Bitcoin could reach $ 500,000, according to ARK Invest’s Catherine Wood

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Bitcoin’s price has been in slump, rising nearly 160% this year and around 25% since the beginning of the month. It could be just the beginning, said Catherine Wood, CEO of ARK Investment Management Barron’s readers Thursday.

Bitcoin’s recent rise to $ 18,640 could give investors a flashback until 2017, when the cryptocurrency hit a high of $ 19,783.21 in December before selling off. This time around it’s different for a big reason, Wood said: the involvement of institutional investors, which she believes could drive Bitcoin’s price to $ 500,000.

The founder of ARK and a well-known promoter of disruptive technologies such as Bitcoin and Tesla told attendees Barron’s Virtual Investing in Tech series that Bitcoin is the most recognized currency in the crypto-asset ecosystem. “It’s the dollar equivalent in the fiat currency system,” he said. “This is quite an exalted role.”

Wood added that the rise of central bank digital currencies, or CBDCs, has added legitimacy to Bitcoin, referencing China’s ambitions to launch a digital yuan.

Some investors, he said, see Bitcoin as a digital alternative to gold or an inflation insurance policy. With the Federal Reserve’s decision to keep interest rates low for the foreseeable future, this is one of the reasons why the price of Bitcoin may rise. And if institutional investors like hedge funds become more interested in Bitcoin, it could drive prices even higher, Wood said. Additionally, Wood noted that the supply of Bitcoin units exceeds 21 million. There are about 18.5 million currently in existence, he said.

Wood said institutions have recently increased their exposure to cryptocurrency, comparing to “the early days of institutions moving into real estate and emerging markets,” when allocations started small, then grew. “So they started with an allocation of half a percent [1%]and therefore 5% or so seemed to be the right number. “

If all institutions were to assign a similar average-figure allocation to Bitcoin, the cryptocurrency could rise “somewhere in the $ 400,000 to $ 500,000 range,” Wood said.

Tesla

(ticker: TSLA) also has room to grow, despite the significant 491% year-to-date increase, Wood said, though he added, “as they say, the easy money has been made.”

Wood said benchmark-focused institutions “are likely to enter the stock” after the company’s inclusion in the

S&P 500,

announced this week. “If we’re right, [Tesla] it has miles to go, miles and miles to go. ”

Investors should view Tesla as a true tech stock, not a self-producing stock, he told attendees, adding that the stock’s high valuation shouldn’t be a problem. “Most people don’t understand what this animal really is,” he said. “It’s a tech title and it’s running away with the electric vehicle market in a way that I think has been surprising for most people.”

Tesla’s future lies in the autonomous vehicle space, Wood said. “We believe it is in pole position to become, at least in the United States, the dominant autonomous taxi network in the coming years.”

Wood also hinted at recent news that Resolute Investment Managers, the US distributor of ARK funds, has moved to take over the business next year. She referred to ARK’s previous statement on this development, in which she said she was “disappointed” by the news. Wood said many know that “we don’t want that to happen”, adding “we’re in talks, so I’ll leave it there.”

E-mail: Shaina Mishkin at [email protected]