It’s probably not cool to be a cryptocurrency investor these days. Bitcoin is down 65% year-to-date. And some say this is not a “cryptographic winter” but rather “cryptographic extinction”.
Yet one pundit remains bullish: Ark Invest’s Cathie Wood.
When asked if she still stands by her bitcoin prediction of $1 million per coin by 2030 during an interview with Bloomberg, her answer was “yes.”
“Sometimes you have to do a battle test, you have to go through the crises first to see the survivors,” he says.
Not to be missed
Wood acknowledges that the current cryptocurrency crisis may be delaying institutional adoption, but still thinks bitcoin will come out of this “smelling like a rose.”
“Once they actually do their homework and see what happened here, I think they might feel more comfortable moving into bitcoin and maybe ether as a first stop.”
Considering that bitcoin currently trades at around $16,400, its $1 million price target implies a potential upside of 5.998%.
As always, Wood is putting his money where his mouth is. Here’s a look at how the super investor is betting on cryptocurrencies.
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 aim to reflect the value of its bitcoin holdings, less fees and expenses. The fund says it fell short of that goal because its shares traded at a premium or discount to that value that “has been substantial at times.”
Since the start of the year, GBTC shares are down 75%.
The failure of cryptocurrency exchange FTX sent shockwaves through the crypto space and this is one of the reasons why investors dumped GBTC stock. As a result, GTBC is trading at a steep discount to its underlying asset – bitcoin.
That discount caught Wood’s attention. Ark Investment Management was reported to have acquired 176,945 shares of GBTC on Monday, valued at about $1.5 million.
Global Coinbase (COIN)
If you’ve ever bought bitcoin from an exchange before, you know that there are typically transaction fees involved. And as more and more people rushed to buy cryptocurrencies, these transaction fees increased rapidly.
This is where Coinbase found its opportunity. As the largest cryptocurrency exchange in the US, it earns a transaction fee every time someone buys or sells cryptocurrency on its exchange.
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In Q3, Coinbase had 8.5 million users making monthly transactions. It earned $366 million in transactional 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 a painful 82% in 2022.
But the company remains in Wood’s portfolio. Ark Invest’s flagship fund, Ark Innovation ETF (ARKK), holds over 5.9 million shares of Coinbase, valued at approximately $257.1 million.
Wood’s Ark Innovation ETF also owns 6.26 million shares of Block, a digital payments technologist formerly known as Square.
With a stake worth $392.7 million, Block is currently ARKK’s fifth-largest holding.
Management changed the name last December because “Square” had become synonymous with the company’s salesmanship. But the move did little to cheer up investors. In 2022, shares have plunged more than 60%.
While the company is far from a market favorite right now, it continues to deliver some seriously impressive numbers.
In the third quarter, total net revenues increased 17% year over year to $4.52 billion. Gross profit was $1.57 billion, up 38% from a year ago.
The company also plays into cryptocurrency: For the quarter, Block generated $1.76 billion in bitcoin revenue and earned $37 million in gross bitcoin profit.
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This article provides information only and is not intended as advice. Comes without warranty of any kind.