It is a common observation that the abundance of anything in the market leads to devaluation, but in the case of cryptocurrency, there is scarcity. Scantiness will raise the value as well as the prices of Bitcoin tremendously.
Cathie Wood, the CIO, Founder, and CEO of the ARK, discussed Bitcoin (BTC) at large in a webinar held on the 25th of March. Moreover, she added that when people try to foresee the future of Bitcoin, its current market cap, which is one trillion dollars at the present moment, is of dwarf worth to what we are expecting will be a lot higher in the coming couple of years. The requirement for such kind of boost in cryptocurrency prices is that we use it as reserves in public companies such as Tesla, Paypal, and Galaxy Holdings, she added.
Industries want the currency to be manifold. Cryptocurrency has provided a second option to investors because the cryptocurrency is the new gold or even a better financial asset. Cryptocurrency behaves differently as compared to any other asset, as we have seen in the days of the pandemic that it proved safer than expected. This option is new of its kind, and the people are happy to have a new option after four centuries.
Allocators always want to have an option of assets, which is not correlated. The necessity of non-correlated assets is highest in the case of real estate. By the use of cryptocurrency, this type of industry can prosper more effectively because Bitcoin has diversified asset options for them. A critical question arises at this point that how much these companies should allocate for cryptocurrencies in their portfolios. A well-calculated and risk-free answer which we have received after the huge number of surveys and research, is at least three to eight percent for a startup.
Cathie Wood also said that the proportion of portfolios of institutional investors should be allocated to Bitcoin (BTC). She said that their detailed research, which is available on the ARK Investment website which focuses on the role of institutional investors. They might implement Monte Carlo if institutions start using that sort of analysis, volatility can be minimized or extreme result in maximizing Sharp ratio, which would be around 2.5 to 6.5% Bitcoin (BTC) in their respective investment portfolios.