It’s probably not good to be a crypto investor these days. Bitcoin is down 65% since the start of the year. And some say this is not a “crypto winter” but rather a “crypto extinction”.
Yet one expert remains optimistic: Cathie Wood of Ark Invest.
When asked if she still held to her bitcoin prediction of $1 million per coin by 2030 during an interview with Bloomberg, her answer was “yes.”
“Sometimes you have to do combat tests, you have to go through crises first to see the survivors,” she says.
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Wood acknowledges that the ongoing crypto crisis could delay institutional adoption, but still thinks bitcoin will grow out of that “smell of roses.”
“Once they’ve done their homework and seen what’s happened here, I think they might be more comfortable moving to bitcoin and maybe ether as their first stop. “
Considering that bitcoin is currently trading at around $16,400, its price target of $1 million implies a potential upside of 5,998%.
As always, Wood puts his money where his mouth is. Here’s a look at how the super investor is betting on crypto.
Grayscale Bitcoin Trust (GBTC)
With the rise of bitcoin over the past few years, a number of bitcoin funds have entered the market. Grayscale Bitcoin Trust is one of them.
According to GBTC, its actions aim to reflect the value of its bitcoin holdings, less fees and expenses. The fund says it didn’t meet that target because its shares traded at a premium or discount to that value that “has at times been substantial.”
Year-to-date, GBTC shares have fallen 75%.
The bankruptcy of cryptocurrency exchange FTX has sent shockwaves through the crypto space and is one of the reasons investors have been offloading GBTC shares. As a result, GTBC is trading at a steep discount to its underlying asset, bitcoin.
This reduction caught Wood’s attention. It was reported that on Monday, Ark Investment Management purchased 176,945 shares of GBTC, worth approximately $1.5 million.
Coinbase Global (COIN)
If you’ve ever purchased bitcoin on an exchange before, you know that there are usually transaction fees involved. And as more and more people rushed to buy cryptocurrencies, those transaction fees quickly piled up.
This is where Coinbase found its opportunity. As the largest cryptocurrency exchange in the United States, it collects transaction fees every time someone buys or sells cryptocurrency on its exchange.
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In the third quarter, Coinbase had 8.5 million monthly users transacting. It generated $366 million in transaction revenue and $211 million in subscription and service revenue.
Given the decline in cryptocurrencies, it’s no surprise that Coinbase shares have also seen high volatility – they’ve fallen 82% in 2022.
But the company remains in Wood’s portfolio. Ark Invest’s flagship fund, Ark Innovation ETF (ARKK), owns over 5.9 million shares of Coinbase, worth approximately $257.1 million.
Block (SQ)
Wood’s Ark Innovation ETF also owns 6.26 million shares of Block, a digital payments technologist formerly known as Square.
With a stake valued at $392.7 million, Block is currently ARKK’s fifth largest stake.
Management changed the name last December because “Square” had become synonymous with the company’s vendor business. But this decision did little to reassure investors. In 2022, stocks have fallen more than 60%.
Although the company is far from a market favorite right now, it continues to deliver very impressive numbers.
In the third quarter, total net revenue increased 17% year over year to $4.52 billion. Gross profit was $1.57 billion, up 38% from a year ago.
The company also plays cryptocurrency: For the quarter, Block generated $1.76 billion in bitcoin revenue and $37 million in gross bitcoin profit.
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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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