According to CryptoPotato, Ark Invest, Cathie Wood's asset management firm, has predicted that the price of Bitcoin (BTC) could soar to $2.3 million if institutions allocated a substantial portion of their investable asset base to it. The prediction was made in the research report titled Big Ideas 2024, which explained the hypothetical impact that institutional investments and allocations from the global $250 trillion investable asset base would have on BTC's price.
Ark Invest's analysis found that a portfolio seeking to maximize risk-adjusted returns on a five-year timeframe from 2015 would have allocated 0.5% to BTC. Since then, on the same basis, the average allocation to the digital asset would have been 4.8%, while in 2023 alone, such portfolios would have allocated 19.4%. Based on this analysis, a 1% allocation from the $250 trillion global investable asset base could push BTC to $120,000. Allocating a 4.8% average maximum Sharpe ratio from 2015 to 2023 could cause BTC to soar to $550,000, and the asset could skyrocket to $2.3 million following the 19.4% allocation in 2023.
Ark Invest also insisted that bitcoin has become an independent asset class worthy of a 'strategic allocation in institutional portfolios,' as the cryptocurrency's price movements have not correlated highly to those of other asset classes. In the past five years, the correlation of BTC's returns relative to traditional asset classes has averaged only 0.27, while the digital currency's annualized return has averaged approximately 44% in the last seven years, compared to 5.7% from other major assets.
