It probably doesn’t feel right to be a crypto investor these days. Bitcoin is down 65% so far. And some say this is not “crypto winter”, but rather “crypto extinction”.
Still, one expert remains optimistic: Ark Invest’s Cathie Wood.
When asked if she still holds her bitcoin forecast of $1 million per coin by 2030 during a Bloomberg interview, her answer was a “yes”.
“Sometimes you have to be tested, you have to go through crises first to see the survivors,” she says.
Do not miss it
Wood acknowledges that the ongoing crypto crisis could slow institutional adoption, but still thinks bitcoin will emerge from this “scented rose”.
“Once they do the homework and see what happened here, I think they’ll feel more comfortable moving to bitcoin and maybe ether as a first stop.”
Given that bitcoin is currently trading around $16,400, its $1 million price target implies a potential upside of 5,998%.
As always, Wood puts her money on her mouth. Here’s a look at how the super investor is betting on crypto.
Grayscale Bitcoin Trust (GBTC)
With the rise of bitcoin in recent 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, less fees and expenses. The fund says it failed to meet this objective because its shares have traded at a premium or discount to that value that “at times has been significant.”
So far, GBTC shares are down 75%.
The bankruptcy of cryptocurrency exchange FTX has sent shockwaves through the crypto space and that is one of the reasons why investors have divested GBTC shares. As a result, GTBC is trading at a deep discount to its underlying asset – bitcoin.
That discount caught Wood’s attention. It was reported that Ark Investment Management acquired 176,945 shares of GBTC on Monday, worth approximately $1.5 million.
Coinbase Worldwide (COIN)
If you’ve ever bought bitcoin from an exchange before, you’ll know that there are usually transaction fees involved. And as more people rushed to buy cryptocurrencies, these transaction costs quickly mounted.
That’s where Coinbase found its chance. As the largest cryptocurrency exchange in the US, it earns transaction fees every time someone buys or sells cryptocurrency on its exchange.
Read more: Trade up while the market is low: Here are the best investing apps to seize once-in-a-generation opportunities (even if you’re a beginner)
In the third quarter, Coinbase had 8.5 million monthly trading users. It earned $366 million in transaction revenue and $211 million in subscription and service revenue.
Given the downturn in cryptocurrencies, it’s no surprise that Coinbase shares have also experienced heavy volatility – they’re down an agonizing 82% in 2022.
But the company remains in Wood’s portfolio. Ark Invest’s flagship fund Ark Innovation ETF (ARKK) owns more than 5.9 million shares of Coinbase, worth approximately $257.1 million.
Wood’s Ark Innovation ETF also owns 6.26 million shares of Block, a digital payment technologist formerly known as Square.
With a $392.7 million stake, Block is currently the fifth largest stake in ARKK.
Management changed the name last December because “Square” had become synonymous with the company’s sales activity. But the move did little to cheer investors up. In 2022, the shares have plummeted by more than 60%.
While the company is far from being a market favorite at the moment, it continues to post some very impressive numbers.
In the third quarter, total net sales increased 17% year over year to $4.52 billion. Gross profit was $1.57 billion, up 38% from a year ago.
The company is also game with cryptocurrency: For the quarter, Block generated $1.76 billion in bitcoin revenue and earned $37 million in bitcoin gross profit.
What to read next
This article provides information only and should not be taken as advice. It comes without any kind of warranty.