It probably doesn’t feel good to be a cryptocurrency investor these days. Bitcoin is down 65% year to date. Some say it’s not a “crypto winter” but a “crypto extinction.”
Yet one expert continues to rise: Ark Invest’s Cathie Wood.
During a Bloomberg interview, when asked if he still maintained his $1 million per coin bitcoin prediction by 2030, he answered yes.
“Sometimes you have to be battle-tested, you have to go through crises to see the survivors first,” he said.
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Wood acknowledges that the ongoing cryptocurrency crisis may delay institutional adoption, but still thinks bitcoin will come out of this “smell of roses.”
“Once they really do their homework and see what’s going on here, I think it might be more comfortable to move to bitcoin and maybe ether as a first stop.”
Given that Bitcoin is currently trading around $16,400, its $1 million price target represents a potential upside of 5,998%.
As always, Wood puts his money where his mouth is. Let’s take a look at how a super investor bet on cryptocurrency.
Grayscale Bitcoin Trust (GBTC)
With the rise of bitcoin over the past few years, several bitcoin funds have entered the market. Grayscale Bitcoin Trust is one of them.
According to GBTC, its shares aim to reflect the value of bitcoin holdings, less fees and expenses. The fund says it did not meet that goal because its shares were sold at a “sometimes significant” premium or discount.
GBTC shares are down 75% year to date.
The collapse of the FTX cryptocurrency exchange sent shockwaves through the cryptocurrency space and is one of the reasons why investors dumped GBTC shares. As a result, GTBC is trading at a steep discount to its underlying asset, bitcoin.
That discount caught Wood’s attention. On Monday, Ark Investment Management acquired 176,945 shares of GBTC, valued at about $1.5 million, it said.
Coinbase Global (COIN)
If you’ve bought bitcoins on an exchange before, you know that there are usually transaction fees. As more people rushed to buy cryptocurrency, these transaction fees quickly increased.
Coinbase found this opportunity. As the largest cryptocurrency exchange in the US, everyone earns a transaction fee when they buy or sell cryptocurrency on their exchange.
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Coinbase had 8.5 million monthly transacting users in the third quarter. It earned $366 million from operations, and $211 million from subscriptions and services.
Given the decline in cryptocurrencies, it’s no surprise that Coinbase shares have also experienced heavy volatility — they’re down a painful 82% in 2022.
But the company remains in Wood’s portfolio. Ark Invest’s flagship fund Ark Innovation ETF ( ARKK ) holds more than 5.9 million shares of Coinbase, worth about $257.1 million.
Wood’s Ark Innovation ETF also owns 6.26 million shares of digital payments tech Block, formerly known as Square.
With a value of $392.7 million, Block is currently the fifth largest holding in ARKK.
In December of last year, the management changed this name because “Kvadrat” had become synonymous with the company’s sales business. But the move did little to cheer investors. Shares have lost more than 60% in 2022.
While the company is currently far from the market’s favorite, it continues to deliver very impressive numbers.
Total net income in the third quarter was up 17% year-over-year to $4.52 billion. Total profit increased by 38% compared to last year and amounted to 1.57 billion dollars.
The company is also making a play on cryptocurrency: during the quarter, Block generated $1.76 billion in bitcoin revenue and $37 million in gross profit from bitcoin.
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This article provides information only and should not be construed as advice. Provided without any warranty.