Ark Invest, a major Tesla shareholder, sets sights on a five trillion market cap for Bitcoin in the next decade

Ark Investment Management, a financial technology company that was extremely bullish on Tesla's stock price as early as 2018, has released two Bitcoin investment reports in September, suggesting that the market value of this premier cryptocurrency could reach as high as $5 trillion in the next decade.

Founded in 2014, Ark Investment is an investment firm that focuses on disruptive startups and is famous for its optimistic outlook on Tesla, being one of the top twenty shareholders of the company. Its founder, Cathie Wood, is also known as the female version of Warren Buffett due to her unique investment insights.

Reasons for Bullish Outlook

In a report released in September, Ark Invest believes that Bitcoin has surpassed expectations in its current scale but is still in the early stages of monetization, holding significant appreciation potential. Over the next decade, its market cap is projected to grow from the current $200 billion to $1-5 trillion. The reasons for the bullish outlook are as follows:

• Becoming one of the global settlement networks
• As a hedge asset
• Digital gold properties
• Catalyst for currencies in emerging markets

Ark Invest estimates that out of the $14.7 trillion in annual U.S. deposits, settlements amount to a high $1.3 quadrillion. If Bitcoin can capture 10% of this value in the future, its market cap would expand more than sevenfold, from the current $200 billion to $1.5 trillion.

Additionally, Bitcoin's relatively low market cap is often compared to gold. Ark Invest believes that if it can reach 10% of the current gold market cap, Bitcoin would increase fivefold to reach a $1 trillion market cap. With its anti-seizure characteristics, assets managed through private keys would be difficult to confiscate in practice. Ark Invest points out:

We believe that allocating some Bitcoin in assets can significantly reduce the risk of assets being confiscated by corrupt governments, whether due to fiat currency inflation or being seized by unethical governments. Although Bitcoin's current scale is insufficient to serve the overall market, the demand for Bitcoin in emerging markets is expected to increase with the development of infrastructure.

Risks Still Exist

Despite the high regard for Bitcoin, Ark Invest also mentions several risks that could threaten Bitcoin's development potential, with the main focus on regulatory uncertainty. The report states:

Institutional security vulnerabilities and poor private key management have resulted in investors losing millions of dollars, with users having inadequate regulations to recover assets. The adoption by institutions may also threaten Bitcoin's value proposition, potentially leading to a scenario where a few custody institutions dominate Bitcoin transactions and deviate from Bitcoin's core values.

Indeed, as early as 2015, Ark Invest invested in Bitcoin through the Grayscale Bitcoin Trust Fund at a price of only $230 and cashed out in 2018. Ark Invest stated at the time:

Selling Bitcoin was a "complex decision," as Bitcoin still holds significant advantages, primarily due to regulatory and tax issues.

However, Ark analyst Yassine Elmandjra emphasized earlier this year that Ark Invest continues to hold Bitcoin in "unpublicized, independently managed" accounts.