Bitcoin 's price could surge to $550,000 as institutional investors ramp up allocations to the space, according to Cathie Wood.- Wood told CNBC on Thursday that institutions are seeking exposure to uncorrelated assets and
crypto fits the bill. - "The move by institutions into bitcoin could add $500,000 to bitcoin's price if they moved into the tune of roughly 5% over time," Wood said.
The price of $4 could surge to more than $500,000 as institutional investors begin to allocate to the relatively new cryptocurrency space, Ark Invest's Cathie Wood told CNBC in an interview on Thursday.
Wood explained that institutions are always in search of investments that are uncorrelated to traditional asset classes like stocks and bonds, and crypto fits that bill.
"I think institutions are moving in [to crypto] right now," Wood said, adding that they currently prefer the two largest
"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," Wood explained. A study conducted by Ark Invest found that the asset with the closest correlation to bitcoin is real estate.
That runs counter to the commonly held belief that cryptocurrencies are risk assets that move in tandem with broader moves in the stock market. For example, amid the $4 last week, $4 falling more than 20% from its recent high.
"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," Wood said.
If institutions moved roughly 5% of their portfolio to bitcoin over time, Wood believes it would add $500,000 to the current price of bitcoin, to about $550,000 based on bitcoin's current price. That represents potential upside of 1,000% from current levels.