The price of bitcoin could skyrocket to more than $500,000 as institutional investors begin to allocate to the relatively new crypto space, the CEO of Ark Invest Cathie Wood told CNBC on Thursday.
According to Wood, institutions are always in search of investments that are unrelated to traditional asset classes like stocks and bonds. “I think institutions are moving in [to crypto] right now,” Wood said, noting that they currently prefer the two largest cryptocurrencies, bitcoin and ether.
The reason institutions are moving in “is to some extent this is a new asset class with correlations very different compared to other asset classes,” she explained.
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Ark Invest’s study has found that the asset with the closest correlation to bitcoin is real estate.
Wood said that, “Institutional managers have to look at new asset classes that are evolving, that have low correlations, that’s the key to diversification, and it’s the holy grail in terms of asset allocation.”
The chief executive noted if institutions move roughly 5% of their portfolio to bitcoin over time, it would add $500,000 to the current price of bitcoin.
Bitcoin was trading down more than 5% on Thursday, above $48,000 per token as of 15:10 GMT.
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