According to Cathie Wood, this is the 1 top cryptocurrency to buy before it surges 2,139%

Cathie Wood from Ark Invest firmly believes so Bitcoin (BTC 1.58%). After receiving approval from regulators, it launched Ark's first spot-priced Bitcoin exchange-traded fund (ETF) in January.

Earlier this year, Wood increased her price target from $1 million to $1.5 million by 2027 – which would represent a whopping 2,139% increase from Bitcoin's recent price of around $67,000. Wood expects this explosive growth to be driven by three tailwinds: the approval of Bitcoin ETFs, institutional purchases of these ETFs, and the expected halving next month, which will halve the rewards for mining Bitcoin.

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We should take these estimates with a grain of salt, as Wood has a habit of making extremely optimistic predictions that don't necessarily come true. their flagship Ark Innovation ETFfor example, has only increased by 13% in the last five years S&P 500 increased by 88%. However, we should still consider whether Wood's bullish thesis makes sense and whether Bitcoin is worth buying.

The bull case for Bitcoin

Bulls believe that Bitcoin will eventually serve as a hedge against long-term inflation along with gold, silver and other precious metals. Like the gold bugs, Bitcoin bulls believe that fiat currencies are destined to lose value and that this trend will drive more governments, companies and investors to adopt the cryptocurrency. Until January of this year, most of these people invested in Bitcoin in three ways: through direct purchases on a crypto exchange like Coinbasethrough a trust like Grayscale Bitcoin Trustand through ETFs that were linked to Bitcoin futures.

However, all three methods had disadvantages. Crypto exchanges were disconnected from public exchanges, prone to sudden disruptions and outages, and were often targeted by regulators. The collapse of FTX and the recent criminal charges against Binance have also shaken investor confidence in standalone cryptocurrency exchanges.

Crypto trusts were safer and could be actively traded on the exchange, but charged high fees. Bitcoin futures ETFs also charged high fees but often couldn't keep up with the cryptocurrency's actual spot prices. The Securities and Exchange Commission’s approvals of the first 11 spot price Bitcoin ETFs in January resolved these issues; The ETFs charge low fees, are tied directly to the spot price of Bitcoin, and can be easily traded on the open market.

Wood believes these new ETFs will encourage institutional investors to buy more Bitcoin. Back in December 2021, Wood predicted that if institutional investors invested an average of 5% of their portfolio in Bitcoin, the short-term price of Bitcoin would increase by around $500,000. Wood reiterated this bullish assessment earlier this month, saying institutional buyers would drive Bitcoin's price to $1.5 million as it becomes recognized as a new asset class.

Meanwhile, Bitcoin will see its next halving in April. This process, which occurs every four years, halves the reward for miners Marathon Digital to mint new Bitcoin – but it could help boost Bitcoin's price as market demand outpaces slowing supply growth.

At the same time, continued inflation and escalating geopolitical conflicts could lead to more countries adopting Bitcoin as a mainstream currency. This trend could accelerate the transformation of Bitcoin into a reliable and safe asset like gold and silver.

But is Bitcoin really heading towards $1.5 million?

Cathie Wood is not alone in her optimistic assessment of Bitcoin's future. The British bank Standard Chartered says its price will reach $100,000 by the end of 2024, while financial services giant Fidelity predicts its price will reach $100 million by 2035 and $1 billion by 2038. It's impossible to say whether these predictions will come true, but the approval of the first spot Bitcoin ETFs could set a floor on the volatile price.

So instead of wondering whether Bitcoin will post a 2,000% gain in just three years, investors should simply ask themselves whether they believe in the bullish argument. If Bitcoin sounds like a promising investment, then it might be smart to accumulate some Bitcoin or shares of a low-fee spot price ETF as a long-term growth investment.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Coinbase Global. The Motley Fool recommends Standard Chartered Plc. The Motley Fool has a disclosure policy.

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