Bitcoin’s banking crisis wave will ‘attract more institutions’: ARK’s Cathie Wood

by · March 22, 2023

The value proposition of Bitcoin (BTC) is on full display amid the current banking crisis, which will only “attract more institutions” to the BTC market over time, believes ARK Invest CEO Cathie Wood.

Wood shared his thoughts on BTC’s recent price surge in a March 21 Bloomberg interviewwhich says its price behavior through the crisis “is going to attract more institutions.”

“The fact that Bitcoin moved in a completely different way than the stock markets, in particular, was quite instructive,” she added.

Institutional interest in Bitcoin may have already arrived, according to Oliver Lynch, CEO of Seattle-based crypto exchange Bittrex.

Lynch noted in a March 21 interview on The Wolf Of All Streets podcast that many large banks bought into crypto as an investment product well before the recent banking crisis:

“The big talking point for this bear market is institutional interest in crypto. Every major bank now has an extensive crypto desk, not only for trading but also for partnerships.”

However, he said there remains a divide between traditional financial institutions and crypto firms, which has caused headwinds in institutional adoption in recent months.

“Historically, the big players have been the biggest drivers of innovation,” he said, adding that the two sides are currently “stuck in a rut” and that the “big change” won’t happen until they stop fighting for superiority.

“It’s not crypto versus Goldman Sachs or crypto versus institutions. It’s a race to see who can make crypto better.”

Regarding the impact on Bitcoin’s price from the institutional interest, Wood explained in the interview that ARK Invest’s BTC price prediction of $1-1.5 million by 2030 was made on the basis of a BTC allocation analysis for institutional investors, which estimates that most firms will allocate between 2.5% to 6.5% to BTC in their investment portfolios.

“These are the kinds of allocations that they would have made to new, emerging asset classes like real estate in the ’70s and small caps in the ’80s and ’90s,” Wood added.

Related: Bitcoin holds $28K due to spot buying, but institutional investors are still selling

ARK Invest estimates that the BTC price towards $1.5 million will be pressured by institutional investors who allocate between 2.5-6.5% of their portfolio to BTC. Source: ARK Invest

Linch, on the other hand, believes that “aggressive” institutional adoption will come when opportunities become more easily identifiable:

“Show them how it can be done and it can make them money, and I guarantee you they won’t stand in the way of that. They’ll step to the metal to take advantage of that opportunity.”

Positive sentiment has surrounded Bitcoin following the collapses of Silvergate, Silicon Valley Bank and Signature banks. BTC is up 43.6% since its latest low on March 11, compared with a 25.3% gain in the broader crypto market over that time, according to CoinGecko data.

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