The U.S. Securities and Exchange Commission (SEC) sued Binance on Monday, accusing the crypto exchange of violating several securities laws. Charges include running an illegal trading platform in the U.S. and misusing funds deposited by investors. The SEC has long maintained that many crypto assets are securities, and this lawsuit is another crack at proving that concept.
News of the litigation initially sent Bitcoin (CRYPTO:BTC) tumbling on Monday. Its price fell below $26,000 for the first time since March, but it rebounded on Tuesday as the SEC turned its attention to Coinbase Global. In its second lawsuit in as many days, the SEC accused Coinbase of operating as an unregistered exchange and broker, and it named 13 crypto assets on the platform that allegedly qualify as securities.
Readers wondering why Bitcoin rebounded on the news can refer to that list. It names popular cryptocurrencies like Solana, Cardano, and Polygon, but Bitcoin is absent. The rebound may also indicate that Bitcoin investors have assessed the charges against Binance and found little reason to be worried. Ultimately, neither lawsuit should have a lasting impact on Bitcoin.
Cathie Wood is bullish on Bitcoin
Ark Invest CEO Cathie Wood has long been bullish on digital assets, especially Bitcoin. Wood has not commented on the pending litigation against Binance or Coinbase, though she did say this last week, "It would be nice if the U.S. were leading [the Bitcoin] movement, but we're losing it, and we're losing it because of our regulatory system."
Wood used Coinbase as an example. The company has repeatedly asked the SEC to clarify its stance on cryptocurrencies, or design a new framework specific to digital assets, but the regulator has so far refused. In response, CEO Brian Armstrong has warned the SEC that Coinbase would consider leaving the U.S. in the absence of clear regulations, and the company recently received a license to operate in Bermuda.
However, Wood is seemingly as bullish as ever where Bitcoin is concerned. Ark Invest has a sizable position in Coinbase -- it owns 6% of the outstanding shares, and Coinbase currently ranks as its fifth-largest holding -- and the Ark analyst team recently published wildly optimistic price targets for Bitcoin.
Ark says Bitcoin could be worth $1.48 million by 2030
Earlier this year, Ark outlined three valuation models for Bitcoin through the end of the decade. The bear case puts the cryptocurrency at $258,500 in 2030, which implies 857% upside from its current price. The base case puts Bitcoin at $682,800 in 2030, which implies 2,400% upside from its current price. And the bull case puts the cryptocurrency at $1.48 million in 2030, which implies 5,300% upside from its current price.
The investment thesis is simple: Bitcoin was the first modern cryptocurrency, and it remains the most valuable. It accounts for more than 45% of the entire crypto market. That points to immense popularity.
If Bitcoin were a business, it would have brand authority like Apple. That popularity is important because Bitcoin is a finite asset. Its source code imposes a supply limit of 21 million coins, and basic economics says the price of a finite asset will rise in lockstep with demand.
So here is the million-dollar question: Will demand for Bitcoin rise in the future?
Ark believes the answer is yes. Analysts outline eight use cases that should drive demand for Bitcoin higher in the coming years.
For instance, Ark thinks Bitcoin will play a larger role in corporate and nation state treasury strategies by 2030. The firm also believes retail investors and financial institutions will put more money into Bitcoin in the future, and that more emerging markets will adopt Bitcoin as a currency. Finally, Ark expects Bitcoin to play a bigger part in remittance payments and bank settlements by the end of the decade.
Why Bitcoin is worth buying (for some investors)
Ark has a reputation for aggressive valuation models. Indeed, the bull case assumes Bitcoin will account for 25% of global remittance volume and 10% of bank settlement volume by 2030.
That seems overly optimistic. But the investment thesis behind Bitcoin is solid: It is the most popular digital asset by a wide margin, and that makes Bitcoin a logical choice for traders, institutions, corporations, and nations looking to diversify into digital assets. That's why risk-tolerant investors should consider buying Bitcoin today.
