.
According to GBTC, its shares are intended to reflect the value of its bitcoin holdings, minus fees and expenses. The fund says it did not achieve this goal because its shares traded at a premium or a discount to that “sometimes significant” value.
Year-to-date, GBTC shares are down 75%.
The bankruptcy of cryptocurrency exchange FTX sent shock waves across the crypto space and that is one of the reasons why investors dumped GBTC shares. As a result, GTBC is trading at a significant discount to its core asset – bitcoin.
This opponent caught Wood’s attention. On Monday, it was reported that Ark Investment Management acquired 176,945 shares of GBTC, worth approximately $1.5 million.
Coinbase Global (COIN)
If you’ve ever bought Bitcoin before, you know that there are usually transaction fees involved. And as more people rush to buy cryptocurrencies, these transaction fees have increased rapidly.
This is where Coinbase found its opportunity. As the largest cryptocurrency exchange in the US, it earns transaction fees every time someone buys or sells cryptocurrency on the exchange.
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In the third quarter, Coinbase had 8.5 million users transacting per month. It generated $366 million in transaction revenue and $211 million in subscription and service revenue.
Given the cryptocurrency downturn, it’s no surprise that Coinbase shares have also experienced wild volatility – they’re down an excruciating 82% in 2022.
But the company remains in Wood’s portfolio. Ark Invest’s Ark Innovation ETF (ARKK) owns more than 5.9 million shares of Coinbase, valued at approximately $257.1 million.
Wood’s Ark Innovation ETF also owns 6.26 million shares in Block, the digital payments tech formerly known as Square.
With a stake value of $392.7 million, Block is currently the fifth largest company in ARKK.
Management changed the name last December because “Square” had become synonymous with the company’s vendor business. But the move did little to cheer investors. In 2022, shares are down more than 60%.
While the company is far from being a market favorite right now, it continues to deliver some very impressive numbers.
In the third quarter, total net revenue increased 17% year over year to $4.52 billion. Total profit was $1.57 billion, up 38% from last year.
The company is also playing a game on cryptocurrency: This quarter, Block generated $1.76 billion in bitcoin revenue and generated $37 million in total bitcoin revenue.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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