1 Standout Cryptocurrency to Buy Before It Rockets 2,975% Higher by 2030, According to Cathie Wood's Ark Invest

Key Points

• Bitcoin currently trades near all-time high prices of $123,000.

• Cathie Wood and her research team at Ark Invest are predicting that Bitcoin could reach a price of $3.8 million by 2030.

• A number of factors are driving Wood's optimistic views of Bitcoin.

• 10 stocks we like better than Bitcoin ›

Cathie Wood has built a reputation on Wall Street for making bold -- and, at times, seemingly unconventional -- predictions. As CEO and Chief Investment Officer of Ark Invest, Wood was an early champion of electric vehicle (EV) pioneer Tesla and artificial intelligence (AI) software developer Palantir Technologies -- two picks that, in retrospect, appear to have been obvious opportunities.

Given Wood's penchant for asymmetric risk assets, it should come as no surprise that she has also developed a strong conviction for cryptocurrency -- particularly Bitcoin (CRYPTO: BTC).

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In prior reports published by Ark Invest, Wood and her team of analysts modeled an upside price target of $1.5 million per Bitcoin by 2030.

Since then, Wood has amplified her forecast considerably. She's now projecting a price of $3.8 million per Bitcoin within the next five years. At Bitcoin's current price of roughly $123,000, this forecast implies nearly 3,000% potential upside.

Let's explore the key factors that could propel Bitcoin's price higher in the latter half of the decade.

What could drive the price of Bitcoin higher?

For years, Bitcoin found greater acceptance among retail investors compared to large institutional players such as banks, hedge funds, or wealth management firms. Historically, asset management funds steered clear of Bitcoin due to its uncertain regulatory framework and perceived lack of real-world utility compared to traditional fiat currency.

However, these dynamics are starting to shift. Digital assets are increasingly viewed as a legitimate avenue for portfolio diversification. According to Wood's research, even a modest reallocation of 1% to 5% from commodities into cryptocurrency within institutional portfolios could release billions in capital -- a shift that would significantly boost demand for, and consequently the prices of, digital assets such as Bitcoin.

Closely tied to this trend is the introduction of spot Bitcoin ETFs. These are vehicles that offer direct exposure to Bitcoin without the complexities of managing a crypto wallet or navigating specific exchanges such as Coinbase. Moreover, the Securities and Exchange Commission's (SEC) approval of these ETFs signals a growing regulatory acceptance of cryptocurrency as a mainstream asset class -- a development that likely alleviates lingering concerns among institutional money managers.

Outside of traditional portfolios, Bitcoin adoption is also accelerating as part of evolving corporate treasury strategies. Companies such as Strategy (formerly MicroStrategy) and GameStop are complementing cash and short-term investments on their balance sheets with direct exposure to Bitcoin. Much like Wood's thesis on untapped institutional liquidity, if more corporations adopt Bitcoin as a strategic financial differentiator, it could create a domino effect -- prompting additional enterprises to do the same.

Taking this idea a step further, several countries around the world have explored creating a strategic Bitcoin reserve. The same logic driving increased institutional and corporate adoption applies here. While Bitcoin should still be viewed as a speculative asset, it could prove to be a major differentiator in a world of increasingly complex trade negotiations and heightened geopolitical risks -- factors that often contribute to fluctuations and instability in traditional currency markets.

Stablecoins are a type of cryptocurrency pegged to the value of a fiat currency. While this may seem unrelated to Bitcoin at first glance, broader adoption of stablecoins as a medium of exchange could foster greater psychological acceptance of digital assets as an integrated part of commerce. In turn, increased acceptance of decentralized finance (DeFi) protocols could encourage more investors to hold cryptocurrencies such as Bitcoin as a core component of their investment playbooks.

The core pillar of Wood's forecast rests on Bitcoin's fixed supply cap of 21 million coins. Prices of traditional commodities such as gold fluctuate based on changes in production. In contrast, Bitcoin's supply is finite by design and inherently constrained by periodic halving events -- a feature that instills a scarcity mindset among investors. As a result, Bitcoin is often referred to as "digital gold" and is viewed by many as a hedge against inflation. In essence, the basic dynamics of supply and demand point to exponentially rising demand chasing a fixed supply -- an idea that supports the potential for meaningful price appreciation.

Image source: Getty Images.

Is Bitcoin right for your portfolio?

Indeed, Wood's $3.8 million price forecast is aggressive -- and perhaps overly optimistic. As a long-term investor, I would not focus solely on Bitcoin's potential upside in terms of absolute dollars. Instead, investors should consider the underlying factors driving bullish sentiment from investors like Wood.

As Bitcoin gains broader acceptance among major financial institutions, corporations, and governments, the cryptocurrency becomes increasingly positioned to play a meaningful role in the modern financial system. Even a modest allocation to Bitcoin could serve as both a diversification tool and a potential hedge against inflation during periods of economic uncertainty.

In my view, an investment in Bitcoin reflects a broader endorsement of the digital asset revolution -- and I see no better asset to own in this space.

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Adam Spatacco has positions in Palantir Technologies and Tesla. The Motley Fool has positions in and recommends Bitcoin, Palantir Technologies, and Tesla. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.