Why will Bitcoin hit a new high and deserve strategic allocation?
Due to heavy position Tesla and achieve amazing results ARK Investment Management recently released 2021 annual investment report.
With its long-term vision of excellence in science and technology, ARK Big Ideas series of annual reports has previously been regarded in the professional financial circle as the “bible “. This year’s annual report is even more impressive after their legendary Tesla record has hit the world.
in this year’s report, the bull queen Cathie Wood led her ARK research team to propose 15 ambitious and promising investment themes in areas beyond well-known bitcoin, electric vehicles, driverless, including deep learning, new generation gene sequencing, data centre re-creation, virtual world, and more.
Among them, the report looks very optimistic.
With strong fundamentals, Bitcoin prices have reached record highs.
As Bitcoin prices continue to refresh record highs, ARK research shows that its fundamentals are still healthy.
Compared with the 2017 volume, Bitcoin’s price rise does not seem to be mainly due to hype. As Bitcoin gained more and more trust, some companies began.
Consider Bitcoin as an asset similar to cash.
If all component companies in the S & P 500 allocate 1% of their assets to Bitcoin, Bitcoin prices are expected to increase by about $40000.
1. Bitcoin prices hit a record high near the end of 2020 as fundamentals gain more support.
2. market participants have never been so focused on bitcoin for so long.
As of November 2020, about 60% of Bitcoin has not changed hands for more than a year, which proves the market’s long-term concern for it and the strong belief of holders.
3. Bitcoin markets and investor groups seem to mature.
The realized market value (Realized Capitalization) of Bitcoin —— an important measure of the cost base of holders. The growing cost base shows that early investors are making more money, new investors are building positions and pushing up price support lines.
4. hype around Bitcoin is more intense than in 2017.
As the price of bitcoin skyrockets, the interest in its search on the Internet has increased. When prices hit record highs, the number of bitcoin-related searches in Google also hit a record high of 15 per cent.
5. Bitcoin is becoming more and more accepted, laying the foundation for Ethernet and stimulating a new wave of other financial innovations.
We believe that decentralized finance (DeFi) is a benign catalyst for the acceptance of Ethernet Square. By using etheric coins as collateral for “trust minimization “, market participants can skip the traditional financial firms as intermediaries, intervene directly in financial services, including credit, market-making, trading, trusteeship, investment, and have access to comprehensive dollar exposures.
6. Bitcoin can play a key role in corporate cash.
Both Square and Microstrategy have invested in bitcoin, and they demonstrate that listed companies can configure bitcoin as a legal alternative to cash.
According to our study, if all component companies in the S & P 500 allocate 1% of their assets to Bitcoin, the price of Bitcoin will increase by about $40000.
Bitcoin: embrace the Age of institutions!
1.ARK believes Bitcoin’s rapid rise has given it a place in the organization’s asset allocation.
We believe that Bitcoin provides the most compelling risk-return of all configured assets.
As the results show, its size may expand to $500 billion in five years, and network capital will reach $1-5 trillion in the next decade.
We think people should include the opportunity cost caused by neglecting Bitcoin in some new investment costs.
2.ARK believe that Bitcoin deserves strategic allocation in asset allocation.
Bitcoin, which is not bound by traditional rules, is more popular in diversified asset allocation than other assets. Bitcoin has been the only investment option with a low correlation with other traditional assets over the past decade.
3. Bitcoin has trading volumes comparable to large-cap stocks and is still growing exponentially.
ARK estimate that the daily trading volume of bitcoin will exceed the U.S. stock market in four years and the global foreign exchange spot market in six years.
4. institutional investors can get bitcoin in more ways.
Bitcoin open interest and futures contracts traded at a record high on a price commodity exchange in October 2020, nearly 10-fold to $1 billion. The Chicago Mercantile Exchange’s integration of Bitcoin into existing financial assets opens up more opportunities for investors with all risk preferences.
5. we believe Bitcoin has won an important place in the diversified investment
Based on the daily return analysis across asset classes, Bitcoin is configured from 2.55 to 6.55 per cent to maximize returns.
In the ARK analysis, we simulate a Monte-Carlo— of each asset allocation portfolio consisting of 1000000 portfolios. as shown in the figure, the most efficient boundary implies the highest rate of return at a given level of volatility. Stars represent the maximum Sharp ratio and minimum volatility.
6. institutions invest in bitcoin prices have a substantial impact.
Based on the ARK analogue product portfolio, the 2.5-6.5% institutional configuration will have an impact between $200000 and $500000 compared to the TT price.