‘You’ve got to get through this’: Cathy Wood says this crypto crash is a huge opportunity even as bitcoin still climbs 6,000% to $1 million – here are her 3 big sector bets
It may not sound like a good time to be a crypto investor these days. Bitcoin is down 65% year-to-date. And some say this is not a “crypto winter” but a “crypto extinction”.
But one expert remains optimistic: Arch Invest’s Cathy Wood.
When asked if she’s still sticking with her Bitcoin forecast of $1 million per coin by 2030, she answered “yes” during a Bloomberg interview.
“Sometimes you have to test, you have to go through crises to see the survivors first,” she says.
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Wood acknowledges that the ongoing crypto crisis could delay institutional adoption, but still believes Bitcoin will emerge from this “rose-smelling” outcome.
“Once they’ve really done their homework and seen what happened here, I think they’d be more comfortable going with bitcoin and maybe ether as a first stop.”
Given that Bitcoin is currently trading around $16,400, its $1 million price target means a potential upside of 5.998%.
As always, Wood puts her money where her mouth is. Here’s a look at how the super investor is betting on crypto.
Grayscale Bitcoin Trust (GBTC)
With the rise of bitcoin in recent years, a number of bitcoin funds have emerged. Grayscale Bitcoin Trust is one of them.
According to GBTC, its shares are designed to reflect the value of its bitcoin holdings, lower fees and expenses. The fund says it was unable to achieve that goal because its shares were trading at a premium or discount to that price that “at times was significant.”
Year-to-date, GBTC shares are down 75%.
The bankruptcy of cryptocurrency exchange FTX has sent shockwaves through the crypto space and is one of the reasons investors are dumping GBTC shares. As a result, GTBC is trading at a huge discount to its underlying asset – Bitcoin.
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This discount caught Woods’ attention. On Monday, Ark Investment Management reportedly bought 176,945 shares of GBTC worth about $1.5 million.
Coinbase Global (COIN)
If you’ve ever bought bitcoin on an exchange, you know that transaction fees usually apply. And as more and more people rushed to buy cryptocurrency, those transaction fees quickly added up.
This is where Coinbase got its chance. As the largest cryptocurrency exchange in the US, it earns transaction fees every time someone buys or sells cryptocurrencies on its exchange.
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In Q3, Coinbase had 8.5 million users making monthly transactions. It generated $366 million in transaction revenue and $211 million in subscription and service revenue.
Given the decline in cryptocurrencies, it shouldn’t come as a surprise that Coinbase stock has also seen massive volatility — falling a painful 82% in 2022.
But the company remains in Wood’s portfolio. Arc Invest’s flagship fund, the Arc Innovation ETF (ARKK), holds more than 5.9 million shares of Coinbase, valued at approximately $257.1 million.
The Woods Arch Innovation ETF also holds 6.26 million shares of Block, a digital payments technologist formerly known as Square.
With a stake valued at $392.7 million, the block is currently the fifth-largest holding in ARKK.
Management changed the name last December because “Square” had become synonymous with the company’s vendor business. But the move did little to reassure investors. In 2022, stocks are down more than 60%.
While the company is far from a market favorite right now, it continues to post some very impressive numbers.
In the third quarter, total net sales increased 17% year over year to $4.52 billion. Gross profit was $1.57 billion, up 38% year over year.
The company also plays with cryptocurrency: During the quarter, Block generated $1.76 billion in bitcoin revenue and earned $37 million in bitcoin gross profit.
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This article is informational only and should not be construed as advice. It is provided without any guarantee.