It’s probably not good to be a crypto investor these days. Bitcoin is down 65% year to date. And some say that this is not “crypto winter” but rather “crypto extinction”.
Still, one expert remains optimistic: Cathy Wood of Ark Invest.
When asked if she still stands by her prediction of $1 million bitcoin per coin by 2030 during an interview with Bloomberg, her answer was yes.
“Sometimes you have to be battle-tested, you have to go through crises to see the survivors first,” she says.
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Wood acknowledges that the ongoing crypto crisis may slow institutional adoption, but still thinks Bitcoin will come out of this “smelling like a rose.”
“Once they actually do their homework and see what’s happened here, I think they might be more comfortable moving to Bitcoin and maybe Ether as a first stop.”
Given that Bitcoin is currently trading at around $16,400, her $1 million price target suggests a potential upside of 5,998%.
As always, Wood puts his money where his mouth is. Here’s a look at how the super investor is betting on crypto.
Grayscale Bitcoin Trust (GBTC)
With the rise of Bitcoin over the past few 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, minus fees and expenses. The fund says it fell short of that target because its shares traded at a premium or discount to that value, which “was at times substantial.”
Year-to-date, GBTC shares are down 75%.
The bankruptcy of cryptocurrency exchange FTX has sent shockwaves through the crypto space and is one of the reasons why investors are offloading GBTC shares. As a result, GTBC trades at a deep discount to its underlying asset, Bitcoin.
This concession caught Wood’s attention. It was reported that on Monday, Ark Investment Management bought 176,945 shares of GBTC worth approximately $1.5 million.
Coinbase Global (COIN)
If you’ve ever bought Bitcoin on an exchange, you know that there are usually transaction fees involved. And as more people rushed to buy cryptocurrencies, those transaction fees quickly increased.
That’s 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.
In the third quarter, Coinbase had 8.5 million monthly transactional users. It earned $366 million in transaction revenue and $211 million in subscription and service revenue.
Given the decline in cryptocurrencies, it’s no surprise that Coinbase’s stock has also seen some serious volatility — it’s down a painful 82% in 2022.
But the company remains in Wood’s portfolio. Ark Invest’s flagship 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, the digital payments technology firm formerly known as Square.
With a stake valued at $392.7 million, Block is currently the fifth largest holding in ARKK.
Management changed the name last December as “Square” became synonymous with the company’s vendor business. But the move didn’t cheer investors much. In 2022, the stock collapsed by more than 60%.
While the company is far from the market favorite right now, it continues to deliver some very impressive numbers.
In Q3, total net revenue rose 17% year over year to $4.52 billion. Gross profit was $1.57 billion, up 38% from a year ago.
The company is also playing with 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 should not be construed as advice. Provided without any warranty.