Photo by Patrick T. Fallon.
As institutional investors increase their allocations to the space, the price of the virtual currency could surge to $550,000.
Wood told CNBC on Thursday that institutions are looking for exposure to uncorrelated assets.
If institutions moved into the game with a 5% increase in price over time, it would add $500,000 to the price.
As institutional investors begin to allocate to the relatively new space of cryptocurrencies, the price of bitcoin could surge to more than $500,000, according to Ark Invest's Cathie Wood.
Wood said that institutions are always looking for investments that are unrelated to traditional asset classes, and that is why they like the idea of investing in cryptocurrencies.
"I think institutions are moving into cryptocurrencies right now, and they prefer the two largest cryptocurrencies, bitcoin and [ether]," Wood said. According to Wood, institutions barely have any exposure to the space.
"Institutions are moving in because of a new asset class with very different correlations compared to other asset classes," Wood said. Real estate was found to be the most correlated asset with the digital currency.
It's not true that cryptocurrencies are risk assets that move in tandem with the stock market. The stock market sell-off last week led to the entry of a bear market for bitcoin, which fell more than 20% from its recent high.
"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," Wood said.
Wood believes that if institutions moved 5% of their portfolio to bitcoin, it would add $500,000 to the current price of the virtual currency. The potential upside is 1,000%.
Business Insider has an original article.
