Cathie Wood is reportedly worth hundreds of millions of dollars. The chief executive officer of Ark Invest didn't get there overnight. Wood is known for making bold investments, often buying high-growth stocks that she thinks can be multibaggers by disrupting huge markets in tech. One asset class Wood has not shied away from is cryptocurrency. On numerous occasions, Wood has predicted that Bitcoin (CRYPTO: BTC), the world's largest cryptocurrency, will eventually be worth many multiples of what it is today. With Bitcoin now valued at more than $100,000, Wood is doubling down and predicting that Bitcoin will hit $3.8 million by 2030. Wood is also broadening her crypto investments. Ark recently purchased a cryptocurrency exchange-traded fund (ETF) that one Wall Street analyst thinks could shoot 164% higher next year. Let's take a look.
Second Fiddle
If gold has silver, Bitcoin has Ethereum (CRYPTO: ETH). Ethereum is the second-largest cryptocurrency in the world and is also seen as one of the sector's pioneers like Bitcoin. While Bitcoin is viewed as a hedge against inflation, Ethereum is the go-to network for developers building decentralized apps with smart contract functionality. Ethereum has performed well since Election Day but also has played second fiddle to Bitcoin, which has widely outperformed this year.
Bitcoin Price data by YCharts
In the third quarter, ARK purchased slightly less than 19,000 shares of the iShares Ethereum Trust ETF (NASDAQ: ETHA) by BlackRock. Bitcoin and Ethereum are the only two cryptocurrencies the Securities and Exchange Commission (SEC) approved for spot exchange-traded funds (ETFs), which many believe has increased exposure to both tokens. ETFs are highly liquid and trade like stocks, so many view them as an easier financial instrument to trade than buying cryptocurrencies directly.
In October, Wood (on X) issued a research paper on Ethereum, suggesting that the token is developing traits similar to U.S. Treasury bills, largely due to its staking mechanism in which investors can post Ethereum as collateral to validate transactions and earn rewards. Wood thinks that Ethereum's ability to produce yield and be used as collateral in the digital asset sector will set the token apart.
Wood isn't the only expert bullish on Ethereum. Standard Chartered analyst Geoff Kendrick also sees significant upside heading into 2025, according to Benzinga. In early November, Kendrick reiterated his 2025 price target for Ethereum at $10,000, which implies 164% upside from current levels (as of Dec. 11). Kendrick is bullish on President-elect Donald Trump's pro-crypto policies, which he expects to help the entire sector.
First, Kendrick believes a Trump administration will provide regulatory clarity for the sector and remove roadblocks like the SEC's Staff Accounting Bulletin (SAB) 121. SAB 121 requires financial institutions holding crypto assets on behalf of their clients to deviate from normal accounting and record them as liabilities on their balance sheets, which will also require an offsetting asset accounted for at fair value. This leads to higher regulatory capital and liquidity requirements for banks, making them less likely to provide crypto custodial services. If this rule is lifted, the crypto environment should be more favorable.
Kendrick is also optimistic about crypto networks with real-world utility like Ethereum. These networks should eventually be able to tap into sectors like gaming and physical infrastructure like transportation and telecommunications, all of which are in the early stages, Kendrick wrote in his note.
Can Ethereum hit $10,000
Predicting price targets is a tough business in a stable asset class, let alone a volatile one like crypto. However, I think Bitcoin and Ethereum are good long-term assets for investors to have at least some exposure to. I also think that Ethereum can close the gap with Bitcoin over time because it is trading at a low value relative to Bitcoin. The Ethereum-Bitcoin ratio is roughly 0.0376 (as of Dec. 11). Dating back to 2020, the ratio has averaged 0.0538, so I think that suggests upside to Ethereum over time.
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Bram Berkowitz has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool recommends Standard Chartered Plc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
